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The Sunshine Economy

Trulieve In The Sunshine Economy: Medical Marijuana And Money

Jose Iglesias
Miami Herald
Trulieve opened Miami's first retail medical marijuana dispensary near Miami International Airport in 2017.

Kim Rivers' dad was a Jacksonville Sheriff's deputy while she was growing up. For a time, he was working with an undercover narcotics unit.

Today, Rivers leads the largest seller of legal marijuana in Florida, as the CEO of Trulieve.

The company was the first to have medical marijuana dispensaries in the state, and now has the most. Revenues grew 400 percent last year to more than $100 million and sales are expected to more than double this year. It has bought dispensaries in California and Massachusetts, and announced the purchase of a Connecticut dispensary this month.

More than 200,000 Floridians have received the green light from the state to use medical marijuana, and more than 2,200 doctors have the clearance to prescribe the drug to patients. The numbers are growing fast, especially since Trulieve and the other dispensaries began selling smokable medical marijuana in mid-March.

Growing Demand

"The state of medical marijuana in Florida is very robust and it's growing all the time," says Rivers. 

Since smokable marijuana was made legal in mid-March, Rivers has seen the pace of new patients pick up. About 10,000 people per month qualify with the state for their active ID card, allowing a qualified doctor to prescribe them marijuana. "We think that there was a stable of patients who simply didn't see the product that they were looking for on the shelves yet in Florida and waited until that law changed to enter the program."

Smokable prescription marijuana now is responsible for 30 percent of the company's product mix -- a remarkable jump in just two months. Rivers thinks it could wind up being around 45 percent of Trulieve's sales.

Rivers would not confirm that the new smokable marijuana sales have changed Trulieve's financial forecasts. "Stay tuned," she says. In June, she expects to release new financial predictions for this year and the following two years.

But as new patients get qualified, she also cautions that another key to growth is having more doctors get state approval to write prescriptions for medical marijuana. "The number of physicians in Florida hasn't kept up with the patient demand and we're starting to see a lag and wait time."

A year ago there was one doctor for every 65 patients, she says. This month, it's one doctor for every 97 qualified patients.

Credit courtesy: Trulieve
Trulieve CEO Kim Rivers. The company is based in Quincy, Florida, and its stock is publicly traded in Canada.

Store Growth

Trulieve opened the state's first dispensary in 2016 in Tallahassee. Florida lawmakers had okayed a very limited low-THC strain of marijuana to be sold to certain patients. It wouldn't be until the fall of 2016 when Florida voters would okay a constitutional amendment expanding the use of medical marijuana.

Trulieve has expanded quickly to 27 stores, including eight in South Florida. It could have up to 49 stores by 2020, which is more than the state-mandated limit. The company was in a court fight with the state over how many dispensaries it could have, and whether the state limit was constitutional. A legal settlement would not count 14 of Trulieve's stores against the state limit, currently set at 35. This allows the company to have up to 49 outlets before the state limit is lifted next spring. Trulieve’s competitors, Curaleaf and Surterra, would like to take advantage of the proposed settlement to open more stores.

Rivers is cautious about extending the same terms to her competitors. "I think as long as the same standard is applied and the same analysis as provided," she says. "What I don't think is fair would be if a different standard was applied."

The industry may not have to wait long to see the state cap on dispensaries increase. If more than 300,000 Floridians qualify for their medical marijuana card before April 2020, the state limit on the number of dispensaries a company can own will increase by five. "Florida is a very large market and it's growing faster than any other market in the country. And there's room for a number of good players."

Marijuana Money

Trulieve may be selling millions of dollars of marijuana legally each month, but finding a bank remains difficult. Most patients pay in cash and the company has a regular schedule of cash pickups by armored cars. Rivers says Trulieve uses a state chartered bank, but it cannot get a traditional business loan. "We are limited in the type of financial products that we're able to take advantage of in our business."

That inability to have a full financial relationship with the American banking industry is why, Rivers thinks, many U.S. marijuana firms publicly list their stocks in Canada. Trulieve stock trades on the Canadian Securities Exchange, along with several other industry players. The company also has borrowed money from insiders. Some of those loans carry a 12 percent interest rate -- high compared to normal market rates, but "very low" for cannabis companies, according to Rivers.

"We would love to have access to traditional financing at competitive rates," says Rivers. "If we were in any other business aside from cannabis, we would have the ability to have a much more efficient utilization of capital."

No Hemp, Edibles

The future of Florida's cannabis industry is growing now in small plots of land, including one in South Miami-Dade County. Last year, the federal government made industrial hemp legal for the first time since 1937 and gave states the freedom to create hemp programs. A new proposed state law take would effect July first begins the process of creating the state’s framework for allowing hemp to be grown at an industrial scale.

It’s a business Trulieve is not interested in. Rivers calls it "definitely a win" for the state, but hemp is not the core of her business. The difference between what Trulieve grows and hemp is the amount of THC in the harvested plant -- too much THC and it is marijuana, too little and it's hemp.

Trulieve is anxious to start settling edible medical marijuana. In April, the state's agriculture department finalized rules for edibles. A second regulator, the Department of Health, must also okay a set of rules before companies can file to get individual products approved.

"We are so excited about edibles," says Rivers.

The company has built an industrial kitchen at its facility in the Panhandle in anticipation of edible medical marijuana. It has partnered with edible marijuana product manufacturers in Colorado and California. And it has drafted the paperwork for its proposed products. "We are sitting on go," she says.

Just how big the edible opportunity is remains to be seen, but Rivers thinks it could be responsible for 20 percent of its business.

"It's hard to pass up the chocolate bar, at least for me."

Tom Hudson is WLRN's Senior Economics Editor and Special Correspondent.
Daniel Rivero is part of WLRN's new investigative reporting team. Before joining WLRN, he was an investigative reporter and producer on the television series "The Naked Truth," and a digital reporter for Fusion. He can be reached at drivero@wlrnnews.org