Issue 48: Trulieve Leaves
One of the world's largest (and most controversial) cannabis companies announces they're fleeing Massachusetts.
You probably already knew what this week’s newsletter was going to be about, so let’s get right into it.
Trulieve Retreats From Massachusetts
In news that can somehow be categorized as both surprising AND predictable, Trulieve announced yesterday that they are exiting the Massachusetts market. The publicly traded company said they will be closing down their cultivation/processing center in Holyoke and their three dispensaries in the state in an attempt to “continue optimization efforts.” This news came just under two years after the company opened its first retail location in Massachusetts, capping off a brief but tumultuous time in the state for the Florida-based cannabis business that is among the largest in the world.
The brief press release made no mention of the fate of the 100+ Trulieve employees in Massachusetts, but reporting from Jeremy Berke suggests that workers will continue to receive payments and benefits through the end of July.
While this retreat didn’t come as a total surprise, the sudden and complete withdrawal of their presence in the Bay State — particularly with no potential buyers of their assets lined up — came as a bit of a shock.
It’s also a bit shocking that Trulieve plans to bail on Massachusetts to cut costs while simultaneously spending over $38.4 million on a campaign to legalize marijuana for recreational use in Florida.
Trulieve has placed a big bet that passing a company-friendly legalization initiative in Florida will allow them to become the premier cannabis businesses in one of the country’s largest potential markets — a risky endeavor should the ballot initiative fail to reach the 60 percent threshold that initiatives need in Florida to pass.
The company announced yesterday that the Florida initiative has enough signatures to qualify for the 2024 ballot, but it must first clear a legal challenge implemented by the state’s Attorney General.
“We Were Maxed Out”
In a twitter space conversation last night, Trulieve CEO Kim Rivers suggested that the state’s limits on the amount of cultivation space and retail licenses were ultimately preventing the company from implementing their preferred business model.
“We were maxed out in Massachusetts in terms — or close to it — in terms of the amount of cultivation square footage we had, as well as the number of stores,” Rivers said.
Limits on the amount of cultivation space and retail licenses one company can own were well established in Massachusetts before Trulieve made the decision to open here, but it seems like the company expected to make up for this lack of a bigger physical footprint by being a large player in the wholesale space.
While it’s impossible to know for sure how much the controversy surrounding the death of Lorna McMurrey played in the company’s failures in Massachusetts, it’s fair to say that the fatal incident overshadowed the company’s efforts to grab a foothold in the state’s highly competitive marketplace.
The Fate of Their Facilities
It’s important to note that Trulieve doesn’t actually own their Holyoke facility; the company completed a $43.5 million sale/leaseback deal with Innovative Industrial Properties back in 2019.
Trulieve is currently licensed to have 70,001 - 80,000 square feet of cultivation canopy in Holyoke.The company’s lease with IIPR wasn’t due to expire until 2029.
At the time the deal was announced, IIPR’s President and Chief Executive Officer Paul Smithers said:
“We are thrilled to add a tenant with the strength of credit and of the caliber of Trulieve to our tenant roster. Through its dedication to providing Florida patients with the highest quality products in a welcoming, compassionate environment, Trulieve has become the preeminent operator in Florida, and we look forward to supporting Trulieve as a long-term real estate capital partner as it continues to expand its operations in Massachusetts.”
A request for comment from IIPR went unanswered.
It’s remains to be seen what will happen to the existing retail licenses that the company has in Worcester, Framingham, and Northampton. Considering all three cities are already highly competitive cannabis markets — and that we’re in an environment where some retail operators are attempting to give away their stores for free — it’s hard to believe there’s going to be many potential buyers for these licenses.
My analysis of Northampton’s local cannabis tax revenues back in December suggested that there were little profits to be made in that particular city, and anecdotal reports suggest that Trulieve’s Worcester and Framingham locations haven’t fared much better in terms of sales.
Commission Investigation Continues
While there’s still a lot of questions to be answered, there’s one thing that has been confirmed: The state’s investigation into Trulieve is still ongoing. In response to questions about the probe, a Commission spokesperson released the following statement last night:
The Cannabis Control Commission investigation regarding Trulieve in Holyoke is pending with staff work still ongoing. The agency continues to collaborate with the Massachusetts Department of Public Health as well as local and federal agencies to gather evidence.
According to reporting from Dan Adams back in October, the Commission’s investigation into the company started sometime in the fall of 2021, months before the fatal incident involving Lorna McMurrey occurred.
The probe has now continued for at least 16 months.
The results of the investigation are still important. Even if Trulieve successfully exits the state before the open investigation into the company concludes, regulators in other states are probably going to want to know what the CCC has learned. It’s also possible that Trulieve could still receive fines or other punishments if allegations of wrongdoing are proven by the state while their licenses are still active.
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New England
MAINE’S FAST-CHANGING CANNABIS INDUSTRY REQUIRES BEING FLEET OF FEET (Alexis Wells | Maine Biz Journal)
Upward Organics grows cannabis outdoors which is believed to be the most sustainable, ethical and economical method for reducing the environmental burden of cannabis production.
They are one of three cultivators in the country that are part of the 1% for the Planet.
“Our mission is to produce the highest quality cannabis possible with the lowest environmental impact,” says Burdick.
ANALYSIS: See? The industry isn’t all gloom and doom.
Rest of U.S / National
N.J.’S LARGEST WEED COMPANY USED POLITICAL CONNECTIONS FOR A FAST FIX (Jelani Gibson | NJ.com)
The about-face was made after the cannabis commission received legal counsel from state Attorney General Matthew Platkin’s office, according to multiple sources familiar with the decision who requested anonymity because they didn’t have permission to speak about it. The commission took a recess in May, but will reconvene on Thursday for its next regular monthly meeting. Curaleaf is not listed on the agenda but other annual license renewals are on deck for approval.
ANALYSIS: It seemed obvious that the Cannabis Regulatory Commission had gotten some sort of feedback that caused their sudden change of heart regarding the vote to deny Curaleaf’s license renewal, and now we have some insight on how that happened. It’s hard to believe that a company that doesn’t have the resources that Curaleaf has would have received such a speedy reversal.
CANNABIS MSOS SET TO ENTER NY ADULT-USE MARKET AFTER POLICY CHANGE (Chris Casacchia | MJBizDaily)
The proposals, which OCM is expected to approve following a public comment period, effectively eliminate a three-year waiting period for the state’s 10 vertically integrated medical marijuana providers, or registered organizations (ROs), to enter the recreational market.
Regulators adopted the waiting period to provide a first-to-market advantage for social equity retailers and smaller suppliers, but they shifted gears in an effort to expand retail channels and accelerate business.
MSOs have welcomed the change, but smaller operators feel snubbed.
ANALYSIS: I feel like the more I read about New York’s market, the less I understand. This makes me a bit hesitant to have bold opinions about what’s going on there. That being said, it appears that the state is abandoning one of the core principles of its social equity initiatives (preventing MSOs from entering the market for three years) so that it can rescue its underfunded social equity fund.
THE STATE AGENCY THAT OVERSEES CANNABIS HAD THE TOOLS TO REGULATE LA MOTA, BUT RECORDS SHOW IT RARELY DID (Sophie Peel | Wilmette Weekly)
Long before they placed Oregon Secretary of State Shemia Fagan on their payroll, Mitchell and Cazares amassed what the state agency that regulates cannabis termed a “substantial compliance history”—another way of saying regulators suspected they weren’t consistently following the rules. As WW has previously documented, the Oregon Liquor and Cannabis Commission appears to have been unwilling to clamp down on a chain that allegedly stiffed small vendors as it opened more than 30 dispensaries across the state and exhibited a “flagrant disregard” for the law, according to a letter the industry’s guild wrote this month to lawmakers.
ANALYSIS: I’ve never met Sophie, but I’m going to have to ask her to slow down a bit. With her relentless reporting on the OLCC, she’s making everyone in the cannabis media space — myself included — look lazy in comparison, and cannabis isn’t even her only beat. Perhaps it shouldn’t be a surprise that some of the best cannabis journalism in the country is happening at a local, independently-owned publication that values original reporting.
International
🇨🇦 CANNABIS PRICE 'RACE TO THE BOTTOM' HURTS MARKET'S FUTURE: OCS CEO (CTV News)
"Once you condition consumers to certain prices, it may take a generation to change perceptions and price tolerances," David Lobo, Ontario Cannabis Store president and chief executive, said in a speech at the Lift cannabis conference in Toronto on Thursday.
"In an economy where inflation has impacted every other consumer good, we can't keep pushing lower."
ANALYSIS: This syncs up with what I’ve heard from operators in the states as well. Once you lower prices, it becomes very difficult to raise them back up. Consumers will begrudgingly accept price increases for staples like eggs and other super market goods, but cannabis is a whole different ball game.
🇹🇭 WEED NETWORK FEARS LAW CHANGE (Bangkok Post)
Seangpirun Wongtawan, the owner of a cannabis shop in Khon Kaen, told the reporters that she was worried about vague legal regulations on cannabis, as they made it difficult for owners to keep up with and adhere to, particularly concerning plant registration.
ANALYSIS: Recent election results have disrupted the development of the cannabis industry in Thailand, but even without having an understanding of the nuances of the country’s political situation, I have a feeling they are going to have difficulty putting the cannabis-infused toothpaste back into the tube, so to speak.
Welcome Distraction
I didn’t grow up a wrestling fan, but for one reason or another, I’ve gained a better appreciation for the spectacle as of late. Last night I checked out Wrestling Open at Worcester’s White Eagle Polish Club, and I must say: It was a really good time!
Here’s a brief clip of the Polish Eagle winning a bout with a fall time of 4 minutes, 20 seconds (nice.)
If you’re in the area, check it out sometime, you’ll be hard pressed to find a better way to spend a Thursday Night.
Cat of the Week
This one. Happy Pride Month everyone!
Special Bulletins
On this week’s episode of Blunt Banter, Ravon and I discuss MSOs losing money, NFL running back smoking weed, Nikki Haley’s cannabis comments, and more! Check it out on Youtube, Spotify, or Google Podcasts.
If you’re in the New England area, be sure to check out the Parabola Center’s Federal Cannabis Policy Crash Course on June 10th at Boston Public Library! Burn After Reading readers can use the code PARTNER50 to get a $5 ticket.
