Skymint Closes Down Lansing Grow Facility: What's Next For Michigan's Once Leading Cannabis Producer?
Portfolio Pulse from Joana Scopel
Skymint, a Michigan-based cannabis producer, is closing its Harvest Park facility and laying off 180 employees by March 1, 2024, due to excess supply, decreasing prices, and cost inflation in the state's cannabis sector. The company, which operates 22 retail locations, was acquired out of bankruptcy for $109.4 million by Tropics LP, a subsidiary of SunStream Bancorp Inc., sponsored by SNDL Inc. (NASDAQ: SNDL). The dispensaries were reported to generate $68 million in annualized sales as of September. Skymint's financial issues included a $127 million lawsuit by Tropics over breached agreements and a sharp decline in sales, leading to a revenue drop to $110 million in 2022. Innovative Industrial Properties Inc. (NYSE: IIPR), which owns the Harvest Park property, has not commented on its future plans. SNDL's stock was down 2.71% at $1.435 per share.
December 11, 2023 | 10:30 pm
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NEGATIVE IMPACT
SNDL Inc., which is associated with Tropics LP through SunStream Bancorp Inc., saw its shares fall by 2.71% following the news of Skymint's facility closure and financial challenges.
The negative stock price movement for SNDL Inc. is likely a reaction to the challenges faced by Skymint, which is now under the ownership of Tropics LP, a subsidiary of SunStream Bancorp Inc., a joint venture sponsored by SNDL. The market may be concerned about the potential financial impact on SNDL due to Skymint's operational downsizing and legal issues.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
Innovative Industrial Properties Inc. owns the Harvest Park property that Skymint is closing, but has not yet disclosed any plans for the property's future amid Skymint's financial difficulties.
While IIPR owns the property that Skymint is vacating, the short-term impact on IIPR's stock is uncertain without further information on the company's plans for the property. The closure of Skymint's facility may be of concern to IIPR investors, but the overall impact will depend on IIPR's ability to repurpose or re-lease the property.
CONFIDENCE 75
IMPORTANCE 50
RELEVANCE 60