Trulieve Cannabis Corp. [TCNNF] Filings

Trulieve Cannabis Corp. [TCNNF] Filings

Trulieve Cannabis Corp. [TCNWF] Filings

10-Q 1 tcnnf-20220331.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 March 31, 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

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 May 5, 2022, the registrant had 135,001,544 Subordinate Voting Shares and 49,217,899 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 March 31, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three months ended March 31, 2022 and 2021	2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
	Signatures	49

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. 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

(in thousands)


	March 31, 2022		December 31, 2021
	(unaudited)		(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	267,226	$	230,646
Restricted cash		—		3,013
Accounts receivable, net		12,782		8,854
Inventories, net		236,427		212,188
Notes receivable - current portion		634		1,530
Prepaid expenses and other current assets		76,182		68,189
Total current assets		593,251		524,420
Property and equipment, net		805,999		779,916
Right of use assets - operating, net		121,972		125,973
Right of use assets - finance, net		70,225		66,764
Intangible assets, net		1,098,278		1,117,982
Goodwill		789,900		765,358
Notes receivable, net		12,188		12,147
Other assets		34,041		18,312
TOTAL ASSETS	$	3,525,854	$	3,410,872
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities		109,810		94,073
Income tax payable		77,687		27,610
Deferred revenue		6,514		7,168
Notes payable - current portion, net		9,481		10,052
Private placement notes - current portion		1,874		—
Operating lease liabilities - current portion		10,553		9,840
Finance lease liabilities - current portion		6,905		6,185
Construction finance liabilities - current portion		1,154		991
Contingencies		13,826		13,017
Total current liabilities		237,804		168,936
Long-term liabilities:
Notes payable		3,476		6,456
Private placement notes, net		537,703		462,929
Warrant liabilities		2,075		2,895
Operating lease liabilities		128,575		122,130
Finance lease liabilities		69,167		65,244
Construction finance liabilities		175,032		175,198
Deferred tax liabilities		243,395		251,311
Other long-term liabilities		9,433		8,400
TOTAL LIABILITIES		1,406,660		1,263,499
Commitments and contingencies (see Note 21)
SHAREHOLDERS' EQUITY
Common stock, no par value; unlimited shares authorized. 184,184,142 issued and outstanding as of March 31, 2022 and 180,504,172 issued and outstanding as of December 31, 2021.		—		—
Additional paid-in-capital		2,012,564		2,008,100
Accumulated earnings		105,746		137,721
Non-controlling interest		884		1,552
TOTAL SHAREHOLDERS' EQUITY		2,119,194		2,147,373
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	3,525,854	$	3,410,872

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

(in thousands, except per share data)


	Three Months Ended
	March 31, 2022			March 31, 2021
	(unaudited)
Revenues, net of discounts	$	318,348		$	193,823
Cost of goods sold		140,198			58,559
Gross profit		178,150			135,264
Expenses:
Sales and marketing		72,862			44,558
General and administrative		33,546			12,709
Depreciation and amortization		29,305			5,434
Impairment and disposal of long-lived assets		13,780			—
Total expenses		149,493			62,701
Income from operations		28,657			72,563
Other income (expense):
Interest expense, net		(17,877	)		(7,899	)
Change in fair value of derivative liabilities - warrants		820			—
Loss on divestment and sale of non-operating assets		(2,681	)		—
Other income (expense), net		915			(37	)
Total other expense		(18,823	)		(7,936	)
Income before provision for income taxes		9,834			64,627
Provision for income taxes		42,316			34,549
Net (loss) income and comprehensive (loss) income		(32,482	)		30,078
Less: Net loss and comprehensive loss attributed to non-controlling interest		(507	)		—
Net (loss) income and comprehensive (loss) income attributed to common shareholders	$	(31,975	)	$	30,078

Net (loss) income per share:
Basic	$	(0.17	)	$	0.25
Diluted	$	(0.17	)	$	0.24
Weighted average number of common shares used in computing net (loss) income per common share:
Basic		187,054,916			119,892,507
Diluted		187,054,916			127,589,096

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

Trulieve Cannabis Corp.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(in thousands, except per share data)


	Super Voting Shares			Multiple Voting Shares			Subordinate Voting Shares		Total Common Shares		Additional Paid-in-Capital		Accumulated Earnings		Non-Controlling Interest		Total
Balance, January 1, 2021 (audited)		58,182,500			1,439,037			59,952,461		119,573,998	$	328,214	$	119,689	$	—	$	447,903
Share-based compensation		—			—			—		—		741		—		—		741
Shares issued for cash - warrant exercise		—			—			469,133		469,133		6,861		—		—		6,861
Conversion of warrants to Subordinate Voting Shares		—			—			133,408		133,408		—		—		—		—
Conversion of Multiple Voting to Subordinate Voting Shares		—			(117,668	)		117,668		—		—		—		—		—
Conversion of Super Voting to Subordinate Voting Shares		(3,021,100	)		—			3,021,100		—		—		—		—		—
Conversion of Super Voting to Multiple Voting Shares		(55,161,400	)		55,161,400			—		—		—		—		—		—
Net income and comprehensive income		—			—			—		—		—		30,078		—		30,078
Balance, March 31, 2021 (unaudited)		—			56,482,769			63,693,770		120,176,539	$	335,816	$	149,767	$	—	$	485,583


	Super Voting Shares		Multiple Voting Shares			Subordinate Voting Shares			Total Common Shares			Additional Paid-in-Capital			Accumulated 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 earnout		—		—			3,626,295			3,626,295			—			—			—			—
Distribution		—		—			—			—			—			—			(50	)		(50	)
Divestment of variable interest entity		—		—			—			—			—			—			(111	)		(111	)
Net (loss) income and comprehensive loss		—		—			—			—			—			(31,975	)		(507	)		(32,482	)
Balance, March 31, 2022 (unaudited)		—		49,217,899			134,966,243			184,184,142		$	2,012,564		$	105,746		$	884		$	2,119,194

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

Trulieve Cannabis Corp.

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
	(unaudited)
Cash flow from operating activities
Net (loss) income and comprehensive (loss) income	$	(32,482	)	$	30,078
Adjustments to reconcile net (loss) income and comprehensive (loss) income to net cash provided by operating activities:
Depreciation and amortization		29,305			5,434
Depreciation included in cost of goods sold		10,692			3,667
Non-cash interest expense		1,232			(41	)
Non-cash interest income		(163	)		—
Loss on impairment and disposal of long-lived assets		13,780			—
Loss on settlement of held for sale assets, net		1,862			—
Loss on lease terminations		819			—
Amortization of operating lease right of use assets		2,892			1,573
Share-based compensation		4,564			741
Accretion of construction finance liabilities		293			711
Change in fair value of derivative liabilities - warrants		(820	)		—
Change in legal contingencies		(1,248	)		—
Allowance for credit losses		42			—
Deferred income tax expense		—			(1,487	)
Changes in operating assets and liabilities:
Inventories		(21,957	)		(5,598	)
Accounts receivable		(3,970	)		(2,309	)
Prepaid expenses and other current assets		(8,094	)		(1,673	)
Other assets		(16,216	)		(7,298	)
Accounts payable and accrued liabilities		22,093			595
Income tax payable		42,210			36,540
Operating lease liabilities		(2,106	)		(943	)
Deferred revenue		(654	)		(399	)
Other current liabilities

Trulieve Cannabis Corp. [TCNNF] Filings
Trulieve Cannabis Corp. [TCNWF] Filings
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]

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company