Skymint, a major cannabis brand in Michigan, has been placed into receivership by one of its lenders, Tropics LP. The brand owes more than $127 million to Tropics, according to a lawsuit filed by the Canadian company against Skymint’s parent company, Green Peak Industries. The suit alleges that Skymint has been in default of its loan obligations since at least March of 2022. The Ingham County judge approved placing Skymint into receivership on March 7.
Skymint owns or operates 24 cannabis dispensaries across Michigan and employs more than 600 people. The brand’s spokesperson has issued a statement saying that Skymint Brands has consented to enter receivership with its primary lender to improve its balance sheet and financial position, while maintaining day-to-day business operations and preserving long-term growth potential.
Reasons for Skymint’s Receivership
The lawsuit filed by Tropics LP against Skymint’s parent company, Green Peak Industries, highlights a number of reasons for the brand’s receivership. One of the main concerns raised by Tropics is Skymint’s declining sales and falling wholesale prices. The suit explains that in December 2019, the average price for an ounce of flower was $516. By January 2023, the average price had fallen to $81.
In addition to falling prices, Skymint’s daily sales have decreased from $356,953 in April 2022 to $184,579 in January 2023. The suit also alleges that Green Peak was at risk of losing its cannabis license in November 2022 due to overdue sales and excise taxes. Tropics advanced $6,250,000 to Green Peak, of which $5,841,322 was used to pay off the taxes.
The Implications of Skymint’s Receivership
Skymint’s receivership could have significant implications for the cannabis industry in Michigan. With 24 dispensaries across the state, Skymint is one of the largest cannabis brands in Michigan. Its receivership could lead to job losses and disrupt the supply chain of the cannabis industry in the state.
Furthermore, Skymint’s receivership highlights the challenges faced by the cannabis industry in Michigan. Excess supply, decreasing prices, limited access to capital, and the increasing cost of capital are all issues that the industry is grappling with. Skymint’s receivership is a stark reminder of the financial challenges facing cannabis businesses in Michigan.
The Future of Skymint
Despite its receivership, Skymint’s stores remain open and operational. The brand’s spokesperson has issued a statement saying that Skymint Brands will focus on its debt obligations to address the financial challenges facing the cannabis industry in Michigan.
Skymint’s receivership could potentially lead to a restructuring of the brand’s operations, including a potential sale or merger with another cannabis company. However, it is too early to predict the future of Skymint at this point.
