Skymint’s Strategic Move Towards Long-term Viability Amidst Financial Struggles

LOS ANGELES- Skymint, a leading cannabis operator in Michigan, is facing significant operational changes as it shuts down its Harvest Park growing and processing plant in Dimondale, near Lansing. The closure, announced in an internal memo obtained by Crain’s Detroit, is set to impact approximately 180 employees, with layoffs commencing on February 12 and concluding by March 1.

Jeff Donahue, Skymint’s Executive Vice President and General Counsel, cited the evolving cannabis industry landscape as a key factor behind this decision. “The changes that occurred in the cannabis industry over the past few years no longer allow us to compete cost-effectively while maintaining our growing processing operations at the Harvest Park facility,” Donahue explained. This move is part of a broader strategy aimed at ensuring Skymint’s competitiveness and sustainability in the market.

Despite this setback, Skymint maintains a significant presence in the state, operating 22 retail locations. However, the company’s journey has been marred by challenges, including a substantial drop in cannabis prices and management issues that have adversely affected its financial stability.

The acquisition of Skymint by Canadian firm Tropics LP, under the new entity Skymint Acquisition Co., is a critical development in this narrative. Tropics, a subsidiary of Sunstream Bancorp—a joint venture with SNDL Inc. (NASDAQ: SNDL)—purchased Skymint’s assets for $109.4 million in October following Skymint’s entry into receivership in March. This acquisition included Skymint’s cultivation assets and 22 retail leases, which reported sales of around $68 million in September.

Skymint’s financial woes trace back to a series of loans and legal entanglements with Tropics. The company defaulted on its obligations, including a $70 million loan for acquiring competitor 3Fifteen Cannabis. This led to a cascading effect, with Skymint failing to meet various financial commitments and facing a drastic reduction in daily sales revenue.

Additionally, Skymint’s plans to expand its production capabilities by leasing the former Summit Sports and Ice Complex near Lansing were abandoned. The company relinquished the 176,000-square-foot facility to Innovative Industrial Properties Inc., which had invested approximately $30 million in the property.

The future of the Harvest Park plant, owned by Innovative Industrial Properties, remains uncertain, as representatives from the company have not yet responded to inquiries about its fate.

Skymint’s situation reflects the broader challenges within the cannabis industry, where market dynamics and financial complexities necessitate strategic adaptations. The closure of the Harvest Park facility, while a significant development, is part of Skymint’s efforts to navigate these challenges and reposition itself for future success.