Trulieve Cannabis Corp. (TCNNF) Accused of Misleading Shareholders
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between September 25, 2018 and December 17, 2019, in September 2018, Trulieve Cannabis Corp. (TCNNF) filed a listing statement following its merger with Schyan Exploration Inc., lauding its high-yield indoor cultivation facilities and techniques that gave Trulieve impressive cultivation and greenhouse capacity. Throughout the relevant period, Trulieve touted substantial increases in gross profit in its biological asset transformation with margins of 130% growth on average, which the Company attributed to “increased gain on biological assets and increased retail sales.” Then, on December 17, 2019, Grizzly Research published a report revealing that rather than using the high-quality indoor production the Company consistently touted, in reality, the vast majority of the Company’s marijuana was produced in low quality hoop houses, therefore making its gross margins on biological assets excessive and inflated. Additionally, the report revealed that Trulieve had failed to disclose related party real estate transactions that resulted in substantial gains for the related party. On this news, shares of Trulieve fell almost 13%, to close at $10.40.