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Our investments made us ‘the most profitable cannabis company’: Trulieve CEO

Trulieve CEO Kim Rivers joins Yahoo Finance Live to break down the company's latest earnings report and weigh in on the outlook for the cannabis industry.

Video transcript

ZACK GUZMAN: Welcome back to "Yahoo Finance Live." We're watching Trulieve shares in today's session, after a double beat came from that company, one of the quickest-growing cannabis companies in the US. Florida-based Trulieve impressing with its latest quarter revenue, coming in ahead of estimates, up $21 million versus last quarter. It hit $215 million. That was ahead of what analysts had expected at 207. Adjusted EBITDA also coming in ahead of expectations at $94.9 million, marking the 14th consecutive quarter of profitability for Trulieve, and for more on that, I'm happy to welcome back into the program the CEO of Trulieve. Kim Rivers joins us once again.

And, Kim, it's been interesting to watch, kind of, I guess, now, at this point, the break in, maybe, different cannabis companies, and the strategies being implemented, and you guys continue your expansion now. Georgia is going to be the seventh state. I mean, talk about what you guys saw in the quarter, and how the expansion plans to take over more states continue.

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KIM RIVERS: Yeah, absolutely. So, we are so excited to have won a very competitive application process in Georgia, recently announced. We were among 70 applicants to win just one of two Class 1 production licenses there. And so, you know, our headquarters and the bulk of our operations in Florida are located about an hour and a half south of the Georgia border, and we're going to be strategically located in Adel, Georgia, which is a Southern Georgia community, and are very excited to be able to make a meaningful investment into that community, and continue our job creation efforts in Georgia. So we're thrilled and thankful to be given that opportunity, and look forward to bringing medicine to the folks in Georgia very, very soon.

ZACK GUZMAN: Yeah, you've got 96 stores in the US, including a new one in Worcester, Mass., the backyard of one of your competitors, Curaleaf. And it's been interesting, because Curaleaf, Boris Jordan was on the show yesterday, their Executive Chair, talking about international expansion plans, as we await, kind of, some stuff here in the US to get clear, in terms of regulations and social justice measures at the federal level. How does Trulieve look at those plans, versus what's going on here in the US? I mean, you guys poured $2 billion into the expansion with Harvest. Do you look at opportunities there on the international side better right now? Does that look better than what you're seeing play out here in the US?

KIM RIVERS: Trulieve is all about the US growth story, which we believe is alive and well. And, you know, while there are some exciting things happening at the federal level, that has never been a requirement for the industry to grow. As a matter of fact, you know, when we look around, and we see the incredible growth that's happening, really, every day, as new states enter the market, we just talked about Georgia. We're also plowing ahead with our expansion plans in West Virginia. Connecticut, which is a market that we participate in, just went recreational. We've got a number of other states that are on the horizon, in terms of launching medical programs and/or converting to recreational. So there is a ton of growth ahead, as you've seen not only with Trulieve, of course, with our earnings beat this quarter. That's a common theme among US, and that's a very key word, "US," operators.

And so we believe that true brand building happens in the US, and we look forward to continuing to participate in that brand building. We really look at the US as five regions, and are approaching our expansion in a very hub-and-spoke way. Of course, the Southeast, which we just talked about, with Florida, where we have a dominant market position, we have over 45% of the market here in Florida, which is our home state, and we're operating at true scale. We currently have over two million square feet of cultivation. We've got, as you mentioned, 96 stores across the country, 7,000 employees, our Northeast hub in Pennsylvania, Massachusetts, Connecticut, et cetera. And then, of course, with Harvest, we'll be adding a meaningful hub to our portfolio, with Arizona as well. And so plenty of runway ahead right here in the US of A, and that's where we plan to focus.

AKIKO FUJITA: Kim, how do you build on that? I mean, you just listed a long list here of just how Trulieve has been active, particularly in this quarter, and, you know, while federal legislation, or the lack of federal legislation, may not necessarily be holding back growth, I imagine you're thinking about positioning ahead of what's likely to be legislation, whether that's this year or next year. How are you thinking about potential acquisitions, and what are some of the missing pieces that you'd like to fill out?

KIM RIVERS: Absolutely. So, as I mentioned, we think about the market in the US through a distribution and a brand building lens. Certainly, Harvest is a key part of our future growth story, but it's not the only part of our future growth story. I mean, what Harvest does is it increases our total addressable market by over 50%, which is obviously very meaningful. It also provides us with a key management team in a very key part of the country, which is the Southeast. But, in addition, there are lots of other growth opportunities that Harvest brings to the table that we can build around.

And so, as we think about how we operate in these core markets, again, in the Southeast, in the Northeast, in the Southwest, we're looking for expansion opportunities and ROI, of course, for capital investment across those markets. And so we've always been a company that's really been focused on shareholder value and financial discipline. It's why we are the most profitable cannabis company in the world. And so we're going to continue to do those things by making strategic investments in the markets that are those core markets to us, while we wait for the inevitable, which we think is coming, which, of course, would be sweeping federal change.

ZACK GUZMAN: Yeah, and, Kim, I mean, you know, it's taken longer than I thought. It's taken longer than you thought. It's taken longer than, I think, a lot of people in the industry have thought, when we look at even just getting the Safe Banking Act passed that would help access, or help kind of, I guess, figure out what the tax implications should look like for companies, and also get them open to banking. But when you look at that, you know, it's taken so long, and we were talking about it yesterday too. Boris Jordan laid out that Q1 2022 is maybe his timeline. If you guys are more US-levered than some of the other players out there, I mean, talk to me about your timeline, as you see it, and then, also, you know, the longer it takes, I wonder how it impacts you relative to, maybe, some of the competitors who are a little bit more international-levered.

KIM RIVERS: Yeah, so, I mean, again, listen, we paid $80 million in taxes over this last quarter, because it's a double-tax quarter, right? So we certainly understand very first hand the pain that comes with, at least, 280E, which is the tax provision that we're subjected to, continuing to be applied. However, I think that with the challenges also comes opportunity, and so I think that those of us who have been successful-- And, I mean, listen, this is not slow growth that we're talking about. You're talking about near 80% year-over-year growth top line. You're talking about strong margins. We had a 67% margin this quarter. We've got a 44% even-on margin. I mean, you are talking about a very financially sound and healthy company.

What that forces us to be is it forces us to be more strategic. It forces us to make sure that we have the right value propositions, that we're listening to our customers, we're putting good product on the shelves in those important and core markets. So I think that it actually separates, and maybe makes it a little bit more evident, those of us who are focused on the right metrics and the right things, and it provides opportunity. So I think, as far as we're concerned, you know, again, state growth is the way that we've been living this last five years, and it's worked out pretty well. And, of course, we're looking forward to additional growth as we move forward, which there is significant, significant growth ahead. So, you know, I think that the international conversation may be interesting, although I would argue that the US market is significantly larger than other markets, particularly the European one.

ZACK GUZMAN: Q1, though, Q1 2022, are you taking the over or the under on that?

KIM RIVERS: For Safe Banking, I'm there on Safe Banking for Q1 2022. The votes are there now. It just has to get brought to the floor.

ZACK GUZMAN: All right. All right. I might take the over. We'll see how this plays out. It's been interesting to watch it, you know, constantly. But Kim Rivers, the CEO of Trulieve, always love having you on. I appreciate the time. Be well.