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This narrative, graciously republished with the authorization of Crain’s Detroit and meticulously crafted by the esteemed journalist, Dustin Walsh, elucidates a strategic maneuver that underscores the dynamic nature of the cannabis industry. Lume Cannabis Co. has articulated its intentions with precision and foresight to assume control of a prominent cannabis cultivation facility situated in the vicinity of Lansing, previously operated by its rival, Skymint.
The formalization of Lume Cannabis Co.’s intentions occurred on a notable Friday, marked by the execution of a letter of intent, thereby initiating the meticulous process to transition into the role of lessee for the expansive 56,000-square-foot cultivation facility located within Harvest Park, precisely at 10070 Harvest Park in Dimondale.
This significant development unfolds in the aftermath of Skymint’s decision to cease its operational engagements within this facility, orchestrated by the property’s owner, Innovative Industrial Properties—an influential entity within the realm of cannabis property development. The scheduled cessation by March 1 signifies a pivotal juncture in Skymint’s operational strategy as it emerges from a protracted period of receivership, during which it undertook a comprehensive restructuring initiative.
Historically, this facility represented Skymint’s sole cannabis cultivation center within the state. Moving forward, Skymint has outlined plans to source its cannabis products from alternative growers whilst maintaining the operation of its 22 retail outlets dispersed across the state.
In anticipation of finalizing a long-term leasing agreement with IIP, Lume will embark upon a rigorous due diligence process. The overarching objective is to commence occupancy of the facility within the ensuing 90 days, as outlined by Doug Hellyar, the President and COO of Lume, who leads one of the state’s preeminent cannabis cultivation and retail operations, distinguished by its extensive network of retail locations.
Concurrent with these developments, Lume diligently works towards securing a local license from the village of Dimondale, a prerequisite for assuming operational control of the facility, as articulated by Mr. Hellyar.
Looking forward, Lume has delineated an ambitious timeline for the inaugural harvest at the Harvest Park facility, scheduled for August. After this milestone, the harvested plants will undergo flash-freezing, followed by transportation to its processing facility located in Evart. Upon stabilizing operations, Lume envisages relocating its solventless extraction operations to the Dimondale facility, thereby centralizing its production activities.
In the grand scheme of Lume’s operational strategy, the Dimondale facility is poised to become the exclusive production site for its coveted live rosin product, known as Lume Gold Label. This high-potency concentrate, esteemed for its application in vaporizers and smokable cured forms, represents a critical component of Lume’s product portfolio. The expansion into the Dimondale facility is driven by a compelling need to satiate the burgeoning demand for the Gold Label product, which currently outstrips the production capacity afforded by Lume’s existing infrastructure, as elucidated by Mr. Hellyar.
Lume’s Strategic Expansion and Vision for National Leadership in Live Rosin Production
Mr. Hellyar’s visionary proclamation regarding the Dimondale facility forecasts its ascent as the foremost establishment dedicated to the production of live rosin, not only within the confines of the state but potentially transcending to national eminence. This lofty ambition not only underscores the strategic importance of the Dimondale operation within Lume’s overarching operational framework but also serves as a testament to the company’s commitment to pioneering excellence in cannabis cultivation on a grand scale.
In consonance with its steadfast dedication to harnessing cutting-edge technology and infrastructure to elevate its production capabilities, Lume stands poised to allocate a significant financial investment, amounting to millions of dollars, towards the implementation of a state-of-the-art lighting system at the Harvest Park facility. This strategic investment extends beyond mere illumination upgrades; it encompasses a comprehensive suite of enhancements meticulously designed to optimize operational efficiency and productivity within the facility’s precincts.
The strategic relocation of extraction operations to Dimondale is anticipated to yield substantial benefits for Lume’s overarching cultivation strategy. By liberating valuable space at its expansive Evart facility, spanning over 200,000 square feet, this operational pivot empowers Lume to bolster its cultivation endeavors significantly. The newfound space affords Lume the latitude to expand its cultivation operations, thus fortifying its capacity to meet the burgeoning demand for its premium cannabis products, thereby reinforcing its market dominance.
The Harvest Park facility, under Skymint’s stewardship, historically served as a significant source of gainful employment, boasting a workforce comprising 143 individuals. As Lume assumes the mantle of operational stewardship, there exists a palpable anticipation regarding the retention of a portion of this workforce to underpin the operational exigencies of the Lume growth operation. Nonetheless, the precise contours of this employment transition remain nebulous at present, as elucidated by Mr. Hellyar.
Concurrently, Skymint embarks upon a series of layoffs at the facility this week, marking a pivotal juncture in the company’s ongoing restructuring endeavors, indicative of the formidable challenges it confronts amidst an evolving industry landscape.
The narrative of Skymint’s tribulations is further compounded by its entanglement in receivership proceedings initiated in March of the preceding year, precipitated by a lawsuit instigated by its principal lender, Tropics LP, a Canadian entity. The lawsuit stemmed from Skymint’s outstanding debt obligations, aggregating $127 million. In a subsequent turn of events, Tropics, operating under the auspices of a newly established entity named Skymint Acquisition Co., orchestrated the successful acquisition of the assets of Green Peak Industries, operating under the Skymint brand, via a stalking horse bid valued at $109.4 million in October. It is noteworthy that Tropics operates as a subsidiary of Sunstream Bancorp., a joint venture in collaboration with SNDL Inc. (NASDAQ: SNDL), a publicly traded entity.
The acquisition orchestrated by Tropics includes not only Skymint’s cultivation assets but also 22 retail leases for dispensaries, which, according to a press release issued by the company, were reported in September to generate annualized sales of approximately $68 million.
In a parallel narrative strand, April bore witness to Skymint’s voluntary surrender of its lease on the erstwhile Summit Sports and Ice Complex near Lansing. Initially harboring aspirations to significantly augment its cannabis production capabilities through the acquisition of this facility, Skymint’s vision never materialized into reality. Consequently, the company opted to relinquish the 176,000-square-foot facility and the accompanying 21 acres back to the developers, Innovative Industrial Properties (IIP), a venerated name in the domain of cannabis property development, recognized as the nation’s preeminent developer of such properties.
Amidst this complex tapestry of events, Lume steadfastly steers its course towards expansion, with projections indicating a revenue generation surpassing the $200 million mark for the current fiscal year. This meteoric growth trajectory finds its underpinnings in Lume’s operation of a cultivation facility in Evart and its expansive network of 38 strategically positioned dispensaries across the state, emblematic of the company’s ascendant stature as a paramount entity in the Michigan cannabis market landscape.
