Skymint was an early entrant into the market and blazed an aggressive growth strategy, currently employing more than 600 across 24 retail dispensaries around the state and three indoor grow operations in Dimondale and Lansing.
But its strategy appears to have been unprepared to tackle falling prices.
Tropics LP, a subsidiary of Calgary-based Sundial Growers Inc.’s investment firm SunStream Bancorp Inc., loaned Green Peak $70 million in September 2021 towards the acquisition of competitor 3Fifteen Cannabis and its 12 dispensaries in Detroit, Grand Rapids, Ann Arbor, Flint and elsewhere. Merida, a majority shareholder in 3Fifteen, also lent $8 million toward the 3Fifteen purchase.
Under the Tropics promissory note, Green Peak agreed to repay the lender in full by September 2025 at an interest rate of 12.5 percent, compounding monthly, as well as sell some common shares of the company to Tropics, according to the lawsuit.
Under the agreement, Green Peak agreed to maintain a minimum cash balance of $7.5 million, which Tropics alleges in the suit that it failed to do in March last year. In response, Tropics loaned Green Peak another $5 million, raising the loan total with fees to nearly $81.5 million.
Green Peak did not meet its new loan obligation in June 2022 after failing to raise an additional $15 million in new funding, according to the suit. The company also failed to pay additional fees to Tropics, pay back rent on its E. Jolly Road facility in Lansing and pay certain taxes, according to the lawsuit.
The two parties entered into another agreement in November, which included Tropics paying more than $5.8 million toward overdue sales and excise taxes for Green Peak.
Tropics alleges in the court filing that Green Peak’s daily sales revenue has dropped from $356,953 in April 2022 to just $184,579 in January of this year, exacerbating an already bad financial picture.
Green Peak owes nearly $4 million in sales and excise taxes by March 25, the suit alleges, and the landlord of its leased cultivation facility in Dimondale is attempting to evict the company for owing roughly $1.1 million in rent.
Tropics is asking the receiver to take possession of Green Peak’s assets.
“Absent appointment of a receiver, defendants’ assets are subject to waste, and plaintiff will suffer severe and irreparable damage unless in the hands of a receiver …,” the suit says. “(The receiver should) take all necessary action to preserve the value of the assets, all subject to the direction of the court during the pendency of those proceedings and until the assets are sold.”
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