Trulieve Hashish, the predominant participant in Florida’s medical marijuana trade, is warding off assaults raised in a current damaging analysis report as rivals attempt to minimize into the corporate’s practically 50% market share within the state.
Grizzly Analysis promotes itself as doing in-depth analysis of publicly held firms, however its web site doesn’t checklist a headquarters handle or the names of its principals. Grizzly alleged in a short-seller report in mid-December that Trulieve:
- Produces low-quality marijuana based mostly on drone footage.
- “Portrayed profitability” by means of suspicious accounting.
- Has “in depth ties” with an ongoing FBI investigation of public corruption in north Florida.
A number of analysts and trade officers gave little credence to the Grizzly report, which benefited quick sellers when Trulieve shares declined sharply after the report circulated on Dec. 17.
Quick sellers are betting costs will go down. They borrow shares and promote them on the present market value after which earn a living after they repurchase these shares at a decrease value sooner or later and return these borrowed shares to the lender.
“General we take into account the Grizzly quick report as largely rehashing previous data and deceptive much less subtle buyers over the corporate’s truly very sturdy fundamentals,” analyst Rob Fagan of the funding banking agency Stifel GMP wrote shortly after the Grizzly report was printed.
Fagan known as Grizzly’s tackle Trulieve’s accounting a “rookie evaluation.”
The report already has spawned lawsuits towards Tallahassee-based Trulieve by regulation companies making an attempt to construct class motion claims.
“We see this as an opportunistic and cynical try to capitalize on Trulieve’s sturdy monetary outcomes and operational success by making unfaithful statements for his or her private acquire,” Trulieve mentioned within the investor Q&A.
Trulieve sued Grizzly Analysis in Florida state courtroom on Jan. 10, alleging defamation for publicly disseminating false and libelous statements to control the corporate’s inventory value.
Grizzly didn’t instantly reply to Marijuana Enterprise Each day‘s request for a response to Trulieve’s allegations.
Results on Trulieve?
Damaging analysis stories can have lingering impacts on investor and buyer belief, affecting inventory costs and gross sales.
Trulieve shares, traded as TRUL on the Canadian Securities Change and as TCNNF on the U.S. over-the-counter markets, declined by greater than 20% from $15.69 to $12.06 in intraday buying and selling on Dec. 17, however they largely recovered by Dec. 31.
Costs just lately have slumped since.
In an interview with MJBizDaily, Trulieve CEO Kim Rivers insisted the corporate hasn’t skilled a fallout on its gross sales or from buyers.
Rivers famous that Trulieve just lately opened its 43rd dispensary in Florida and continues to command a dominant share within the state – one of many nation’s most profitable MMJ markets.
The corporate’s market share of smokable flower between mid-December and Jan. 2 has declined barely, in response to the state’s weekly stories, but it surely’s unclear whether or not that’s because of the hostile Grizzly report.
Quite a lot of multistate operators have aggressively expanded operations since Florida lifted a ban on smokable marijuana final March.
“Actually everybody (within the trade) learn (the report),” mentioned Jeffrey Sharkey, president of the Medical Marijuana Enterprise Affiliation of Florida.
However he doesn’t consider it’s one thing shoppers pays a lot consideration to total.
“One of many questions is whether or not one of many rivals is making an attempt to undermine them (Trulieve) by mobilizing Grizzly,” Sharkey mentioned.
“I don’t hear that’s taking place … But it surely’s clear Trulieve is out entrance and the hounds are barking. Everyone seems to be making an attempt to catch up.”
Marijuana high quality and FBI claims
Probably the most dramatic particulars within the Grizzly report is a declare that drone flyovers confirmed that Trulieve produces low-quality hashish.
“I don’t know the way a drone might inform whether or not vegetation are tended effectively,” Sharkey mentioned.
Trulieve mentioned in its investor Q&A that the vegetation within the drone footage are produced for oil extraction, and that course of removes impurities.
All smokable flower merchandise, Trulieve mentioned, are harvested in state-of-the-art indoor cultivation amenities.
Stifel GMP’s Fagan characterised the drone declare by Grizzly as “irrelevant” for the explanations famous by Trulieve.
The allegation in regards to the FBI investigation stems from the truth that Rivers’ husband, John Thomas “J.T.” Burnette, an actual property developer, faces trial in April on bribery expenses stemming from a federal investigation of public corruption that began in 2015.
Trulieve, since going public in 2018, has disclosed in Canadian securities filings that Rivers was one in every of many people subpoenaed in 2017 for data associated to her involvement with the Neighborhood Redevelopment Company in Tallahassee in addition to political contributions she made by means of an related enterprise. No data requested associated to Trulieve, in response to the disclosure.
Trulieve’s board, in response to the disclosure, retained counsel to research the matter and concluded that Rivers wasn’t a goal of the FBI investigation and that the potential legal responsibility wasn’t nice sufficient to stop her from persevering with as CEO.
However there may be at the least one lingering optic of concern: Trulieve has a contract with a building agency that features Burnette as minority proprietor. The development agency has been concerned in Trulieve’s cultivation tasks.
Rivers emphasised to MJBizDaily that Trulieve has been “totally clear and had full disclosure” on the matter. She mentioned there’s no present dialog to vary insurance policies.
Fagan wrote that whereas he believes Trulieve has adopted the authorized disclosure necessities, the transactions involving Rivers’ husband “are admittedly not our favourite firm attribute.”
Rivers declined to say what sort of private toll this has taken, as a substitute directing her feedback to her dedication to see the controversy by means of as Trulieve’s CEO.
“I really feel extraordinarily passionate and excited to rise up and do what I do on daily basis,” Rivers mentioned. “I believe our numbers and outcomes converse for themselves.
“We proceed to sit up for 2020.”
Then, in reference to the short-seller report, she added: “There’s not even an creator on the report. We expect it’s fairly obvious on its face what that is and what the intent was, and we’re actually simply trying ahead to transferring previous it.”
Jeff Smith could be reached at [email protected]
Nick Thomas could be reached at [email protected]
For evaluation and in-depth seems to be on the funding developments and offers driving the hashish trade ahead, join for our premium subscription service, Investor Intelligence.