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Trulieve announced today that it is cutting losses in two mature markets where it has a minimal footprint relative to other states. The multistate operator said it is closing its last retail location in California, in Grover Beach, and in Massachusetts, where it has three stores and one cultivation/processing facility, the company said it will cease all operations by the end of the year.
The move was characterized as a continuation of “measures to preserve cash and improve financial performance.” It reduces by four the 185 dispensaries the company currently operates nationwide, and reduces by one the 18 cultivation/processing locations Trulieve operated nationwide as of March 31, 2023, according to a May 2023 10Q SEC filing. The closures will impact 128 employees, said the company in an email.
The 10Q filing listed ten states the company operated in as of March 31, 2023, as well as the number of dispensaries and cultivation/processing locations it operates nationwide. In order of footprint, Florida had 125 Trulieve dispensaries and 6 cultivation/processing sites; Arizona had 20 and 4, respectively. Pennsylvania had 19 and 3; West Virginia had 10 and 1; Maryland had 3 and 1; Massachusetts had 3 and 1; California had 3 dispensaries and no cultivation-processing sites; Connecticut had 1 and none; Colorado had no dispensaries and one cultivation/processing site; and Georgia also had no dispensary and one cultivation/processing location, however the company has opened a dispensary in Macon, Georgia since the report was issued.
The closure of Trulieve’s Grover Beach store follows its “exit of select California retail assets last year in Palm Springs and Venice,” the company said today. In Massachusetts, it added, “Dispensaries located in Framingham, Northampton and Worcester will close on June 30, 2023. The Company expects to cease Massachusetts operations by the end of 2023.”
Trulieve commenced wholesale sales in Massachusetts in September 2021 out of its Holyoke cultivation and manufacturing facility, which it reported in the recent 10Q as a “failed sale-leaseback financing arrangement.
“In July 2019,” the 10Q states, “the Company sold property it had recently acquired in Massachusetts for $3.5 million, which was the cost to the Company. In connection with the sale of this location, the Company agreed to lease the location back for cultivation. The transaction was determined to be a failed sale-leaseback financing arrangement. As of March 31, 2023, and December 31, 2022, the total construction finance liability associated with this transaction is $45.4 million and $45.2 million, respectively.”
The Holyoke operation is where Lorna McMurrey was employed before she was hospitalized and subsequently died as a result of working conditions at the facility. As we reported last year, “Following an inspection, OSHA reported that McMurrey, who collapsed at work at Trulieve’s Holyoke facility before being taken to the hospital, died from ‘occupational asthma due to exposure to ground cannabis.’”
Massachusetts was also blamed in part for Trulieve’s decreasing net revenue. Per the 10Q, “Revenue, net for the three months ended March 31, 2023, was $289.1 million, a decrease of $28.7 million or 9% from $317.7 million for the three months ended March 31, 2022. The decrease in revenue is due to a $15.0 million decrease in retail revenues and a $13.7 million decrease in wholesale revenues. The Company experienced increased competition and promotional activity in certain markets, including Florida, Pennsylvania, and Massachusetts. The Company operated 184 dispensaries and 165 dispensaries as of March 31, 2023, and March 31, 2022, respectively, opening three new dispensaries during the first quarter of 2023.”
Additionally, the Commonwealth figures significantly in the company’s Impairments and Disposals of Long-lived Assets, Net. “Impairment and disposal of long-lived assets, net for the three months ended March 31, 2023, was $31.0 million, an increase of $14.6 million or 88% from $16.5 million for the three months ended March 31, 2022,” reported the company. “During the three months ended March 31, 2023, the Company recorded an impairment of $30.3 million in the Massachusetts market, which primarily consisted of intangible assets. The impairment expense incurred in the prior year was primarily due to exited facilities and the repositioning of assets, primarily in our southeast hub.”
“Over the past year, Trulieve has worked to streamline and optimize operations across the organization focusing on markets with long-term growth potential,” said Trulieve in an email. “Some of this work includes closing select retail locations in California, exiting Nevada and reducing production to match consumer demand across multiple markets. Today we announced that Trulieve will close the Grover Beach, California location and wind down operations in Massachusetts which will affect 128 employees as part of our ongoing efforts to focus on our strategy while bolstering our business for long-term success.”
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