Kim Rivers Reveals Trulieve's Bold Move for Florida's ~$6 Billion Opportunity

Kim Rivers Discusses Trulieve Preparing for Florida's ~$6 Billion Opportunity

Bryan Fields: What's up guys, welcome back to another episode of The Dime. I'm Bryan Fields, with me as always is Kellan Finney, and this week we've got a very special guest, two-time returning to the podcast, Kim Rivers. Kim, thanks for taking the time, how are you doing today? Kim Rivers: Hey, I'm great, how are you guys doing? Kellan: Great, Kim, how are you doing? I'm doing really well, really excited to talk to Kim, really excited to dive into Florida and learn a little bit more about what's going on down south and on the East Coast. Bryan Fields: I'm very excited, and as Kim was telling us before, she's got wonderful weather in Florida — maybe not perfect for her, but for Kellan and me here in freezing cold, it's nice to have somebody bringing the heat. So Kim, how's everything going today? Kim Rivers: Everything's fantastic. I just finished a meeting with the Florida team right before this, talking about our plans. We just had a board meeting a couple weeks ago, so I'm really excited about having the plan solidified for the year ahead. Bryan Fields: The first question on everyone's mind — Ron DeSantis, big news, saying the marijuana legalization initiative will be on the state's November ballot, predicting a potentially favorable legal outcome for activists. I want to get your feeling on that. When you saw that information, how did it make you feel, understanding all the implications and the work your team helped lead to shepherd to that moment? Kim Rivers: Well, we're not there yet, right? So we appreciate the vote of confidence for sure, and any good vibes anyone wants to send our way we'll certainly be very thankful for. We're anxiously awaiting the Supreme Court ruling, which can come anytime between now and April 1st. Anyone who watched the hearing came away with a similar conclusion — that it definitely appears more likely than not that the court, at least based on their questions and commentary, is postured in a certain way. But to be clear, at this stage it's not an indication that the court is in favor of legalization. Instead, it's really just that the ballot initiative and its wording are crafted in a way that meets the state standards — that it's not misleading for voters between the ballot summary and the ballot text, and that it addresses a single subject. We felt confident going in that the ballot language was narrowly crafted to pass that test, so it's great to hear that the governor agrees with that assessment. Bryan Fields: Kim, you've been a key figure in the Smart & Safe Florida campaign, playing a pivotal role in advocating for legalization. Can you share some of the challenges in shaping this initiative, particularly the language, and how it will impact Florida both economically and socially if it gets through these hurdles? Kim Rivers: Each state is unique in terms of its ballot initiative process, and Florida is very strict on two requirements — that the summary isn't misleading and that it addresses a single subject. Many initiatives, including marijuana initiatives, have failed because they didn't strictly follow those requirements. For us, it's always hard because you only get 75 words for the summary, and that summary is what's really in front of the court. You want to include a lot, but the reality is you can't — and in Florida, initiatives have failed because they tried to include too much. One piece of feedback we've gotten from the beginning is that home grow isn't included. We're big supporters of home grow — we sell clones, we actively participate in the home grow market wherever allowable, and we've financially supported home grow initiatives in Florida in the past in a meaningful way, including petitions in our stores. But you cannot have both legalization and home grow in the same ballot initiative in Florida. So if people say they won't vote yes without home grow, that means they'll never get a chance to vote on legalization, because there will never be an initiative with both in it. People also want it to be prescriptive — they want to know exactly what products they'll be able to get — but you can't do that in 75 words either. There's a line where the Supreme Court will say that's up to the legislature, not something to be decided by a ballot vote. Hopefully, after this passes in November — we need 60% of the vote, and medical got the highest vote in Florida history at 72% — it goes to the legislature for implementation, and a lot of those details get ironed out in the spring session. Bryan Fields: We had Charlie Bachtell on a few weeks ago, and he talked about the tremendous work your team was doing, literally shepherding this forward. I think the industry deserves to praise you, because in other states there hasn't been a single leader like yourself carrying the entire battle. Has it been challenging to take on the weight of the industry and pull it forward? Kim Rivers: It's what we do. We felt like it was the right time — a presidential election year, and Florida being such a huge, heavily Republican state — to have something on the ballot and pass it and clear 60% would be a real testament to where we are as a country and a game-changer at the federal level. There really wasn't a choice for us. It's unfortunate others didn't participate on the front end. Now is the time a coalition has to be built — voter education, and we don't yet know if there will be a strong opponent. The Florida Chamber of Commerce has been making noise, conducted polling, and even filed a brief in opposition at the Supreme Court. Once we get a favorable Supreme Court ruling, it would be a shame if the industry doesn't come together to push it across the finish line. My ask to anyone watching is to contact other cannabis companies and let them know they need to participate in a meaningful way in Florida. Bryan Fields: What's been the biggest win for you so far in this journey? Kim Rivers: It was very satisfying to hear the court's response — to hear conservative justices make comments back to the state suggesting the language would work. It's very reaffirming of the work we've put in, and hopefully we'll have a formal ruling shortly. Bryan Fields: Making the assumption that, as a recovering lawyer, your previous skill set has been very applicable to these nuances — understanding how to get this from where it is today to where it needs to go despite the legal processes. Kim Rivers: I do personally geek out that there's something in front of the Supreme Court I had a hand in working on. That's very rewarding for the team too — we've got an amazing team of lawyers, and the campaign has done an amazing job. This work has been years in the making, with a lot of analysis behind it. But it's absolutely a collaborative effort — I'm not sitting by the fire drafting language myself, though I am definitely involved in the conversation, maybe more than they'd like, because I'm a lawyer and I like to geek out on this stuff. Kellan: I think you're alluding to sitting in front of ChatGPT trying to fit this into 75 words — unfortunately, this was a while back so that wasn't an option. Kim Rivers: Yeah, that would be an interesting exercise now, a side-by-side comparison. Bryan Fields: Let's go through the steps so everyone listening can understand exactly where we are today, January 25th, and how we get to the finish line. Kim Rivers: The next step is the Supreme Court ruling. The Supreme Court issues new opinions every Thursday — that's their cadence, and what's on their website. So sometime between now and the beginning of April they'll issue a ruling. Assuming that ruling is favorable — I like to speak it into the universe — we then move into the next phase of the campaign, which is get-out-the-vote and public education. We'll work with the campaign, hopefully alongside other advocates, organizations, and MSOs, to outline that next phase. Then the vote happens in November alongside the presidential election, needing 60% approval. After it passes, there's a self-implementing clause stating that current operators can begin adult-use sales six months from the date of passage — which happens to land around Cinco de Mayo, so it'll be a party, y'all should come. There's also a regularly scheduled legislative session during that window, and by design there will likely be an implementation bill addressing the adult-use program — whether they keep the existing statute largely as-is or create a whole new set of statutes, the only requirement is that it implements the will of the people as outlined in the constitutional amendment. That's where I'm asking other operators to participate — between now and the vote is the biggest hurdle. Florida has 21 million residents and a lot of different media markets, so it's expensive, especially in a presidential election year, and we need to educate people who know nothing about cannabis on why they should vote yes. Medical operators converting to adult use have everything to gain, so it's put-up-or-shut-up time. Bryan Fields: How do you deploy resources internally, given you're focused on this educational campaign but also converting stores from medical to rec, which isn't as simple as flipping a switch? Kim Rivers: It's execution, execution, execution. We've been spending a lot of time allocating resources — human capital, financial — mapping out timelines, because we have idle capacity we'll be bringing back online, thinking about store conversions, when to hire, how quickly, and where. There's a plan and I feel good about it. This is the single largest opportunity Trulieve has had in the history of the organization. We currently have 130 stores — we'll give store guidance on our call on February 29th. To put it in perspective, I believe the largest prior conversion from a store footprint standpoint in an MSO rec flip has been 20 stores — versus 130 for us today. We estimate the opportunity to be approximately $6 billion, and there's going to be plenty for everyone. I don't think I'd be in a position, no matter how fast we move, to singularly service a $6 billion market. So there's plenty of opportunity for others too. Bryan Fields: One of the fun parts of that $6 billion estimate is that it's just an estimate — it could be way higher, given the appetite for cannabis in states like Missouri, where demand blew past projections. Kim Rivers: I think there will be some supply constraints initially, but Florida has an opportunity to really be a leader, and it'll scale up. But converting all your stores over isn't as simple as swapping a neon sign from 'Med' to 'Rec.' Kellan: With everything going on in Florida, that's not the only place Trulieve operates. How are you balancing Georgia, Pennsylvania, and everything else with all your resources focused on Florida? Kim Rivers: As an organization we've been pretty transparent that we've got several cornerstone markets — Florida, Pennsylvania, and Arizona. In addition, Maryland, a recent rec flip, gets attention because we see continued growth there and it's instructive to be close to the consumer even in a smaller market. Pennsylvania has been doing exceptionally well — we've seen prices stabilize and even regain some pricing leverage, with additional flexibility for the consumer, particularly with our in-house brands. Getting momentum behind our branded products was a critical strategic initiative last year — our top sellers in-store are our Modern Flower and Roll One brands, wholesale is growing too, and the team's done an amazing job. Pennsylvania is laying groundwork for an eventual adult-use pivot there, likely through legislative action in two to four years. Arizona is another cornerstone market — we're finally at a point where our supply chain has stabilized and our cultivation assets meet our standards, so we're relaunching brands we'd held back and rebranding 100% of that portfolio to the Trulieve store banner this year, after testing the concept with a few ground-up Trulieve stores. We're also launching our Loyalty 2.0 platform in Arizona soon. Maryland has been amazing too, giving us both a retail view of customers and brand adoption through wholesale. Bryan Fields: I want to ask about the Northeast hub, because I see a few states, and one in particular is missing that I have to ask about — but first, New Jersey. Why did that become a critical target for your team? Kim Rivers: It was a critical target two years ago when we applied — that was a two-year application process. At this point, candidly, I don't know that we're moving forward with it. We're a little late to that market. As we think about the Northeast, we're focused on Pennsylvania, Ohio — which we can talk about, and I think that portfolio will expand as we conclude litigation there — Maryland, and Connecticut. One lesson we've learned over the years is not to get distracted by the shiny object or what's working for others, and to know when to lean in and when to back away. I have concerns about the midterm viability of the New Jersey market as it stands. The folks who got in early are doing well, but the risk-reward of us losing focus to launch a whole new market right now, given everything else on our plate — particularly Florida — doesn't make sense. I've told investors: if I start talking about anything other than our three cornerstone markets, particularly the Florida opportunity, tell me I'm crazy and take your money elsewhere. We're on the 10-yard line, we need a touchdown, and we shouldn't settle for a field goal — and we definitely can't fumble the ball, which is what happens if you start running in another direction without fully securing the opportunity in front of you. That said, our M&A days aren't over — if we execute well in Florida, we'll have the capital and optionality to do more later. Bryan Fields: It's a tough pill to swallow given how much effort your team put into that license. Kim Rivers: I wouldn't call it emotional — this is a team that understands we've made investments we've had to pull out of before. What's emotional is committing to a market, hiring people, and then having to pull back because it's not working out. I'd rather make the strategic call up front. The team that worked on the New Jersey application is fine — we have structures in place so they win regardless. We place bets without always knowing how a market will evolve, but it's usually the lowest-cost bet we can place. Two years ago the calculus looked different than it does today. And frankly, I get calls weekly from people asking if I want to buy their New Jersey cultivation or retail assets — so opportunities are there if we ever decide to enter, just maybe not until 2025. Bryan Fields: The whole New Jersey market is just a percentage of what the Florida market is, so it makes complete sense given the chessboard you're managing. Bryan Fields: Unfortunately, the one place you left out is New York — I don't think I'll be getting Trulieve products there anytime soon. Kim Rivers: No, unfortunately not — but check with me in a couple of years. Once we're sitting as hopefully the biggest player in a recreational Florida, our earnings calls will look a whole lot different, with a potential tripling of our largest market. If we decide New York is somewhere we need to be, we can be there — it's about how you focus resources. When I read the early draft regs for New York, it was clear the state didn't want multi-state operators as key business owners in their adult-use program, so we made a strategic decision to focus elsewhere, where we felt more aligned with our strengths. Kellan: Go to your parents, Bryan — self-drive your family closer, Pennsylvania. You'll be able to come on down. Bryan Fields: My mom will be very happy with that statement. Kim, fortunately or unfortunately, Florida isn't the only massive news in the cannabis industry — rescheduling is making major waves. How is your team handling that, and does it alter anything from a positioning standpoint? Kim Rivers: I was excited — maybe the lawyer in me — to read the unredacted HHS report. There's a lot of incredible information in it, including an in-depth comparison of cannabis to alcohol, which they typically don't do in reports like that since alcohol isn't scheduled at all. I'd encourage anyone with extra time to actually read it. As for the DEA, nothing has really changed from my vantage point — everyone still speculates it'll happen sometime this year, likely ahead of the presidential election. I'm very involved with the National Cannabis Roundtable and our federal lobbyists, but the DEA is the DEA — if anyone's expecting a leak of information from that agency, it's the least likely one to leak. We'll know when we know, but the thoroughness of the report is encouraging. Bryan Fields: Broad strokes, do you think it's good for the industry or people in the street? Kim Rivers: Of course it's good for the industry — it's super exciting. When you zoom out and think about where we were back in 2015 versus today, cannabis wasn't even discussed at the national level, and now there's real engagement from both the executive and legislative branches, plus agency involvement. Rescheduling would be monumental historically, and maybe more importantly, it could be the domino that leads to other changes on a national scale. Bryan Fields: The 280E implications would be wonderful for companies large and small, but I think the part that gets forgotten is that customers benefit too, since there's less tax burden built into pricing. Why isn't that more commonly discussed? Kim Rivers: It's hard to quantify, and different operators will use the savings differently. In our 750,000-square-foot facility in Florida, we're getting incredible efficiencies, high THC percentages, and we share some of those cost savings with the customer — it's a win-win. But some companies have significant debt to pay down first, so there may be a lag before consumers see the full benefit, followed by reinvestment, job creation, and other downstream positive impacts. Bryan Fields: How is rescheduling related to SAFE Banking? Can you lay out the difference for everyone? Kim Rivers: Rescheduling is solely within the executive branch. SAFER Banking is a bill going through Congress. Rescheduling was launched by President Biden, first goes to the FDA, which recommends a schedule to the DEA/DOJ based on scientific evidence — HHS recommended Schedule III. DOJ then reviews it through a public safety lens and, hopefully in this case, agrees with the recommendation. Then it goes to rulemaking, an administrative process with a comment period, ending in a final rule. SAFER Banking, on the other hand, is a bill currently in the Senate, aiming to provide a safe harbor for financial institutions that choose to bank cannabis businesses so their compliance departments are protected. Rescheduling affects things like taxes and international narcotics treaty implications; SAFER Banking is about providing banking access. Bryan Fields: One of my favorite topics on Twitter is people scenario-planning how a company like yours would allocate dollars if Schedule III is confirmed. Any scenarios you can share? Kim Rivers: Nothing we've said publicly, but we're very focused on capital allocation and management, taking advantage of the opportunities in front of us, reinvesting in the business, and remaining opportunistic. We've shown the ability to generate cash — strategic initiatives put in place almost two years ago are showing up meaningfully in our financials, especially in Q3. In 2022 alone we paid $137 million in 280E taxes, so relief would change the dynamics significantly, including how institutions view our financial health, and would let us operate under a normalized tax regime like every other U.S. business. Bryan Fields: Can you elaborate on the IRS situation? I saw you speak at MJBizCon about not paying certain taxes — I want to make sure people understand the strategic approach. Kim Rivers: We are paying taxes. What we've done, announced in October, is file for a refund of the 280E portion of taxes paid for 2019, 2020, and 2021 — the IRS already has that money, and we believe we don't owe it, backed by a legal position we've built with outside counsel. We were fully paid up, including 280E, through mid-year 2023. Since we filed for a refund, we've stopped paying the 280E portion moving forward — you can't contest a payment and keep paying it at the same time. Look at Coca-Cola's disputed transfer-tax payment with the IRS — they've done exactly the same thing, carrying what's called an uncertain tax position on their books, which is what we're doing too, accruing for those payments. We're still paying the IRS as a regular filer, still sending checks and returns — in sharp contrast to peers who stopped paying the IRS anything entirely, took what we call a 'gap year,' and then had to enter binding settlement agreements with penalties and interest because they became insolvent. We didn't want to be in a position where we'd paid an A+ in taxes with no leverage if, say, rescheduling changes the underlying 280E liability and others try to renegotiate lower settlements. We feel very good about our position and the precedent, and we remain transparent about it in our financials. Bryan Fields: You're on the board — where did the idea originate? Kim Rivers: Shout out to our chief legal officer — he'd been researching this, with a strong tax background from prior roles, along with our finance team and several strategic thinkers on our board. It was a collaborative effort, and it made more sense for us than the path many peers went down, even while we watched analyst reports praise others for 'no longer paying taxes.' Bryan Fields: Switching gears to brands — it looks like your team has taken a serious expansion toward a house-of-brands strategy. Can you elaborate? Kim Rivers: We've retired 17 brands from our portfolio over the last year or so, narrowing focus into clearer, more approachable brands for consumers. We're seeing the rewards in adoption rates and shelf share in mixed-shelf markets. Roll One is our value brand across flower, vape, and concentrates. Modern Flower, mid-tier, has a strong following built on variety and genetics, spanning flower, live resin, and vape cartridges, including a unique formulation called HTE carts. Both have performed really well, especially as consumers trade toward value while still wanting quality. Sweet Talk is our edibles brand, launched in all markets except Pennsylvania, where edibles aren't yet available. Bryan Fields: Is that Cannabis 2.0 in terms of consumer optionality? And is there a brand or partner in the last 12 months you knew right away would crush it? Kim Rivers: On Cannabis 2.0, absolutely — we're constantly iterating on customer personas, tracking how people evolve through their cannabis journey since it's much more dynamic than in other sectors. Our marketing and data science team focuses on actionable data — not drowning in reports but knowing what action to take, feeding insights back into our CDP (consumer data platform) to target messaging and influence behavior. On partners, our relationship with Connected has been very positive in Florida — interesting since they're a California-based grower, and we've worked together on adapting cultivation methodologies to Florida's different environmental conditions. They perform really well for us in the premium segment. Sunshine, a Florida-originated, advocacy-backed brand, has a cult following and shows up authentically for consumers — we're excited about their entrepreneurial growth. Bryan Fields: Do you standardize data across states to pick which brands to deploy where? Kim Rivers: We're not really in the market for additional brands right now — we just streamlined by cutting 17. Data insights inform brand decisions across our whole market portfolio. For example, our Loyalty 2.0 launch in Arizona matters because in a rec market you don't automatically capture customer information the way you do with medical patients, so you need a reason for people to opt in. Our CDP works across all markets, feeding into a large shared database we can segment multiple ways, including by persona, to track trends over time and gauge responsiveness to strain drops, product launches, or promotions. Bryan Fields: Quick true or false — if Jordan Travis was healthy, would Florida State have beaten Michigan and won the national championship? Kim Rivers: A thousand times true. Florida State was robbed. I cannot wait for us to find a way to get out of the ACC. Bryan Fields: One recent focus has been MSOs educating institutional and retail investors about the industry. What would you say to them about Trulieve and the opportunity ahead? Kim Rivers: I was just in New York yesterday meeting with investors, reintroducing Trulieve and the sector to some new faces and some who've been on a break. There's never been a more exciting time to enter cannabis — great entry points across most names. Trulieve in particular has the largest catalyst that's ever happened to a single company in this space ahead of it, alongside federal momentum like rescheduling and SAFER Banking. Alongside that growth potential, we have a healthy underlying core business — we retired $130 million of notes, bought back bonds in the open market, and feel very strong in our ability to manage the balance sheet proactively, continuing the momentum we saw in Q3. Bryan Fields: What question do you wish more people asked you? Kim Rivers: I get excited about the work we're doing not just for today but the track we're laying for the future — this industry is very 'what have you done for me lately,' partly because of where we are in the investment cycle with a lot of short-term investors. I think that will change. It's about building a sustainable business for tomorrow, not just today — persona work, data insights, brand strategy — all critical for the next wave of cannabis normalization. One of the biggest challenges as a leader is pushing forward on those things without getting too far ahead of your skis, staying foundationally strong today while keeping an eye on what will make us a game-separator in the future. Bryan Fields: Prediction time — as the leading figure in the Florida cannabis market, what undervalued opportunities in market growth or evolving consumer preferences might investors be overlooking? Kim Rivers: I think folks may be overlooking that we have an incredibly large dormant footprint we'll be able to turn back on immediately. Capacity is going to matter — you only have between January and May of next year to get built out, and if you haven't started, it'll be tough to finish in time. The ability to be someone's first relationship in a legal cannabis environment can't be overstated — that customer relationship is yours to lose from there, and its value is incredibly high. Kellan: I agree with everything Kim said, but I'll look further out — Florida is surrounded by water on multiple sides, with existing ports, so it could become a really attractive international distribution hub for cannabis globally once it becomes a global trade commodity, which a lot of people don't consider looking 10-20 years out. Bryan Fields: It's funny that Florida is still underappreciated for its sheer size, even after years of discussion and a $6 billion estimate that people debate as too big or too small. The tools your team has in place — data platforms, understanding consumer preferences, tightening up brands and messaging — position you well, especially since that first relationship is so crucial for people experiencing cannabis for the first time. Kim Rivers: I agree with you — they're probably going to love it. Bryan Fields: Kim, for those who want to get in touch, buy Trulieve stock, or visit your stores, where can they find you? Kim Rivers: Trulieve.com — we have an investor relations tab with our ticker symbol and recent press releases. Definitely check that out if you want to listen to our next earnings call on February 29th, leap year day, in the morning — we start with about 20-30 minutes of a great playlist, so stay for the content. Bryan Fields: Awesome, thanks so much for taking the time, this was a lot of fun. Kim Rivers: Thank you.