Power Players

Power Players: Trulieve CEO Kim Rivers

avatar Alex Halperin / Apr 13, 2020

Since the coronavirus hit, several multi-state operators (MSO) have been scrambling for cash. But Trulieve, which has a dominant position in Florida’s MED-only market, just posted a profitable quarter.

In this week’s Power Players interview, Trulieve CEO Kim Rivers discusses everything from the Florida market to how she expects the coronavirus to upend the industry.  

This interview has been edited for length and clarity.

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“We Decided Not to Wait”

WeedWeek:

You posted some big numbers this week, which are all the more striking, because so few public companies are profitable. What’s your secret?

Kim Rivers:

I don’t know that it’s so much of a secret. Trulieve was founded on principles of financial discipline, and with the customer-first mentality. And we’ve really just stuck to the game plan from the beginning. First and foremost, we want to build a company that’s sustainable, and that has longterm value. I think it’s just been that focus on fundamentals, even though that may not be the trend of the moment.

WW:

You hold the most market share in Florida, which is a big market that isn’t necessarily on everybody’s radar.What does the Florida market looks like?

KR:

Florida is one of the fastest growing medical markets in the country with just over 300,000 patients, and we are the dominant player in Florida. On a consistent basis, we serve over 50% of the market. We have 45 dispensaries total, with 43 of those in Florida. Our patients are very loyal, and have a high level of repeat business. As we say, they’re our Trulievers. The state adds approximately 2,250 patients per week.

WW:

I’m not sure there’s any other company that could claim such a dominant market position in any other state. Why is that possible in Florida?

KR:

I think one of our strengths is our ability to act decisively. Early on, we decided not to wait for the market to come to us, but to be an active participant in helping build it. We launched and began building when the market in Florida was still CBD only. And, of course, as the market evolved, we’re very active in ensuring that more conditions [qualified patients for MED]. We helped ensure that physicians understood what an opportunity this was for their practices. 

Of course, we were also doing our part in terms of having locations that were conveniently located, along with listening to our patients with respect to the types of products and the types of services that they wanted.

WW:

How many other companies are running dispensaries in Florida?

KR:

Right now, I believe that there are, I want to say, 234 dispensaries total in the state of Florida. I think that there’s 13 or 14 companies with a dispensary. All of them are vertically integrated. Florida requires every company to be vertically integrated, meaning that we are required to cultivate, manufacture, and distribute 100% of the products on our shelves.

Florida: “A Good Measuring Stick”

WW:

Florida is a diverse state, racially, age-wise, etc. Who are most of your customers?

KR:

That’s actually one of the things that really attracted us to the state. One of the business theses around Trulieve, was whether or not a cannabis company could really penetrate a market, and achieve scale, and brand penetration. 

Florida is a large state geographically, and the third most populous state in the country. We have massive differences, culturally and socio-economically, from one part of the state to the other. Miami is a very different demographic than Orlando or Tampa, which was very different from Tallahassee, or some of the other more rural parts of the state. A lot of franchise concepts, particularly in the restaurant space, come to Florida to test, their brands to see if they have a concept that will resonate across such a diverse population.

We kind of knew that if we could come up with a concept, and appropriately execute it in Florida, that that was a good measuring stick with respect to success in other parts of the country. 

WW:

Who are your customers?

KR:

Our average customer age is 50 years old, which makes sense, given the state demographics. We have 10 stated medical conditions in Florida that are qualifying conditions, along with a like, kind or class condition, which gives physicians the ability to analogize other conditions to a stated condition. One of the conditions that is authorized as PTSD. We do have a very large veteran population that are patients.

WW:

More about Florida: There was a push for REC to be on the ballot this year, and it looks like that’s not going to happen. There are also quite a few court cases litigating the market. What are the key issues in the state now?

KR:

We are hopeful that there will be language on the ballot in 2022. There continues to be controversy, and a pending court case, around signatures and how they are counted, not just for the cannabis-ballot filed initiative, but for any citizen-led ballot initiative in Florida. We’re hopeful that the signatures that were gathered for the ballot initiative in 2020, will be able to be counted towards an initiative for 2022. I think that’s got a fairly high probability of success. 

The other most reported on litigation that’s going on in Florida, is a case that was brought by Joe Redner [a well-known Tampa strip club owner and MED patient] challenging the nature of vertical integration. That’s pending state supreme court review. 

The courts are closed right now. So I’m not sure on the timing. We’re fairly agnostic with respect to the case. The argument is that the state should allow a horizontal structure, meaning that a company can enter the market, and one of the three areas, cultivation, manufacturing, or retail. 

With respect to Trulieve, I don’t expect that our ability to continue as a vertically integrated company would be in question. I think it’s just about whether a new entrant to the market would be forced into a vertical, or if they would be able to enter in a more segmented fashion.

WW:

And you’re agnostic?

KR:

Yeah. I’m an entrepreneur at heart. Having additional access for small businesses is a positive from a policy perspective. From our perspective, having the ability to do business with some smaller companies that are in specific niches of the market is a win-win. We would love to do business with some craft growers. I would love to be able to do business with some folks to bring specific products to market, that maybe it doesn’t make sense for us to have the necessary equipment or expertise in house.

Certainly, from a distribution perspective, for us to have the ability to get Trulieve products on other shelves, would be a positive as well. Of course, if things were to stay the way that they are, then we understand that too.

Trulieve isn’t necessarily for all markets

WW:

You’re used to being profitable. When you look at expanding to other states, where do you think, want to do business and where do you think, “No, thank you.”?

KR:

There’s pretty specific analysis that we do on a state by state, and opportunity by opportunity basis. It’s important that we can achieve some level of scale, and market penetration. Also, we look at markets that we feel want to do business with companies like ours. There’s some markets out there that maybe don’t. And that’s okay. I think it’s important to understand where we think our advantages are, and not trying to force ourselves where maybe they’re not.

WW:

You see your advantages as ability to reach scale, and operate at scale?

KR:

Yeah. We are very strong on the branded retail front, and we are excited about being able to come to Massachusetts and launch [a different business] wholesale, because we think that that will be a good revenue segment for us. As of right now, that’s unproven, but we have high level of confidence.

WW:

In Massachusetts, as I understand it, it would be harder to achieve a large dispensary network like you have in Florida.

KR:

Yeah. That’s why I said wholesale. So we see Massachusetts as a primarily wholesale opportunity for us, with flagship retail backing it up.

WW:

How do you see the pandemic changing your business and the industry more broadly?

KR:

I guess, the silver lining, is that anytime you have fast and prevalent shifts in a business, there are so many lessons to be learned, some positive and some negative. We’ve seen demand increase very, very rapidly, coupled with shifts in the way we do business, and the way our customers want to do business with us. 

A couple of stats: Our delivery orders have increased by close to 500%. We’ve increased  delivery vehicles from a hundred to just under 200 over the last two weeks. Our call center volume has increased. Normally we take about 20,000 calls a week. Right now, we’re at about 65,000 calls a week. 

WW:

These are people ordering? You can order by phone?

KR:

Yup. You can order by phone. Also, it’s people calling to check the status of their orders. It’s a 1-800 number, so you can call for anything. There’s some calls that are questions about products. There’s calls about order changes. You can also, of course, place an order online.

Our pickup and volume has increased by over 100%. We moved very rapidly to change our business practices. The first thing we were concerned about, was the health and safety of our employees, and making sure that workplaces are safe. 

We knew fairly early on that we would be deemed essential, as a medical provider in Florida. In early March, we started instituting temperature checks at all of our facilities, and we also began messaging to employees, encouraging them to stay home if they didn’t feel well, requiring self-quarantine if there had been traveling. We also increased our PPE requirements  and our sanitation protocols in all of our facilities.

The other thing that we did, is that we began just communicating more to our employees. We think that’s important anytime you’re going through rapid change, and letting them know that they could expedite sick time and vacation times if they were required by a health professional to quarantine. We were offering salary continuation for them. It means being proactive, letting them know that these are the tools that are available to them.

KR:

Then moving to the patients: We immediately implemented free delivery for anyone over the age of 65. Of course, as a result of that, we increased the vehicle fleet, and increasing our employee count around deliveries. 

We moved our highest stores, in terms of volume, to pick-up only, where patients schedule a time to come in and pick up their medicine, so that we can make sure that folks are spaced appropriately, and that we don’t have overcrowded lobbies. 

WW:

How do you see it as changing your business on a macro level?

KR:

It’ll be interesting to see. Change will be determined by whether the trends we’re seeing now, translate into permanent customer behavior changes. I think it’s a little early to tell. We were already seeing increased volume come through our pick-ups channel. That that’s probably going to continue. I think the use of technology, and the use of our text platform, I think, will certainly remain. 

KR:

Throughout all this, it has reinforced that patients and customers want to hear from you in an authentic way. I’ve done several Facebook Live communications with our customers, which has gotten really good feedback. We’ve implemented platforms where we’re pushing delivery status notifications to our customers. And again, I think just communicating with them as to what we’re doing as a business, and how we’re doing it, has really resonated. That’s a lesson that we can learn from.

WW:

In December, you were targeted by short sellers who called the company a “fraud,” and you’ve struck back with a libel lawsuit. Can you give us an update on that situation?

KR:

I can’t talk specifically about pending litigation. We are moving through that process, and we’ll just reiterate what we’ve said in the past, which is that we feel very strongly about the fact that [[the shortsellers went after Trulieve] in an effort to profit, and has no basis in actual facts. We’re confident that we’ll be successful on the suit that we initiated.

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Alex Halperin
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