Trulieve Cannabis Corp. Class Action Lawsuit
- Company Name
- Trulieve Cannabis Corp.
- Stock Symbol
- Class Period
- September 25, 2018 to December 17, 2019
- Eastern District of New York
On December 30, 2019, the Trulieve Cannabis Corp. class action lawsuit was filed charging Trulieve and certain of its officers with violations of the Securities Exchange Act of 1934. The Trulieve class action lawsuit was commenced in the Eastern District of New York on behalf of purchasers of Trulieve publicly traded securities between September 25, 2018 and December 17, 2019 (the “Class Period”) and is captioned McNear v. Trulieve Cannabis Corp., et al., No. 19-cv-07289.
Trulieve, together with its subsidiaries, operates as a medical marijuana company. Trulieve cultivates and produces medical marijuana products and distributes its products to Trulieve branded stores in Florida and through home delivery to patients.
The Trulieve class action lawsuit alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Trulieve’s business and operations. Specifically, defendants failed to disclose that Trulieve overstated its mark-up on its biological assets, which inflated Trulieve’s reported gross profit, and Trulieve had engaged in undisclosed related-party real estate transactions with its Chief Executive Officer’s husband. As a result of this information being withheld from the market, Trulieve securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $15.50 per share.
Then on December 17, 2019, Grizzly Research published a report stating that Trulieve had failed to disclose it had engaged in real estate transactions with insiders; that rather than high quality indoor-grown product, the vast majority of Trulieve’s marijuana was produced in low quality hoop houses; and that Trulieve’s mark-up on its biological assets was excessive and unreasonable. According to the report, Trulieve had engaged in real estate transactions with One More Wish LLC, which was controlled by the husband of Trulieve’s Chief Executive Officer, Kim Rivers. The report stated that “Florida county records show that One More Wish bought a property . . . in Quincy in June 2018 and sold it to Trulieve in August 2018 for a 42% gain[,] which translates to over 800% annualized return,” and that One More Wish “sold two more properties to Trulieve for spectacular gains.” The report also stated that “Trulieve sports unbelievable gross margins of 130% on average. This is mainly due to the biological assets fair value adjustment that is widely adopted within the industry. However, Trulieve seem to be aggressively using this accounting method towards its benefit to inflate it gross profit and margins.” On this news, the price of Trulieve shares fell $1.51 per share, or over 12%, to close at $10.40 per share on December 17, 2019.
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