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“We love competition because we really think that serves as a point of differentiation for our brand versus others”: Trulieve CEO

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Kim Rivers, Trulieve CEO joins the Yahoo Finance Live panel to discuss the future of the cannabis industry and the growth of Trulieve in 2021.

Video Transcript

ZACK GUZMAN: Welcome back to the Business of Cannabis special here on Yahoo Finance. We've been discussing more states legalizing. But businesses that started out in their home states have also done well growing businesses at home before expanding into some other states. And that was exactly the playbook that's being used by Florida-based multistate operator, Trulieve.

And happy to welcome back to the program the CEO of Trulieve here with us. Kim Rivers joins us right now. And Kim, we've chatted a lot about how you guys have been expanding. I understand you just opened two more stores on 4/20 because when else are you going to do that? So, congrats. But talk to me about maybe your strategy here, as you've expanded beyond Florida-- I know you're hot on Pennsylvania right now-- and where growth looks like for Trulieve right now.

KIM RIVERS: Absolutely, Zack. So, happy 4/20, I have to start. It's been amazing 4/20 so far for us at Trulieve. It's also the 50th anniversary of 4/20, so that's very exciting. And this is really a wonderful year for us as a company, as we look to expand our platform outside of our home state of Florida. We just opened our 81st location in the state of Florida, but also had some amazing recent news with our expansion into Pennsylvania, where we're going to have 90,000 square feet of Canopy there, along with six dispensaries and looking to expand further in that state as we look at our hub model, which is really looking at the five regions across the US, to make sure that we have great supply chain management as the legalization movement continues across the US.

ZACK GUZMAN: Yeah, we were chatting with Cowen's Vivien Azer, an analyst who covers Trulieve now. She was pointing out margins and the way you guys lead the industry. You know, never bad to have industry leading margins for multistate operators. But when you look ahead to maybe expanding beyond, what might that do, especially as we talked about Cresco Labs moving into your territory now in Florida as well? Where do you see competition maybe impacting margins moving forward?

KIM RIVERS: Yeah, you know, it's-- we welcome competition in our home state of Florida, where we have dispensaries that have the most competitor dispensaries nearby, so within a mile or so. Those dispensaries actually are some of our top performing dispensaries in the state. So we love competition because we think that really serves as a point of differentiation for our brand vis a vis others. And so, the more, the merrier, as far as we're concerned.

In addition, we think that having really tight control on supply chain and really being a company that's grounded in financial soundness and efficiencies across our supply chain are really key as well. And that's not going to change anytime soon. Certainly, when you look at other lines of business such as wholesale in other markets, there likely may be a bit of margin compression there as opposed to a pure vertical operation. But again, we expect to be the leader in margin for quite some time.

ZACK GUZMAN: Yeah, when we talk about maybe the other implications, we've talked a lot-- this is inside baseball, but we're wrapping up our special here, so might as well get into it-- 280E and the tax implications here that you guys might see changed. Talk to me about the size of that and the impact it would have on Trulieve and also maybe how it would impact the way you'd invest in other products that you might want to bring to market.

KIM RIVERS: Yeah, absolutely, Zack. So last year, we paid over $100 million in taxes, $105.2 million in taxes, with under 280E. If you removed 280E, last year, we would have saved approximately $63.5 million in taxes. So certainly, that, combined with the limitations as-- in terms of access to capital, which, of course, is appropriate to talk about today with the news on Safe Banking, it really is a double whammy for legal cannabis operators. Because not only do we have normalized banking and lending rates, we also have to spend cash, an extremely high amount of cash on paying taxes to the federal government. So we are very much looking forward to a day when those two things are no longer and that we can operate like any other legal business in the United States.

ZACK GUZMAN: Yeah, we haven't talked too much on this special about the medical side of cannabis. But we've also heard from multiple companies today about the excitement around drinks and reaching consumers in a way that's beyond just smoking. I mean, where do you put us now in kind of the evolution of different form factors in the way we're looking at recreational marijuana versus what a lot of people got their start in, perhaps, in the medical side?

KIM RIVERS: Yeah, you know, I've always been a big believer and we've always been a big believer that this distinction or hard line distinction between medical and recreational may not be the right way to look at it. When we look at baskets, we often see and mixed baskets in terms of products and form factors. So I think that it's a little bit maybe not accurate to think about just medical or just recreational. Oftentimes, you know, "recreational," quote unquote, customers may still be getting something to help them sleep at night. Similarly, medical customers may, in fact, be getting something a little extra for a Friday or a Saturday.

So that being said, we are continuing to see incredible innovation happening in our sector. And it's really exciting. Certainly with a focus on isolating minor cannabinoids that have interesting benefits, everything from CBN, which, as I mentioned, is a great sleep aid and is a replacement for many for Ambien without the high that one would get from a THC, to a Delta 8, to CBG. So there's lots of innovation that's happening certainly on the drink side as well, although that can be challenging right now, given the distribution aspects of a Trulieve canned product within state borders.

But certainly, we're seeing kind of the additives to drinks. So we have a powder product that you can add to liquid, which is really popular. And you can self microdose that product as well. And so, certainly I would expect nothing less from this sector than continued innovation among all form factors. But I will say that flower is very, very important and remains a strong, strong seller. And I don't think that that's going to change anytime soon.

ZACK GUZMAN: All right, the CEO of Trulieve, Kim Rivers, a pleasure to have you back with us. Happy 4/20. Congeats on the new openings. And I hope to chat again soon.