The Boss

As the CEO of Trulieve, Kim Rivers is arguably the most powerful woman in the cannabis industry. At the helm of one of the nation’s largest vertically integrated cannabis multistate operators, she leads a company that enjoys market-leading positions in Arizona, Pennsylvania and its home state of Florida. But the optimism and economic conditions that fostered the growth of Trulieve and the cannabis industry aren’t as they once were. With a stock price exceeding $15 per share in December 2022 tumbling to $4 only two quarters later and down from a peak of a little more than $50 per share in March 2021, Trulieve has some ground to make up with investors. 

Despite shifting the company’s focus from certain markets, including California and Massachusetts, Rivers and her leadership team at the company are confident in their strategy for success, which includes leaning into key markets and taking a pass on some emerging markets such as New York. 

Trulieve’s strategy for 2023 focused on generating and preserving cash, is prompted by market and economic forces that are affecting all cannabis companies. Rivers says the industry saw a decade of significant investment and growth that was capped by the COVID-19 pandemic. With many consumers flush with stimulus dollars during mandated shutdowns, demand for entertainment and escape coupled with a heightened awareness of personal wellness prompted 25 percent quarter-over-quarter increases for Trulieve.

But things began to change in 2022 after restrictions were lifted and people began to return to work and play. With stimulus checks a thing of the past and more options available to get out of the house and be entertained, consumers found places other than cannabis dispensaries and delivery services to spend their money.

Additionally, the cannabis industry was not spared when pressures affecting the broader economy began to take hold last year. With consumer demand up and supply chain issues constricting materials needed to produce goods across a host of industries, prices started rising. Rivers says that a “line that was drawn mid-year, where we saw a rapid change in pressure on consumer behavior” as inflation began taking a serious toll on household budgets. Inevitably, dispensary sales began to lag and Trulieve’s executive leadership team decided it was time to re-think the path ahead.

Rivers’ strategy for Trulieve is also predicated on political issues that have seen capital investment in cannabis largely dry up. The heady exuberance and optimism for cannabis reform and the industry that led to the company’s $50 share price in the first quarter of 2021 were fueled in part by the Democrats’ clean sweep in the November 2020 election, when the party found itself in control of the White House and both chambers of Congress. With newly elected President Joe Biden and many other Democrats making cannabis policy reform a key talking point of their campaigns, industry insiders and investors had high hopes for 2021 and beyond.

But the party was short-lived. Before long, it become apparent that the federal government wasn’t going to legalize cannabis any time soon. Optimism for the big win—full legalization—was further dashed when the Republican Party (narrowly) regained control of the House of Representatives in 2022, a development that may have stalled significant progress on reform for years. 

Even the seemingly more attainable goal of passing the Secure and Fair Enforcement Regulation (SAFER) Banking Act, a bill that would give cannabis business access to traditional banking services, has failed to come to fruition yet. Bogged down by debate over the scope of the legislation, including whether the bill should include provisions to address the harms caused by the War on Drugs, passing the cannabis banking bill during the current Congress is uncertain at best.

As the lack of progress became evident, investment dollars flowing into the cannabis industry began to decline significantly. With new capital at a trickle and existing markets slowing, many companies were forced to reassess their plans for growth. At Trulieve, the leadership team realigned its plans, a process that began in mid-2022.

“We’ve got to really focus on cash generation and cash preservation,” Rivers says. “We need to get back to basics and fundamentals.”

For Rivers, addressing the fundamentals of cash generation meant leaning into successful markets. To keep sales in those markets strong, she knew the company needed to truly know its customer base to keep them coming back during challenging times.

“I’m really leaning into understanding ‘What’s the consumer doing? How does the consumer respond within our industry when there’s more pressure on the wallet? When they’re having to make choices when eggs are more expensive, when gas is more expensive? And when they still really want to go on that vacation that they haven’t been able to go on in years? Where do we stack up?’”

Along with a recommitment to the customer experience, Trulieve’s plan to maintain cash generation includes focusing on core business fundamentals and a product line coveted by patients and consumers. The second half of the overall strategy for leaner times—cash preservation—would take more drastic steps.

In June 2023, Trulieve announced that it was winding down operations in Massachusetts, a move that included the shuttering of three dispensaries in the state. Trulieve closed the Grover Beach dispensry in June, which saw them exit the challenging California market after closing Palm Springs and Venice the year before. In a statement from the company at the time, Rivers said that the “difficult but necessary measures” would help Trulieve “focus on our business strategy of going deep in our core markets and jettisoning non-contributive assets” in a bid to preserve cash.

“These actions were taken to redirect resources towards markets with long-term growth potential where we have significant scale and depth such as Arizona, Florida and Pennsylvania,” she said when asked about the belt-tightening. “Rather than trying to be in all markets or filling a map with our footprint, we’re vigilant about driving forward with our strategy to build scale, going deep in markets we choose, as well as cash generation and cash preservation.”

Rivers says that 2023 has been a challenging year for Trulieve and the cannabis industry at large. But she says that the businesses’ strategy to generate and preserve cash gives it a measuring stick by which to gauge its success during a year of cutbacks and layoffs throughout the sector.

“We said early on that our financial strength and operational flexibility have prepared our team to withstand the market compression we are seeing in 2023 and stand firm in this belief,” Rivers says. “Right now, we’re controlling our controllables by continuing to set the standard for operational excellence, high-quality cannabis products and a differentiated customer experience.”

With that strategy in place, Rivers believes that Trulieve is well-positioned for 2024 and beyond.

“We’re at a little bit of a plateau right now,” Rivers says. “That doesn’t mean that there’s no growth ahead.”

This story was originally published in issue 49 of the print edition of Cannabis Now. Read it now on the Cannabis Now iTunes app.