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Cannabis 'is a fundamental state story' that is here to stay: Trulieve CEO

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Trulieve CEO Kim Rivers joins Yahoo Finance Live to discuss the cannabis operator's growth, the prospects of legalization, and the outlook of the cannabis industry.

Video transcript

JULIE HYMAN: Kim Rivers is joining us. She is CEO of Trulieve, which is one of the biggest cannabis operations in North America. Kim, thanks for being here. So let's focus on the legislation, first of all. Do you think that it is more likely that Safe Banking-- that's that banking legislation-- that's that legislation I was just referring to-- do you think we're going to get passed in 2022?

KIM RIVERS: Yeah, you know, unfortunately, Congress has not issued my crystal ball yet. I'm waiting for that. Hopefully, in the new year, but I've heard there are supply chain and shipping delays. What I can say is that, you know, this industry has never been dependent on federal change.

Certainly, there was a bit of a stutter step in the market this year as a result of anticipated federal change. But really, this is a fundamental state story. It has been a state story for some time. And I would just encourage folks to zoom out. And when you look at Trulieve as an example, and you look at our listing-- we went public in September of 2018 at $7.50-- where we are today, we've seen an increase in just that short period of time of over 225%.

So, you know, there are, of course, some short-term bumps in the road when you have a new and exciting industry, but US cannabis is here to stay. When you compare US cannabis to Canadian cannabis, as an example, in 2022, the Canadian market is set to be approximately 5.5 billion, compared to the US market, which is estimated to be approximately 30.5 billion. And that's in our existing parameters today. So while we're certainly hopeful that the legislature and the Congress will step up and listen to the will of the American people, who absolutely want to see cannabis in-- available, in a more available format in their home-- home markets, it certainly isn't an indicator that the industry as a whole has slowed in any-- any form or fashion.

BRIAN SOZZI: And Kim, I do think it's important to note your company is profitable, and it's one of the largest players out there in the market. In the states that you do operate, what are you seeing in terms of demand right now?

KIM RIVERS: Oh, demand has never been stronger. You know, we are seeing incredible growth. As an indicator of that growth, the first nine months of 2021, we have seen a 79% topline growth year over year compared to 2020. And if we were to incorporate our recent acquisition, which is the largest acquisition done in US cannabis, that growth rate would actually have been 259% topline.

So again, customer demand is strong. Americans, I think even more so today, coming out of COVID, and then of course with omicron, want to take control of their health journey. And cannabis allows them to do that. And we're seeing, again, incredible demand at the stores and at the register, with incredible innovation. And again, additional growth ahead, as more and more Americans have access to cannabis through changes at the state level.

JULIE HYMAN: We've definitely seen growth, Kim. I think what I sort of struggle with is the gap, and what I think is reflected in some of these stock prices is the gap between early expectations for what this industry was going to be and reality of what it is, and how quickly it's happening, or not quickly, right? And so I wonder, are we going to start to see that gap close? Is it a question of better managing expectations? Is it a question of national legalization? What do you think is going to kick these-- the stocks up as a group?

KIM RIVERS: Yeah, so keep in mind, right, it's an incredible opportunity for folks who are investing in these names. And again, these are US cannabis names. And I can't stress that enough because there is a fundamental disconnect between what we see advertised as, quote, the cannabis stock plays versus who truly are the US MSOs who are profitable, who have been posting incredible not only topline, but, to your point, bottom-line growth.

And so keep in mind none of us are listed currently on a US exchange. We cannot be listed on the NYSE. We're not listed on NASDAQ. And so there are some barriers to entry and some hoops that folks have to go to in order to invest in these stocks today. We have barriers in terms of taxes that we pay due to 280E. So we're profitable even having to pay close to 50% in terms of taxes. And so those barriers are going to fall over time as we have policy changes, again, at the federal level.

However, that doesn't mean that the fundamentals of these companies are really super strong. And so as we think about, again, just speaking for Trulieve, we're in our SOCs Readiness year. We're already SEC regulated, as well as, of course, CSC regulated. We currently trade on the OTC. But unfortunately, a lot of Americans today are trading in-- when they are trading in cannabis, they're actually trading in Canadian names because of the fact that Canadian companies can be listed on US exchanges, whereas US companies cannot.

So it's an incredible opportunity for folks to get in on the ground floor of what I certainly believe is a generational wealth opportunity. And it's not a matter of if, it's just a matter of when, because that fundamental disconnect between companies that, like Trulieve, who are posting quarter-over-quarter strong topline, bottom-line results, that disconnect is only going to last for a certain period of time. And so, you know, again, we're very optimistic about the growth of our company, and we're very optimistic about the future of the industry here in the US.

BRIAN SOZZI: Kim, you just mentioned innovation. What's the big product launch for you guys next year?

KIM RIVERS: Oh gosh, there are many. We're doing a lot of work right now in the minor cannabinoid space. So it's not just about THC, which, of course, everyone is familiar with as the psychoactive ingredient that produces that high or euphoric feeling. Of course, everyone also has become familiar with CBD, which has had incredible health effects in terms of anti-inflammation and anti-seizure medication. But there are a lot of other cannabinoids that exist in this miraculous plant.

And so CBN, CBG are two compounds that we're working with regularly. CBN is a fantastic alternative to prescription medications such as Ambien. It enhances sleep without any psychoactive effects and without the continued half-life, so you don't wake up groggy and kind of have that fog. So we're really excited about the minor cannabinoid work that we're working on right now, and that we'll be launching a whole series of products highlighting those minor cannabinoids in 2022.

JULIE HYMAN: Kim, thanks for joining us. Appreciate it. Kim Rivers is the CEO of Trulieve. Appreciate your time this morning.

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