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Marijuana company Green Thumb Industries stock tanks 14% on report of federal probe

·Senior Writer
·3 min read
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Shares of Chicago-based cannabis giant Green Thumb Industries (GTBIF) tanked 13% Tuesday after a Chicago Tribune report claimed the company was part of a federal probe into pay-for-play allegations regarding its operations.

The report details an ongoing investigation, which Yahoo Finance was unable to verify, that unnamed sources say scrutinizes political donations and other steps the company allegedly took to win growing and distribution licenses in Illinois and other states. A Green Thumb spokesperson told Yahoo Finance that the company denies the Tribune report and was unaware of any investigation into illegal practices, but would be willing to comply.

"These are unfounded allegations that completely undermine the lengths Green Thumb has taken since day one to compliantly grow our business," an emailed statement said. "We are not aware of such an investigation, we have not been subpoenaed or had assets seized, and we are actively reaching out to the authorities to engage on these allegations. We stand by our hard earned accomplishments."

Green Thumb is a multi-state vertical operator with a footprint in 15 states. The company operates more than 50 retail locations across the country. Earlier this month, the company reported record profits and highlighted legalization efforts in New Jersey and New York as catalysts for continued growth. The company has been able to expand into new markets by winning licenses in new markets, which critics have pointed out frequently tend to go to larger operators like Green Thumb or its peers.

HOLYOKE, MA - JANUARY 31: Jonathan Whitley-Lederman works at the Green Thumb Industries cultivation center in Holyoke, MA on Jan. 31, 2019. Green Thumb Industries, a Chicago-based cannabis company, invested $10 million to create a cultivation center in a former Holyoke mill building. Massachusetts is home to dozens of old textile and paper mills that once thrived, making the state a manufacturing powerhouse. By the 1950s, those industry jobs moved south and the mill buildings deteriorated from decades of neglect. Many have been repurposed as apartments or smaller businesses. Some have been torn down. But one unlikely industry is bringing them back: cannabis. Since the legalization of medical and recreational cannabis in 2012 and 2016, cannabis companies have been buying and leasing these relics of industrialization. There are a few reasons why: quicker profits, availability, and the negative stigma that surrounds weed. (Photo by Jonathan Wiggs/The Boston Globe via Getty Images)
Jonathan Whitley-Lederman works at the Green Thumb Industries cultivation center in Holyoke, MA on Jan. 31, 2019. Green Thumb Industries, a Chicago-based cannabis company, invested $10 million to create a cultivation center in a former Holyoke mill building. (Photo by Jonathan Wiggs/The Boston Globe via Getty Images)

Industry experts note that companies with larger resources or dedicated teams tend to navigate the process faster, tend to contribute to political campaigns, or tend to win out over smaller players with weaker applications or a weaker record of operations. In the worst cases, political donations can spill over into obvious pay-for-play bribery scandals. The case of former Baltimore delegate Cheryl Glenn, who pled guilty last year to charges stemming from accepting more than $30,000 in bribes from an unnamed cannabis company to help streamline the licensing process, is perhaps the most cited example.

Green Thumb, for its part, has donated to political campaigns and political action committees, or PACs, in the past. Notably, in 2019, the company donated more than $600,000 to a political action committee that failed in its effort to get recreational marijuana legalized in Ohio. The Tribune report highlights a history of other Green Thumb political donations, but does not name a specific one in question. 

The cannabis sector as a whole has increasingly lobbied politicians as more states look to legalize medical and recreational marijuana. Green Thumb, along with multi-state operators Curaleaf (CURLF) and Cresco Labs (CRLBF), recently signed on as founding members of the US Cannabis Council, a nonprofit organization dedicated to advancing cannabis reform.

Zack Guzman is an anchor for Yahoo Finance Live as well as a senior writer covering entrepreneurship, cannabis, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.

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