Dustin Walsh
This story was republished with permission from Crain’s Detroit and written by Dustin Walsh.
Embattled Skymint invested heavily last year to retrofit the former Summit Sports and Ice Complex near Lansing into a massive marijuana grow and processing operation. The expansion was supposed to double its marijuana production capabilities.
Skymint never completed the build-out.
The cannabis company surrendered the 176,000-square-foot facility and 21 acres back to developers, the country’s largest cannabis property developer Innovative Industrial Properties Inc.
Green Peak Industries, doing business as Skymint, is now under control of a court-ordered receiver, allegedly owing more than $130 million to investors, for back rent and taxes. Innovative Industrial owns the property and buildings at eight Skymint locations, including the Summit and Harvest Park grow operations as well as six retail dispensaries, totaling approximately 262,000 square feet with a total investment value of $57.6 million.
Innovative Industrial sought to legally regain possession of the Summit property and two retail locations in March when Skymint entered into receivership, the company said in an earnings call last week.
Paul Smithers, president and CEO of the San Diego publicly traded real estate trust, said the company’s investment in the two retail locations was $3 million.
Skymint’s receiver, Gene Kohut of Detroit-based Trust Street Advisors, confirmed to Crain’s the company terminated its lease and returned the Summit property to Innovative Industrial.
Innovative Industrial acquired the property in April 2021 for $15.6 million and invested another $14.4 million in redeveloping the property for Skymint. It’s unclear what Skymint’s monthly rent on the property leased from Innovative Industrial was before it ceded the property back.
Smithers said in the call that Skymint is up to date on rent for the remaining five properties and is already touring the Summit facility to other potential marijuana investors.
Innovative Industrial was not immediately available to comment.
The building, seven miles southwest of downtown Lansing in Windsor Township, spent 22 years as the Summit Sports and Ice Complex that hosted youth hockey, basketball and gymnastics. The complex was home to the Twistars, an infamous gymnastics club that trained the 2012 U.S. women’s Olympic team that won the gold medal in London. John Geddert, the founder of Twistars and Olympic team coach, committed suicide in 2021. Geddert was facing 24 charges related to the sexual predation of imprisoned Michigan State University Doctor Larry Nassar, who also treated gymnasts at Summit.
The complex never recovered from the Nassar scandal and closed in 2021 with a plan to sell to Innovative Industrial on behalf of Skymint.
Skymint never publicly stated their investment in the Summit property, but the Lansing State Journal reported a “multi-million dollar” investment into the property that included warehouse and distribution space, pre-roll production, a commercial kitchen, testing and a grow operation.
“It’s our largest capital investment to date with the company,” Joe Tearpock, vice president of operations at Skymint, told LSJ. “It gives us more room to stretch our legs and really scale our operation.”
But Skymint’s appetite to scale up led to its financial troubles.
The company entered into receivership on March 3 after a lawsuit filed by Canadian investor Tropics LLP in Ingham County Circuit Court. The investor lent $70 million to Skymint to acquire local competitor 3Fifteen Cannabis.
The investor, which says it’s owed more than $127 million, alleges in court documents that Skymint was burning through $3 million in cash per month and generated only $110 million in revenue in 2022, $153 million below its forecast of $263 million in sales for the year. A second lawsuit was filed concurrently in Oakland County Circuit Court by New York-based cannabis investment firm Merida Capital Holdings and its affiliates against Green Peak and its executives alleging misrepresentation of financials and mismanagement.
Merida alleges Skymint CEO Jeff Radway “operated (Skymint) as his personal piggybank, and made unilateral decisions on behalf of the company without board approval.” Merida also alleges Radway had multiple extramarital affairs with employees and on at least one occasion, reached a settlement using company funds with said employee in exchange for silence about the relationship.
Jeff Donahue, executive vice president and general counsel for Skymint, announced to employees on April 7 that Radway is on an “indefinite leave of absence” from the company.
