Investors sue Florida’s biggest marijuana company claiming stock fraud
Florida’s largest medical marijuana company is being sued by investors, who claim the company overstated corporate profits and misled them about the company’s plant-growing practices.
The 20-page securities class-action complaint filed in the Eastern District of New York on Monday comes out of a report by Grizzly Research, which detailed various issues with Quincy-based Trulieve, which trades on the Canadian Securities Exchange. Grizzly Research publishes a blog about publicly traded companies.
The report, published Dec. 17, claims that after researching Trulieve’s manufacturing facilities using drones, it was found that the “vast majority” of the company’s cultivation facilities were “low-quality hoop houses” that were “prone to infestations and weather damage.” The report also points out Trulieve CEO Kim Rivers’ ties to a federal corruption probe in North Florida, and the company’s failure to disclose details to investors.
After the report came out, Trulieve shares fell $1.51 per share or more than 12.6%, causing investors to lose money, attorney Phillip Kim wrote in the complaint.
Trulieve is the largest of Florida’s 22 licensed medical marijuana operators. According to the Florida Department of Health, the company has 42 locations statewide.
In a statement, Trulieve said the Grizzly report contains “several false, slanderous and misleading statements about the company.”
An analyst report circulated in December called the report “absurd” and said Trulieve doesn’t believe the conclusions presented in the Grizzly report were “grounded in fact.” The analyst claims the stock reaction was exacerbated by low end-of-year trading volume. It also says Trulieve has never hidden that it grows product outdoors, and that it even gives tours of these facilities to investors.
The company plans taking legal recourse against the website.
Trulieve CEO Rivers called the report baseless and said Grizzly Reports’ sole interest is “in profiting from a decline in the price of the company’s shares.”
“I have full confidence in our management team and their abilities to continue to serve our customers without being distracted by these baseless allegations,” she said. “We stand behind the quality of our products and have a long-standing no-questions-asked return policy.”
She also emphasized the recent news that Trulieve set a record for flower sales in Florida in early December, capturing over 51% of the market..
Trulieve declined to comment specifically on the class-action suit.
Last month, Trulieve was sued by a Tennessee man who accused the company of illegally sending unsolicited text messages to his cellphone.
This story was originally published January 3, 2020 at 3:11 PM.