This could be one of the largest failures of a cannabusiness in the US
Skymint, one of Michigan‘s largest marijuana cultivators and retailers, is now under the control of a receiver as the industry faces an increasingly difficult market in the state.
The action by the Ingham County Circuit Court in Lansing signals what could be one of the largest marijuana company failures in the U.S. in the nearly decade-long span since the substance was legalized in certain states. It is also the largest corporate collapse in Michigan’s brief history of recreational marijuana since the start of the industry in late 2019.
Skymint, which primarily operates under the parent company of Green Peak Innovations Inc., owes more than $127 million to Canadian investment firm Tropics LP, according to a lawsuit filed in the Ingham County court on March 3.
The lawsuit alleges Skymint was burning through $3 million in cash per month and generated only $110 million in revenue in 2022, $153 million below its forecast of $263 million in sales for the year. A second lawsuit was filed concurrently in Oakland County Circuit Court by New York-based cannabis investment firm Merida Capital Holdings and its affiliates against Green Peak and its executives alleging misrepresentation of financials and mismanagement.
Ingham County Circuit Court Judge Joyce Draganchuk appointed immediately Gene Kohut, a partner at Detroit-based business advisory firm Trust Street Advisors, as the receiver in what is likely the only recourse for the investor. Marijuana companies cannot avail themselves of financial obligations in bankruptcy court. Marijuana remains a Schedule 1 narcotic under the federal Controlled Substances Act, leaving marijuana businesses without the benefit of protection under the U.S. bankruptcy code.
Gov. Gretchen Whitmer signed amendments to the state marijuana laws to allow for receiverships in 2020.
Green Peak did not respond to a request for comment.
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