Financial Reshuffling in Michigan Cannabis: Comco Wellness Awaits New Ownership

January 29th, 2024 Business & Industry
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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.

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