Affairs, Unpaid Loans, and Overdue Rent: Claims Against Skymint Get Messy

Competing lawsuits outline bad behavior at the company.

Michigan cannabis company Green Peak Industries, or GPI (also known as Skymint Brands), has found itself in a world of hurt as the company owes millions of dollars in back rent and unpaid loans to its lender Tropics LP.

In addition, one disgruntled investor – Merida Capital‘s Mitch Baruchowitz – alleges that CEO Jeff Radway is using funds to pay off women from multiple extramarital affairs with employees, including the company’s current president.

Who is Skymint?

Skymint or GPI claims to be one of the largest vertically integrated regulated cannabis operators in Michigan, with multiple indoor and outdoor cultivation facilities, processing facilities, and dispensaries in the state.

Privately held GPI is based in Dimondale, Michigan. It is also associated with the company called The District Park, which is also named in the numerous lawsuits that have been generated as a result of the bankruptcy.

The Lender: Tropics

Tropics LP is an affiliate of SunStream Opportunities LP, which in turn is an affiliate of SunStream Bancorp Inc., a joint venture sponsored by SNDL Inc. (Nasdaq: SNDL) and SAF Group. Tropics CEO Ryan Dunfield is also the CEO of SAF Group.

The firm advanced an initial senior secured term loan to Skymint in the amount of $70 million in connection with Skymint’s acquisition of 3Fifteen businesses. According to the press release accompanying the transaction, “The use of funds of the financing will be for general working capital purposes, as SKYMINT finalizes the transfer of the remainder of the cannabis licenses acquired from 3Fifteen. With the acquisition of 3Fifteen, SKYMINT seeks to expand its retail footprint to 24 locations in Michigan.”

According to court documents, since 2021, GPI and The District Park have borrowed more than $81 million from Tropics. As of February, GPI and The District Park owed Tropics over $127 million.


In the case of Tropics BP vs. Green Peak Industries and the District Park, court documents allege that GPI had already defaulted one or more covenants under the securities purchase agreement by April 2022. By March 2022, the company failed to maintain a $7.5 million cash balance or deliver audited financials.

Yet Tropics continued to give Skymint more money despite the company’s failure to deliver the financial statements.

Skymint also quit paying rent on a property in Lansing, Michigan, and wasn’t paying taxes. Tropics provided more money in order to pay the taxes and keep the cannabis license in good standing.

Tropics agreed to forbearance on the loan covenants as the company agreed to hire a consulting firm to review Skymint’s business. FTI Consulting Canada determined that Skymint was burning through $3 million a month, as sales were falling and wholesale prices for flower declined. The court documents state that average daily sales fell from $356,953 in April 2022 to just $184,579 in January 2023 – a 50% decrease to $67 million in sales annualized. 

Skymint also owes more than $1 million in back rent on a cultivation facility in Dimondale, and the owner has begun eviction proceedings. Innovative Industrial Properties (NYSE: IIPR) reported in its annual filing that Green Peak Industries, Inc. defaulted on its obligations to pay rent at one of its properties in Michigan. In February 2022, IIP said it amended its lease with Green Peak, “increasing the improvement allowance under the lease by $18.0 million to a total of approximately $47.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.”

Skymint was also supposed to buy 3Fifteen Cannabis, but 3Fifteen is alleged to have refused to transfer the licenses causing Skymint even more problems.

When GPI defaulted in April 2022, Tropics essentially started the process to take over GPI’s business and expand its collateral base by any means necessary.

Merida Capital

Merida Capital Partners and Baruchowitz, along with several other parties, also have filed a case against GPI, The District, and members of GPI’s board of directors Radway, Jeff Donahue, Al Gever, and Jeff Jacobs for providing materially false information regarding GPI’s financial condition and withholding material information regarding instances of gross mismanagement and various claims against GPI.

Merida invested $8 million in GPI.

CEO Accused of Multiple Affairs with Employees

The Merida case alleges, “CEO Radway operated GPI as his personal piggybank, and made unilateral decisions on behalf of the Company, without Board approval. As but one example, Radway had multiple extramarital affairs with GPI’s employees. At least one of these affairs resulted in a settlement agreement, which included a promise by the employee not to publicly disclose the details of the relationship. Upon information and belief, the settlement agreement required payment of monetary consideration to the employees, which came out of GPI’s funds.”

The court document continues saying, “One of at least two female employees with whom Radway had affairs while acting as a CEO of GPI is Summer Ransom-Cleveland, the current President of GPI’s Retail Division. Despite GPI’s retail operations being the weakest part of the business and operating as a drag on the financial performance of the Company, Ransom-Cleveland did not only keep her job, but received a promotion to Chief Retail Officer and a raise in January 2022. Radway’s promotion of Ransom-Cleveland was, again, motivated by personal considerations unrelated to what was good for the Company.”

The case alleges that Radway fired CFO Amy Froebel-Fisher and HR Director Jason Desentz after Froebel-Fisher reported the affair to Desentz. Court documents state that both Desentz and Froebel-Fisher received handsome payouts financed out of GPI’s coffers in order to settle their claims against GPI and Radway, which were the direct result of whistleblower retaliation.

Merida also claims that the company did not hold regular meetings of the board of directors. In fact, during the time that Baruchowitz was on the board of GPI (May 11, 2022, until his resignation in February) the company only held one board meeting.

3Fifteen Deal Problems

The case states that an agreement was made in August 2021 to sell 3Fifteen to GPI in exchange for GPI stock and the assumption of certain liabilities of the sellers. On Dec. 21, 2021, the parties entered into an amendment to the original purchase agreement.

However, due to various issues with GPI’s performance and the failure of GPI  to obtain the necessary regulatory approvals to satisfy conditions to closing, the deal never closed.

By spring 2022, GPI again tried to close the acquisition of the sellers’ assets, in part because of pressure from their senior lender, Tropics LP.

The case states, “In order to induce the Sellers to enter into the Amended APA, GPI made a number of representations and promises – among them, a promise to grant Sellers a preference over any proceeds, whereby if GPI were subsequently sold, the aggregate ownership percentage held by the Sellers in GPI would have a value, at a minimum, of $129,750,000, and the Sellers would get the first $130MM of all distributions after paying the debt.”

Merida’s case alleges that Radway and the board of GPI knew that the stock of GPI was not and would not be worth anything close to the $129,750,000 promised the sellers.  Indeed, GPI was already in covenant default with Tropics.

Merida’s case goes on to note that the company provided misleading financials, which were audited and prepared by CohnReznik LLP for 2020. The case says they were subsequently restated in the summer of 2022 to be materially lower, by another audit firm that GPI engaged (Marcum LLP).

“Purchasers did not disclose changing the auditors to sellers, either,” the court documents claim.

The case outlined the following financial discrepancies:

  • Gross profit was restated to be $3.7 million lower, and the gross margin was reduced from 60% to 53% (which means that the initial gross margin numbers were inflated by approximately 11 %).
  • Income from operations was restated to be $2.5 million lower, reducing EBITA margin from 19% to 14% (which means that the initial numbers were inflated by 13.5%).
  • Net loss was restated from ($8.8 million) to ($10.8 million), an increase of 22%.
  • Total assets restated from $114 million to $96 million, reducing total asset base by 15%.
  •  Property, plant, and equipment assets were reduced from $16.4 million to $13.5 million.
  •  Intangible assets value was reduced from $8.5 million to just $20,000, a change of 98%.
  •  Biological assets value was reduced from $12.6 million to $10.8 million.

Merida claims they were told in writing that the $8 million investment was designated for the following uses:

  • To fund growth and acquisition of new stores
  • To avoid a reorganization tax penalty
  • To compensate Thomas Nafso and Ammar Kattoula (indirect shareholders of the sellers) for their consulting services related to these new stores.

The case states, “Had GPI or Donahue disclosed that they had no intent to direct the $8 million investment as promised, Merida would not have entered into the Merida Subscription Agreement and would not have made an $8 million investment.”

Merida also alleges that Tropics is working with Radway to secure the receivership. The case claims that “Tropics promised that, if Radway went along with Tropics’ directions and, in particular, consented to the appointment of the receiver, Tropics would take care of Radway ‘on the back end’ personally.”

In Closing

Skymint is still a viable property, albeit a compromised one. The investors are fighting over a company that has the potential to log more than $60 million in sales a year.

However, the allegations against the CEO and his poor track record of running the company call his leadership into question. No wonder the 3Fifteen company isn’t handing over those licenses, it all seems very messy even for the cannabis industry.

Merida complaint against GPI COMPLAINT FILED
2023-3-3 Verified Complaint(47186853_1) (1)

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

One comment

  • Charmie

    May 7, 2023 at 10:10 pm

    Howdy I know the attorneys or editors probably combed through your title, but I find the choice of the word “affairs,” in this title to be innacurate.

    Can a business owner have an “affair,” with his employees? Isn’t he abusing his power by definition?
    I’m asking because it’s coming out now that he actually preyed on young girls, many of them, and the term affairs doesn’t even touch on that power dynamic.

    I also write so I know those decision aren’t even yours, but maybe pass this comment along?
    Thanks for reading!


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