Scott Willis interviews Kim Rivers, CEO of Trulieve and discusses their multi-state operations.

Transcript

Capital 10X: For people that don’t know Trulieve, could you quickly tell us what you do and where you operate?

Kim Rivers: We are the largest vertically integrated medical marijuana provider in Florida. We have over 600,000 sq. ft. of grow, we have 170 SKUs that we produce and we have 27 retail locations in the state of Florida.

We recently went public in September and since then we have moved into Massachusetts, which we’re building out now and then also what I call an R&D location in Palm Springs, California.

Capital 10X: You guys I think are literally the only consistently profitable cannabis company in North America so that’s saying something. But what that tells me is you think differently about growth versus profitability. So I was hoping I could get in your head a little bit and tell see what you think about that.

Kim Rivers: I didn’t know that I thought differently [than other companies] until we went public. When we think about how to run a company, we are focused on our margins and we are focused on the bottom line. So it’s not only top line growth, it’s how you translate that top line growth into profit. That’s through execution and I like to say we are multi-state operators not multi-state aggregators and so that’s a difference I think with us.

And part of the key to that is really I believe supply chain management, which isn’t talked about enough in this industry but it really is important. So we enter a market, we make sure that we have the correct and proper hold on our supply chain and then we’re also looking for scale and penetration. So, I am not a believer of just putting pins on a map or doing a deal just for the sake of doing a deal to say that’s what we’ve done. I am a believer in making smart acquisitions and smart moves to create long term shareholder value.

Capital 10X: So you like to move into a location and then build it a little before moving onto the next and make sure you have a handle on the situation is that how you think about it?

Kim Rivers: That certainly was the case with Florida. And we needed to prove out and prove our business philosophy. So Florida is obviously a huge state, it’s a huge opportunity, it’s the third largest state in the country with 21 million people. And because of the licensing structure there it has provided enormous opportunity to be profitable. So when we recognized that opportunity fairly early on, to us it was ‘Ok well we can go and be in all these other states that aren’t going to add up to the opportunity here [Florida].’ Or we can make sure that we’re really locking down and building a sustainable brand and business in Florida first. And then pick our head up and say that we know what works, we understand the full supply chain, we’ve become experts in the full supply chain. Now we can take that expertise into other markets and we know how to do it in a way that is profitable.

Capital 10X: So you have a good amount of free cash flow that’s going into building stores, would you look to build a war chest to take on the next challenge for you guys?

Kim Rivers: That’s always an evolving conversation based on the movement of opportunities available. So as you know, we just won a lawsuit for example, in Florida that we settled for 14 additional stores beyond the cap. So that makes our growth trajectory in Florida different than what we had planned. We’re going to actually be re-forecasting in a couple months and we’ll put that out. Because two main things have happened, one that the lawsuit came out and then second smokeable flower became allowable in Florida. So those two are material catalysts to growth in just that market. In terms of other markets, certainly in Massachusetts, we have a very specific capex plan that’s been pretty stable and that we’re executing on. Beyond that it really is dependent on the opportunity as it’s presented.

Capital 10X: So, if you had to handicap, when you look at Trulieve two years from now, how many states do you think you’re in?

Kim Rivers: So I do have a stated goal internally to be in six states exiting 2019. Beyond that, I think every year is the equivalent of dog years in the cannabis world so if you’re asking me to look 14 years out I don’t think I can do that with any degree of accuracy.

Capital 10X: Thank you so much for your time. One question before we leave. Would you sell to a Canadian LP if the price was right, now.

Kim Rivers: We look at the value of the paper we’re taking and so we would have to believe in the fundamentals of the business. So again, it’s a very specific and fact-driven question.

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