Comco LLC, a cannabis company operating under the name Comco Wellness in Jackson, Michigan, is set to be auctioned following a court-mandated receivership process that has lasted nine months in the Jackson County Circuit Court.
The company's substantial assets are poised to be acquired by Bag Boys LLC, the designated stalking horse bidder. This entity is connected to Farm Marcellus, a marijuana cultivation company located approximately 30 miles southwest of Kalamazoo, which holds four Class C grow licenses.
Since August of the previous year, Farm Marcellus has been financially supporting Comco during its receivership. The company has proposed a bid of at least $1.9 million, aimed at settling creditor debts and securing ownership of Comco.
The specifics of the stalking horse bid include a cash payment of $1.031 million and an additional $862,000 allocated for creditor repayment over a 12-month period, as detailed in court documents.
David Dragich, the attorney representing the court-appointed receiver, Gene Kohut, noted that further details regarding the final purchase price are yet to be disclosed.
Additionally, Farm Marcellus plans to absolve the debt incurred by Comco during the receivership, estimated to be between $800,000 and $900,000, as per court records.
Under the proposed agreement, Bag Boys would acquire Comco's cultivation facility located at 12584 Wooden Road in Jonesville. This facility is equipped with four Class C licenses and a processor license. However, Comco's other property at 8891 Pulaski Road in Concord is not included in this bid and is expected to be sold separately, according to Dragich.
Interested parties have until February 16th to submit competing bids for Comco.
The company's entry into receivership in April of the previous year was precipitated by legal action from Anewsha Holding Group LLC, based in Puerto Rico, and New York's cannabis payment software firm, Fusion LLC, operating as LeafLink.
Anewsha claims that Comco and its real estate division, Byrson Enterprises—both under the ownership of attorney Peter Behncke—failed to repay loans and invoices exceeding $1.3 million.
Initially, in 2019, Comco and Bryson borrowed $1.35 million from Anewsha, with an 11.89% interest rate, due by October 31, 2022. However, by the fall of 2022, Comco defaulted on the loan and also accumulated overdue rent of at least $25,000 on its Jonesville property.
LeafLink's lawsuit alleges that Comco has approximately $5.6 million in unsettled invoices since February 2022.
The expected payments from Bag Boys or Farm Marcellus are anticipated to be directed primarily to Anewsha, a secured creditor, as opposed to the service provider, LeafLink, as stated by Dragich.
In a significant move within the Michigan cannabis sector, Boone Labs, a family-owned cannabis processing facility, has announced a strategic partnership with Melk Cannabis, a leader in premium solventless cannabis products. This collaboration is a merging of two family-founded entities aiming to set a new standard in quality, variety, and innovation in Michigan's regulated cannabis market.
Boone Labs, based in Buchanan, Michigan, has been a prominent figure in the industry, known for representing leading brands such as Kush Masters and Elevated Lakes. The partnership with Melk Cannabis, under the guidance of Nick Young, a cannabis industry expert with ten years of experience and a Marketing Professor at Western Michigan University, signals an exciting fusion of educational depth, seasoned expertise, and a shared passion for crafting premium cannabis products that appeal to consumers.
Melk Cannabis, driven by Young's visionary leadership, has gained a reputation for its superior solventless products. The brand stands out for its unique milk carton packaging and innovative approaches to cannabis consumption. With a commitment to quality and consumer preferences, Melk Cannabis has become a favored brand in Michigan's cannabis market.
This strategic partnership brings together Boone Labs' manufacturing excellence and Melk Cannabis' expertise in solventless cannabis production. The collaboration is set to provide retailers and consumers with an enhanced selection of high-quality solventless products, showcasing the combined strengths of Boone Labs, Kush Masters, Elevated Lakes, and Melk Cannabis.
Nick Young, the founder of Melk Cannabis, expresses his enthusiasm for the collaboration, viewing it as an opportunity to reinforce their commitment to providing enjoyable and solventless cannabis experiences. Similarly, Boone Labs is optimistic about the partnership, with Max Boone, the Director of Sales and Partnerships, emphasizing their shared goal to uplift the cannabis experience in Michigan by offering top-tier solventless products.
The partnership has already yielded results, with Boone and Melk producing a solventless concentrate batch that has successfully passed state testing and is ready for distribution. This collaboration not only signifies a growth in business operations for both Boone Labs and Melk Cannabis but also represents a promising step forward in elevating the standards and experiences for cannabis consumers in Michigan.
In 2023, Michigan's cannabis sector demonstrated significant expansion, with total marijuana product sales surpassing $3.06 billion, as reported by the state's Cannabis Regulatory Agency (CRA). This growth trajectory is expected to continue, according to industry experts.
Mid-lower Michigan, including Mecosta and Osceola counties, contributed notably to this success, recording sales exceeding $16 million in December alone. Tyler Dutcher, the owner of Vivid Farms, a grow facility in Barryton, foresees further industry growth, citing increasing consumer demand and innovative consumption methods.
Since Michigan legalized adult-use cannabis in November 2018, the industry has witnessed remarkable growth, with a 474% increase in sales from 2020 to 2023. Additionally, CRA data indicates a 78% reduction in the average price of flower since the early days of legalization, reflecting market growth and saturation.
Dutcher also highlighted the challenges and cyclic nature of the cannabis industry, noting that not all businesses are equipped to handle the industry's fluctuations. He mentioned the significant scale of operations, with some farms planting hundreds of thousands of plants, poised to become national leaders in cannabis cultivation.
A notable development in the industry is the formation of the 'Blacklist of MI Cannabis' Facebook group by Brandon Hauck and Kate Sikkila of Emerald Fire Farms. This initiative aims to address payment issues faced by growers, and it has already facilitated the settlement of numerous debts. The CRA has shown support for this effort by considering non-renewal of licenses for retail establishments that fail to pay their debts.
Chivonne Rush, a marketing representative from Timber Cannabis, reported successful growth for their Big Rapids location since its opening in January 2022. The company's expansion, including the launch of its sixth location in Mount Pleasant, reflects increasing societal acceptance and decreasing stigma surrounding cannabis.
Timber Cannabis focuses on product innovation and education, with Rush noting the popularity of products like infused pre-rolls and live rosin. The company collaborates with High Minded, a grow operation, to develop new strains and products. She emphasized the importance of community involvement for dispensaries and grow operations, as well as the potential for continued industry growth and the passion of new industry entrants.
Dutcher also commented on the diminishing viability of the Medical Marihuana Facilities Licensing Act in the face of recreational cannabis industry growth. He observed a trend of locations across Michigan adopting recreational ordinances, which often provide similar benefits to those of medical dispensaries but with a broader product selection.
According to Michigan Cannabis Information, the state boasts over a thousand CRA-licensed marijuana dispensary locations, including approximately 330 active medical marijuana dispensaries and over 660 active recreational cannabis shops.
In a significant development in Michigan's cannabis industry, Comco, LLC, known for its involvement in the cultivation, production, processing, and distribution of both medicinal and recreational cannabis, is set to have its business assets auctioned. This move comes under the directive of Gene R. Kohut of Trust Street Advisors, LLC, who is acting as the court-appointed receiver for Comco.
Comco, with its cannabis provisioning centers located in Jonesville and Hanover, Michigan, has been a player in the local cannabis market. The upcoming auction, as per the Jackson County Circuit Court's order dated January 12th, 2024, is scheduled for February 26th, 2024, at 12:00 p.m. Eastern Time.
Interested parties wishing to participate in the auction are required to submit a qualified bid in accordance with the guidelines set by the court's Approval Order by February 16th, 2024. This order not only authorizes the Receiver to conduct the auction but also outlines the bidding procedures. It allows for the sale of Comco's assets free from any liens, interests, and encumbrances. Furthermore, the order includes a proposed form of a purchase agreement, known as the Stalking Horse Purchase Agreement.
For those seeking more detailed information, the Approval Order, Stalking Horse Purchase Agreement, Bidding Procedures, and other related materials are available upon request from the Receiver's counsel.
The prime real estate location of Gage Cannabis' premier outlet in Ferndale, Michigan, has been listed for sale. Occupying over 46,000 square feet on a 1.52-acre site at 1523 Academy Drive St., the property is being marketed for $7.06 million. This sale initiative, as detailed by Northmarq, a Chicago-based property brokerage firm, does not signal any operational changes for Gage Cannabis.
TerrAscend Corp., the Canadian company that owns Gage, reassured through CFO Keith Stauffer, that Gage's lease agreement would continue unaffected. The property operates under a triple net lease agreement, placing responsibility for property taxes, insurance, and maintenance on Gage Cannabis, with a 2.33% annual increase in rent.
BJ Feller, Northmarq's Managing Director and Senior Vice President, emphasized the investment appeal of the property, noting the stability of cannabis real estate compared to traditional retail sectors. This stability, coupled with higher than average capitalization rates and returns, makes such properties attractive to investors.
Northmarq's portfolio also includes other Gage properties in Kalamazoo (operating under the Cookies brand) and Traverse City, as well as Lume Cannabis Co. dispensaries located in Holly and Birch Run. Additionally, Gage's Battle Creek location is up for sale, with the Battle Creek property listed at $1.7 million, Traverse City at $2.55 million, and Kalamazoo at $2.9 million.
Ownership of these properties varies. The Ferndale and Kalamazoo sites are held by Troy-based Spartan Partners Properties, while the Traverse City property is under Strategic Koach Properties LLC, and the Battle Creek location by Battle Creek Downtown Central LLC. These entities, as reported by CoStar Group Inc., a real estate information service based in Washington, D.C., have not provided immediate comments on the listings.
The cannabis industry has been a vibrant sector in real estate for several years, offering investors an opportunity to engage in the marijuana market without direct involvement in its cultivation or sale, thereby navigating the complexities of federal drug regulations. However, the value of these real estate investments is highly dependent on local market conditions, particularly the level of competition in the area.
For example, in 2022, a modest 2,400-square-foot building in Pontiac, still awaiting its recreational marijuana market launch, was listed for $3.5 million. Contrastingly, Battle Creek's high dispensary density might explain its lower $1.7 million price point, as opposed to the less saturated Traverse City market, where property values reach $2.55 million.
In a significant development for the cannabis community in Big Rapids, Michigan, Misty Mountain Cannabis is set to open a new dispensary at 702 Perry Ave., a site previously occupied by Rair Cannabis Company. This move marks an expansion of Misty Mountain Acquisitions' presence in the state and is part of their broader strategy to connect with diverse customer bases across Michigan.
Mark de Souza, CEO of Misty Mountain Acquisitions, emphasized the company's commitment to fostering a rich cannabis culture and offering a wide range of high-quality products. He noted that their focus extends beyond product offerings to include strong partnerships with employees and customers, making Michigan a key focus for their operations.
Misty Mountain Cannabis already has development plans for three other dispensaries in Michigan, located in Bay City, Muskegon, and Ann Arbor. The company's approach is centered around celebrating the artistry and craftsmanship of local cannabis growers and producers. Their website highlights their commitment to showcasing these local talents and providing a diverse selection of products.
For the Big Rapids location, de Souza expressed enthusiasm about the opportunities this new site presents. He stressed the importance of competitive positioning within the neighborhood and the company's affection for the city itself. The store plans to offer a comprehensive range of cannabis products, including bulk flower, pre-packed quantities, pre-rolls, distillate carts, concentrates, gummies, chocolates, and a variety of edibles.
A key aspect of Misty Mountain Cannabis's strategy is to integrate customer feedback into their product line, ensuring that the offerings align with consumer preferences and needs. This customer-focused approach extends to their commitment to local partnerships, which is a cornerstone of their business model. The company prioritizes working with Michigan growers, suppliers, and artisans, emphasizing the quality and diversity of the state's cannabis products.
Compliance with Michigan's dispensary laws and guidelines is a top priority for Misty Mountain Cannabis. De Souza highlighted the importance of proper product information, labeling, and educated budtenders who can respond knowledgeably to consumer inquiries. This focus on education and compliance is part of the company's broader strategy to provide a safe and responsible retail experience.
Additionally, Misty Mountain Cannabis takes measures to prevent sales to third-party sellers or minors. The company is meticulous in ensuring that consumers are well-informed about the products' efficacy and strength before purchase.
The new dispensary is expected to create approximately 12-15 jobs in Big Rapids, with a focus on hiring local residents for managerial and staff positions. While de Souza did not commit to specific community contributions, he indicated that assuming successful operations, the company would consider supporting local medical or educational charities, reflecting their commitment to community building.
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