Trulieve Cannabis Corp. [TCNNF] Filings

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10-Q 1 tcnnf-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-56248

TRULIEVE CANNABIS CORP.

(Exact Name of Registrant as Specified in its Charter)


British Columbia	84-2231905
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6749 Ben Bostic Road Quincy, FL	32351
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (850) 480-7955

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

N/A

N/A

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 3, 2022, the registrant had 159,645,155 Subordinate Voting Shares and 26,235,054 Multiple Voting Shares (on an as converted basis) outstanding.

Trulieve Cannabis Corp.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended September 30, 2022 and 2021	2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Controls and Procedures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
	Signatures	56

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, results of operations and future growth prospects. The forward-looking statements contained herein are based on certain key expectations and assumptions, including, but not limited to, with respect to expectations and assumptions concerning receipt and/or maintenance of required licenses and third party consents and the success of our operations, are based on estimates prepared by us using data from publicly available governmental sources, as well as from market research and industry analysis, and on assumptions based on data and knowledge of this industry that we believe to be reasonable. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Quarterly Report on Form 10-Q and in “Part I, Item 1A – Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report on Form 10-Q.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Trulieve Cannabis Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)


	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	114,468		$	230,085
Restricted cash		—			3,013
Accounts receivable, net		11,309			8,563
Inventories, net		301,239			209,943
Notes receivable - current portion		715			1,530
Prepaid expenses and other current assets		62,068			68,145
Assets associated with discontinued operations		2,838			3,615
Total current assets		492,637			524,894
Property and equipment, net		795,506			779,413
Right of use assets - operating, net		100,864			111,723
Right of use assets - finance, net		75,305			66,764
Intangible assets, net		1,027,058			1,081,240
Goodwill		791,495			765,358
Notes receivable, net		12,059			12,147
Other assets		21,531			17,640
Long-term assets associated with discontinued operations		4,503			52,167
TOTAL ASSETS	$	3,320,958		$	3,411,346
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities		87,773			93,801
Income tax payable		4,681			28,084
Deferred revenue		6,385			7,168
Notes payable - current portion, net		4,823			10,052
Operating lease liabilities - current portion		10,779			10,020
Finance lease liabilities - current portion		8,719			6,185
Construction finance liabilities - current portion		1,137			991
Contingencies		25,590			13,017
Liabilities associated with discontinued operations		390			92
Total current liabilities		150,277			169,410
Long-term liabilities:
Notes payable		7,942			6,456
Private placement notes, net		540,301			462,929
Warrant liabilities		268			2,895
Operating lease liabilities		110,625			107,570
Finance lease liabilities		75,011			65,244
Construction finance liabilities		182,257			175,198
Deferred tax liabilities		220,206			241,882
Other long-term liabilities		8,616			8,400
Long-term liabilities associated with discontinued operations		14,575			23,989
TOTAL LIABILITIES		1,310,078			1,263,973
Commitments and contingencies (see Note 22)
SHAREHOLDERS' EQUITY
Common stock, no par value; unlimited shares authorized. 185,880,209 issued and outstanding as of September 30, 2022 and 180,504,172 issued and outstanding as of December 31, 2021.		—			—
Additional paid-in-capital		2,041,748			2,008,100
Accumulated (deficit) earnings		(31,299	)		137,721
Non-controlling interest		431			1,552
TOTAL SHAREHOLDERS' EQUITY		2,010,880			2,147,373
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	3,320,958		$	3,411,346

The accompanying notes are an integral part of these condensed consolidated financial statements.

Trulieve Cannabis Corp.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)

(in thousands, except per share data)


	Three Months Ended						Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenues, net of discounts	$	300,793		$	224,092		$	937,612		$	633,037
Cost of goods sold		132,760			70,147			405,278			199,345
Gross profit		168,033			153,945			532,334			433,692
Expenses:
Sales and marketing		75,915			51,724			224,026			142,858
General and administrative		37,646			28,223			104,840			55,874
Depreciation and amortization		30,190			7,728			88,645			19,829
Impairment and disposal of long-lived assets, net		52,035			(5	)		70,151			(5	)
Total expenses		195,786			87,670			487,662			218,556
(Loss) Income from operations		(27,753	)		66,275			44,672			215,136
Other income (expense):
Interest expense, net		(19,264	)		(6,145	)		(56,815	)		(20,693	)
Change in fair value of derivative liabilities - warrants		365			—			2,627			—
Impairment and disposal of non-operating assets, net		(2,604	)		—			(6,004	)		—
Other income (expense), net		448			89			3,016			385
Total other expense		(21,055	)		(6,056	)		(57,176	)		(20,308	)
(Loss) Income before provision for income taxes		(48,808	)		60,219			(12,504	)		194,828
Provision for income taxes		28,199			41,603			116,742			105,254
Net (loss) income from continuing operations and comprehensive (loss) income		(77,007	)		18,616			(129,246	)		89,574
Net loss from discontinued operations, net of tax benefit of $12,981, $ - , $14,439, and $-, respectively		(38,065	)		—			(42,329	)		—
Net (loss) income		(115,072	)		18,616			(171,575	)		89,574
Less: Net loss and comprehensive loss attributable to non-controlling interest from continuing operations		(518	)		—			(2,555	)		—
Net (loss) income and comprehensive (loss) income attributable to common shareholders	$	(114,554	)	$	18,616		$	(169,020	)	$	89,574

Net (loss) income per share - Continuing operations:
Basic	$	(0.41	)	$	0.15		$	(0.68	)	$	0.73
Diluted	$	(0.41	)	$	0.14		$	(0.68	)	$	0.68
Net loss per share - Discontinued operations:
Basic and diluted	$	(0.20	)		—		$	(0.23	)		—
Weighted average number of common shares used in computing net (loss) income per share:
Basic		188,597,094			128,146,298			187,549,359			122,983,729
Diluted		188,597,094			136,909,266			187,549,359			130,927,083

The accompanying notes are an integral part of these condensed consolidated financial statements.

Trulieve Cannabis Corp.

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(in thousands, except per share data)


	Super Voting Shares		Multiple Voting Shares			Subordinate Voting Shares			Total Common Shares			Additional Paid-in-Capital			Accumulated (Deficit) Earnings			Non-Controlling Interest			Total
Balance, January 1, 2022 (audited)		—		51,916,999			128,587,173			180,504,172			2,008,100			137,721			1,552			2,147,373
Share-based compensation		—		—			—			—			4,564			—			—			4,564
Exercise of stock options		—		—			45,775			45,775			108			—			—			108
Shares issued for cash - warrant exercise		—		—			1,648			1,648			22			—			—			22
Shares issued under share compensation plans		—		—			16,257			16,257			—			—			—			-
Tax withholding related to net share settlements of equity awards		—		—			(10,005	)		(10,005	)		(230	)		—			—			(230	)
Conversion of Multiple Voting to Subordinate Voting Shares		—		(2,699,100	)		2,699,100			—			—			—			—			—
Shares issued for PurePenn, Pioneer, and Solevo earnouts		—		—			3,626,295			3,626,295			—			—			—			—
Distribution		—		—			—			—			—			—			(50	)		(50	)
Divestment of variable interest entity		—		—			—			—			—			—			(111	)		(111	)
Net loss and comprehensive loss		—		—			—			—			—			(31,975	)		(507	)		(

Trulieve Cannabis Corp. [TCNNF] Filings
10-Q	[2022-11-09]
10-Q	[2022-08-10]
10-Q	[2022-05-12]
10-K	[2022-03-30]
S-1	[2022-01-21]
10-Q	[2021-11-15]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
S-1	[2021-04-05]
10-K	[2021-03-23]
S-1	[2021-01-12]