Exclusive Interview with Trulieve CEO Kim Rivers
COVID-19 was just beginning to spread across the United States when Trulieve (CSE: TRUL) (OTCQX: TCNNF) CEO Kim Rivers last spoke with New Cannabis Ventures in March. Months later, the cannabis industry and the rest of the world is still navigating the pandemic. Since the beginning of the year, Trulieve has launched edibles in Florida, opened new locations and hired more team members to help support its continuing growth.
New to the C-Suite and Board
Trulieve has appointed a new CFO and Chief of Staff this year. CFO Alex D’Amico is helping to build out and professionalize the company’s financial department as it prepares to file its S-1 and become an SEC-registered and SOX-compliant company, according to Rivers. She expects the company to achieve that goal by the end of this year or early next year.
Chief of Staff David Lummas comes to Trulieve with a background in operations and project management. His experience in change management will also be an asset as Trulieve works to become a true national player in cannabis, according to Rivers.
In addition to its new C-suite team members, Trulieve added two people to its board during its annual meeting this summer. Susan Thronson previously served as the Senior Vice President of Global Marketing for Marriott International and has served on the boards of companies like SONIC and Angie’s List. Thomas Millner is the former CEO of Cabela’s and he serves as the chair of the Best Buy audit committee.
Trulieve has continued to have strong operations in its home state of Florida with approximately 52 percent market share, according to Rivers, based on data from the Office of Medical Marijuana Use. The company’s Florida retail network has a total of 61 stores. It has 63 stores open across the company and aims to have 68 by the end of the year.
The company is also focusing on product innovation. Trulieve is the first, and thus far only, company to bring edibles to the Florida market. It has gummies, chocolate bars, cookies and brownies on its shelves. The company also recently launched its first CBN product.
While growing its footprint and product portfolio, Trulieve has not lost sight of the importance of connecting with patients and consumers. It continues to serve its customers through initiatives like the launch of a new website with a number of customer-facing features.
California, Connecticut and Massachusetts
Outside of Florida, Trulieve is making progress on its multi-state footprint in California, Connecticut and Massachusetts. The company’s assets in California are undergoing a rebrand to bring them under the Trulieve name. Its Connecticut assets have been completely integrated and are performing strongly. In Massachusetts, the company is working through the inspection process with regulators. Rivers expects the assets in that state to come online and contribute to top and bottom line revenue by early next year.
In September, Trulieve entered the Pennsylvania market through the pending acquisition of PurePenn and Solevo. PurePenn is a grow/processor with a cultivation capacity of 35,000 square feet. A currently underway build-out will take that capacity up to 90,000 square feet. The company also has an adjacent parcel of land available for expansion. PurePenn currently wholesales to 100 percent of the state’s dispensaries, according to Rivers.
Solevo has three dispensaries, primarily located in the Pittsburgh region. This company aligned with Trulieve’s customer-centric focus. Both transactions are expected to close by the end of this year.
Trulieve is taking a hub-based approach to expansion. Pennsylvania helps to grow its northeastern hub, which also includes Connecticut and Massachusetts. Pennsylvania has a robust medical market and the potential to introduce adult-use in the near future.
The company’s current focus for expansion is on its northeastern and southeastern hubs. It will consider both license applications and potential M&A to maximize its potential in its existing markets and to explore the possibility of additional markets. Pennsylvania and surrounding markets are of interest for its northeastern strategy. Florida anchors its southeastern strategy, but more markets in that hub will begin to open up and offer opportunities for growth. No matter how the company decides to grow, via license application or M&A, the opportunities have to be a strategic fit, according to Rivers.
In March, changes to manage the challenges presented by the pandemic were well underway at Trulieve. Months later, the company is seeing some interesting shifts in buying patterns. In April, approximately 80 percent of its orders were for pick-up or delivery. Now, that trend has shifted to a little more than half of orders being filled via pick-up or delivery, but it has not dropped down to the 20 percent that it was prior to COVID-19, according to Rivers. The technology solutions the company implemented to facilitate rapid pick-up and delivery are still supporting sustained adoption of that channel.
Trulieve has also continued to focus on its team throughout the pandemic. It has increased health coverage for its employees and maintained all necessary safety precautions. The company is also actively growing its team, adding almost 1,000 new members to its workforce since January. As the team grows, Trulieve works to ensure its training protocols keep up.
The company executed two public debt offerings in 2019 and an equity deal this year. Rivers is pleased with the response to the equity offering and sees the company in a great position following the close of that raise.
Trulieve strives to be a financially disciplined company, keeping dollars accountable and available to fund growth. Rivers credits the company’s prudent approach to capital with the ability to pursue the Pennsylvania acquisitions with cash on hand. Going forward, she plans to keep the company positioned to take advantage of the right growth opportunities.
Looking to the future, the Trulieve team is keeping a close eye on the advancement of the SAFE Banking Act. Rivers sees Trulieve as one of the most well-positioned MSOs to take advantage of that opportunity should the legislation pass. The company has strong financials, and it can meet traditional bank covenants. Trulieve could, for example, refinance its outstanding debt with more favorable terms if traditional financial institutions were to enter the space.
As 2020 reached its midpoint, it became clear that the company needed to increase its guidance. Trulieve’s updated guidance puts 2020 revenue expectations at $465 to $485 million. That growth is being fueled by the company’s increasing capacity in Florida, as well as the increasing number of patients entering the market. At the beginning of the year, approximately 2,000 patients were entering the Florida program per week. Over the past six weeks, that number has doubled to 4,000 patients per week, according to Rivers.
Trulieve is maintaining and growing its market share in Florida. And in 2021, it will have a number of additional markets contributing to its top and bottom-line growth.
A Data-Driven Company
Trulieve is a data-driven company, and its team regularly tracks important KPIs, according to Rivers. Important metrics include customer retention rate, patient visits per month, average basket size, annual patient spend, same-store sales, average dollars per square foot and average revenue per store.
These metrics are important indicators of performance and the company’s progress. For example, annual average patient spend increased from $1,100 in 2018 to $3,900 in 2019. Same-store sales from Q2 2019 to Q2 2020 increased 30 percent. In 2019, the company had 44 stores and average dollars per square foot of $2,300.
Tracking these kinds of metrics helps the company to spot trends and prepare for the constant change that shapes the present and future of the cannabis industry.
To learn more, visit the Trulieve website. Listen to the entire interview: