Dimondale-based cannabis company Green Peak Industries, which operates under the brand name Skymint, has been placed under the control of a receiver after a lender sued the company claiming it owes them more than $127 million.
The March 3 lawsuit, which also names Green Peak Industries subsidiaries District Bay LLC, The District Park LLC and GPIMD Corp., was filed by Canadian-based Tropics LP in Ingham County Circuit Court.
According to the lawsuit, the four companies “have borrowed more than $81 million” from Tropics since September 2021. They have been “chronically in default of their loan obligations” since “at least March 2022,” the lawsuit said.
The lawsuit alleges Green Peak Industries and its subsidiaries “lack sufficient cash to operate their business.”
Court records show an order to appoint a receiver was filed last week.
A message and email left Tuesday morning with Skymint Brands CEO Jeff Radway weren’t immediately returned, however, the company provided a statement.
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.”
The company’s “sales and the wholesale per pound flower price has been declining at a rapid pace,” and a consulting firm’s review of its financials determined Green Peak Industries and its subsidiaries “were burning cash at the rate of $37.5 million per year or $3 million per month,” according to the lawsuit.
Tropics isn’t the only company suing Green Peak Industries.
In a concurrent lawsuit, New York investment firm Merida Capital Holdings filed a complaint in Oakland County Circuit Court alleging that Green Peak misrepresented its financial standing and was mismanaged, according to Crain’s.
Case Title: TROPICS LP vs THE DISTRICT PARK LLC et al et al Case Number: 23-000149-CBJudge:JOYCE DRAGANCHUK PLAINTIFF: TROPICS LP DEFENDANT: THE DISTRICT PARK LLC DEFENDANT: GREEN PEAK INDUSTRIES INC DEFENDANT: DISTRICT BAY LLC DEFENDANT: GPIMD CORP Case Status: OPEN Disposition: UNDISPOSED File Date: 03/03/2023
Case Events
8-03/09/2023NOTICE OF APPEARANCE AND REQUEST FOR SERVICE OF PAPERS W/ PS
7-03/07/2023ACCEPTANCE OF RECEIVERSHIP APPOINTMENT (RECEIVERSHIP ESTATE)
6-03/03/2023C30 ELECTRONIC SYSTEM FEE RECEIPT: 505386 DATE: 03/03/2023
5-03/03/2023NOTICE OF ASSIGNMENT TO THE BUSINESS COURT
4-03/03/2023NOTICE OF ASSIGNMENT TO THE BUSINESS COURT
3-03/03/2023STIPULATION AND ORDER APPOINTING RECEIVER
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On Wednesday, two residential search warrants for a “large-scale” illegal marijuana grow operation in Richland Township were issued by Michigan State Police and other agencies.
According to Michigan State Police, authorities have seized over 5,400 cannabis plants and more than 100 pounds of processed cannabis.
According to a news release from MSP, the suspects were cultivating and processing marijuana in flagrant violation of the Regulation and Taxation of Marihuana Act of 2018 as well as Michigan’s medical marijuana laws of 2008 and 2016.
The MSP Marijuana and Tobacco Investigation Section, in collaboration with the Ogemaw County Prosecuting Attorney, and with help from the crisis support group of the MSP West Branch Post, carried out the search warrants.
The Drug Enforcement Administration (DEA) has declared that two cannabinoids, delta-8 THC-O and delta-9 THC-O, which have recently emerged in state markets, do not meet the federal definition of legal hemp and are thus considered illegal controlled substances.
An Attorney had previously inquired about the legal status of these cannabinoids with the federal agency last year and followed up.
Since the 2018 Farm Bill legalized hemp containing up to 0.3 percent delta-9 THC on a dry weight basis, the cannabis industry has been abuzz with confusion. This reform has opened the door to a booming market for natural and synthetic cannabinoids in states across the nation.
One of the most popular cannabinoids is delta-8 THC, which can be synthetically produced from CBD, but also occurs in trace amounts naturally in the cannabis plant. As a result, several states have taken steps to regulate this product, which, unlike CBD, does have intoxicating effects.
Moving the Goal Posts
These two cannabinoids “do not occur naturally in the cannabis plant and can only be obtained synthetically, and therefore do not fall under the definition of hemp.”
On Feb 13, 2023, The DEA sent a response letter confirming that these two cannabinoids “do not occur naturally in the cannabis plant and can only be obtained synthetically, and therefore do not fall under the definition of hemp.” This ruling serves as a reminder that the federal government is still enforcing its laws on cannabis-related substances, even as more states move toward legalizing them.
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Michigan marijuana sales reached a record-breaking high in December, according to state data. While medical cannabis purchases have gradually decreased, the adult-use market has more than compensated for the drop, with total sales reaching an impressive $221.7 million – a staggering $9 million more than the previous record set in September.
The Cannabis Regulatory Agency (CRA) reported that December saw $208,318,037 in recreational cannabis sales and $13,419,377 from medical marijuana purchases, as first reported by New Cannabis Ventures. This remarkable surge in sales is indicative of the growing popularity of marijuana in Michigan and the potential of the industry to become a major economic driver in the state. With the legalization of recreational marijuana, Michigan is now one of the largest markets in the United States, and the industry is expected to continue to grow in the coming years.
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The federal government’s justification for upholding the law is “concerning,” according to a federal judge, who ruled that the ban on marijuana users owning firearms is unconstitutional.
A man was charged in Oklahoma in 2022 after police found marijuana and a handgun in his car while he was driving, and the U.S. District Court for the Western District of Oklahoma dismissed the indictment on Friday.
Judge Patrick Wyrick concurred with the attorneys that the Second Amendment of the Constitution is violated by the law that forbids “unlawful” cannabis users from owning firearms.
This ruling comes as the ban is still being contested in a separate federal court by several medical cannabis patients and former Florida Agriculture Commissioner Nikki Fried (D).
The Trump-appointed judge in this case heavily relied on an interpretation of a recent Supreme Court decision in which the justices generally set higher standards for policies that seek to restrict gun rights.
According to the ruling, any such limitations must be in line with the Second Amendment’s original ratification in 1791.
The judge said in his decision on Friday that the historical analogies the Justice Department relied on to support the ban, including allusions to outdated case law prohibiting Catholics, allies, slaves and Indians from owning weapons, “misses the mark” and “cannot provide the basis for a historical analogue.”
The government’s position that marijuana users who use it illegally are “both unvirtuous and dangerous” was also addressed. A user of marijuana does not automatically fall into that category, according to Wyrick, “because the mere act of using marijuana do not involve violent, forceful, or threatening conduct.”
Similar arguments have been made by the government in the Florida-based case, in which medical cannabis patients are actively contesting a federal district court’s decision that dismissed their DOJ lawsuit in November.
Because the state’s cannabis laws had made it possible for “habitual marijuana users” and other disqualified people to obtain firearms illegally, the ATF issued an advisory in 2020 that specifically targeted Michigan and mandated that gun sellers conduct federal background checks on all unlicensed gun buyers.
The Department of Justice will likely appeal Wyrick’s ruling to a higher federal court.
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Michigan Gov. Gretchen Whitmer, calling them rushed, recently vetoed 11 bills including three medical cannabis bills, with others related to retirement and tax. The governor did however sign into law six other bills approved by the Legislature.Â
Two bills that were vetoed: House Bill 5871, which would have amended state law to ease access to medical cannabis products, making them easier to be transferred from one facility to another. HB 5871 would also prohibit a background check of an applicant’s spouse under certain circumstances.Â
House Bill 5965, on the other hand, would have updated some language and definitions in the state’s Medical Marihuana Facilities Licensing Act, such as the title for the state’s Cannabis Regulatory Agency (CRA).
Another medical cannabis-related bill was vetoed. House Bill 5839, introduced by Rep. Pat Outman (R – Six Lakes), would have prevented the CRA from denying a person a license to sell cannabis based on their spouse’s job, including if their spouse works for the state or federal government.
Michigan Advance reports that Whitmer said in her veto letter to the Legislature on Dec. 22 that the bills “were rushed through a lame duck session and need closer examination.”
The Cost of Cannabis
The price of cannabis in the Michigan adult-use market plunged about 75%, from nearly $400 an ounce to less than $100 over the past two years. That drop in price triggered some industry officials to call for a moratorium on cultivation licenses. MLive reports that 2022 was a good year for customers, on the other hand, who are paying prices much lower than normal this year.Â
If you or someone you know has been accused of a crime, DUI or Drugged Driving. Call Komorn Law and turn your defense into an offense. Call Now 248-357-2550
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