Your week in Detroit: Michigan's struggling cannabis companies

Good morning, Free Press subscribers!

Michigan’s burgeoning cannabis industry has evolved rapidly since I started covering it in 2021. Just over a year ago, I met with the owner of a cannabis microbusiness who told me he was having a difficult time competing with the low prices competitors were offering.

A few months later, I found out the declining prices had caused profits to shrink so much that some cannabis companies were struggling to survive while facing other issues like increased competition.

That brings me to this latest chapter and the story I’m telling you about today.

There are seven companies in Michigan under the control of a court-appointed receiver, according to data that I obtained from the state's Cannabis Regulatory Agency. One of those companies is Skymint, one of the biggest cannabis companies in Michigan, because a lender sued Skymint, claiming it owes more than $127 million. Using a court-appointed receiver is one of the only available remedies available for creditors in the marijuana industry to obtain funds that are owed to them because selling marijuana is still a federal crime and bankruptcy is a federal remedy.

The receivership process is not without its challenges, though. One attorney I talked to described the cannabis industry as “the only industry that has this kind of incredible, one-of-a-kind regulatory overlay,” making it difficult to transfer a cannabis license between businesses, for example. Industry insiders, though, expect more companies will come under the control of a court-appointed receiver in the future. 

I’ll continue to cover how it all plays out, so please follow my coverage. Thank you for being a Free Press subscriber!

— Adrienne

Aroberts@freepress.com

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