Another Michigan cannabis company to exit receivership under new owner

Another Michigan cannabis company to exit receivership under new owner

This story was republished with permission from Crain’s Detroit and written by Dustin Walsh.

Another embattled Michigan cannabis company is likely going to end up in the hands of its lenders.

Jackson-based Comco LLC, doing business as Comco Wellness, is being put on the auction block by a court-ordered receiver after nine months in Jackson County Circuit Court.

Most of the cannabis company’s assets are set to be sold to a stalking horse bidder, a new entity called Bag Boys LLC.

The stalking horse bidder is an affiliate of Farm Marcellus, a marijuana grower 30 miles southwest of Kalamazoo with four Class C grow licenses.

Farm Marcellus has been funding Comco in receivership since August last year and is offering up at least $1.9 million to satiate creditors and take ownership of the company.

The stalking horse bid breaks down with a $1.031 million cash payment up front and an additional $862,000 paid to creditors over 12 months, according to court documents.

Other considerations are expected to be included in the purchase price, but are not currently known, said David Dragich, attorney for the receiver in the case, Gene Kohut.

On top of the cash consideration, Farm Marcellus will forgive the amount its loaned Comco during receivership, which is expected to be between $800,000 to $900,000, according to the court records.

Under the deal, Bag Boys would take ownership of Comco’s grow operation at 12584 Wooden Road in Jonesville, which has four Class C licenses and a processor license. Comco’s grow operation at 8891 Pulaski Road in Concord is not part of the stalking horse bid. That property is expected to be sold separately, Dragich said.

Competing bids will be taken for Comco until Feb. 16.

Comco entered receivership in April last year after Puerto Rico-based lender Anewsha Holding Group LLC and New York marijuana payment software company Fusion LLC, doing business as LeafLink, filed a complaint in Jackson County.

Anewsha alleges Comco and its real estate arm Byrson Enterprises, both owned by attorney Peter Behncke, failed to pay back loans and invoices of more than $1.3 million.

Comco and Bryson initially borrowed $1.35 million from Anewsha in 2019. The loan carried a 11.89% interest rate and was due on Oct. 31, 2022.

However, by the fall of 2022, Comco was in default on the loan and owed back rent of at least $25,000 on its Jonesville property.

LeafLink alleges in the lawsuit that Comco has roughly $5.6 million in unpaid invoices since Feb. 2022.

It’s expected the payments from Bag Boys and/or Farm Marcellus will be paid to Anewsha as it’s a secured creditor versus the service provider, LeafLink, Dragich said.

The Comco auction is the second major cannabis auction in recent months.

In August, Skymint entered the auction block owing more than $135 million to its primary lender, Canada-based Tropics LLC.

Tropics was the stalking horse bidder, which turned up no other bidders, for Skymint with an offer of $109.4 million.

That deal is not yet closed as certain legal issues continue to play out in Ingham County Circuit Court.

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