LANSING, Mich. (Michigan News Source) – As Michigan marijuana vendors across the state struggle to keep up with slipping profits, some are exploring new ways to keep their doors open. 

One such method is a court-appointed receiver, which could provide lenders with the chance to recover their investments in the turbulent cannabis industry. 

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The method is somewhat complex according to some like Ben Sobczak, a partner at the law firm Dickinson Wright, who contends that cannabis “is the only industry that has this kind of incredible, one-of-a-kind regulatory overlay,” Sobczak said which makes it a challenge to transfer a marijuana license between companies according to the Detroit Free Press. 

He also acknowledges there are more companies in a default status that could be placed in a receivership but they are not “because those lenders are already kind of realizing it’s going to be a messy, long and expensive affair.”

One of Michigan’s top ten cannabis companies is currently in the process of entering into a receivership in the wake of a court decision.  Green Peak’s subsidiary, Skymint, which is located at the former Summit Sports and Ice Complex in Dimondale, is being appropriated by Innovative Industrial Properties Inc. after Tropics LP sued the company claiming they owed more than $127 million. 

It also claimed that the group had been “chronically in default of their loan obligations” since “at least March 2022” the lawsuit also said.  It also alleged that Green Peak Industries and its subsidiaries lacked sufficient cash to operate their business.  The Lansing State Journal reported on a statement provided by the Skymint Brands CEO Jeff Radway about the lawsuit in March. 

Skymint “consented to enter a receivership with our primary lender to improve our balance sheet and financial position, while maintaining day-to-day business operations and preserving long-term growth potential,” the company said in an emailed statement. “The court-approved agreement will allow us to focus on our debt obligations to address the financial challenges facing many in Michigan’s cannabis industry, including excess supply, decreasing prices, limited access to capital and the increasing cost of capital.”

Gene Kohut, the receiver of Skymint, is now at the stage of restructuring the company according to the Detroit Free Press.  He is looking at “every particular part of the company, service line, employee role, location and product … to determine what is necessary to continue the operations going forward in a profitable way.”

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Despite Michigan’s growing demand for the product, prices have dropped from previous years as in March 2021 the average cannabis flower price was $255 per ounce, and $191 per ounce in March 2022.  However, the cost of the flower per ounce this March was roughly $87 per ounce according to Cannabis Business Times.