Any CEO has a multitude of headaches at any given time, but Trulieve Cannabis (TCNNF 2.55%) captain Kim Rivers might take the cake for now; her husband, J.T. Burnette, is on trial for federal bribery and other corruption charges.
In this clip from Motley Fool Live, veteran Fool contributor Eric Volkman discusses the situation and the controversy's potential ramifications for Trulieve with healthcare and cannabis bureau chief Corinne Cardina. This was recorded on July 16.
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Corinne Cardina: Let's talk about Trulieve and some very interesting headlights that the CEO's husband is involved in some alleged bribery. There's a trial. What is going on and should investors raise their eyebrows about all this mess?
Eric Volkman: Yeah. It's uncomfortable. The deal is Trulieve's CEO Kim Rivers, her husband is a gentleman named J.T. Burnette who is a finance and real estate guy, [and has] kind of dipped his toes into a bunch of things in Tallahassee, Florida.
He and a city commissioner of Tallahassee, a guy named Scott Maddox, have been indicted and their trial has just started -- only this week, I believe -- for bribery and corruption, federal charges which are extremely serious. These guys were busted in an undercover sting operation by the Feds. The evidence seems to be very strong for their collusion and their corruption, and their alleged attempts to edge out some of Burnette's rivals.
These are the kinds of headlines you don't really want to see as a company investor. There was some sort of relationship between Burnette as an individual and Trulieve as a company. It's somewhat tenuous. Trulieve did buy property and they bought equipment from a company, the name of which I don't have in front of me, but a company where Burnette was a minority owner. So it's not like they were meeting in a back alley somewhere handing over bags of money or anything for favors.
But these buys were kind of significant, and they sharply increased from $12 million in 2018, leapt to $46 million in the following year, and in 2020, it was nearly $100 million in these purchases. So it doesn't look great. The company did admit it, but in their one of their regulatory filings, they said it didn't seem as if this put them in legal jeopardy.
Rivers herself wasn't indicted. Apparently, she wasn't even under investigation during the probe that resulted from the sting operation. So it doesn't seem as if the company is in legal jeopardy. Most likely Rivers is going to keep her job. There really hasn't been a lot of scuttlebutt that she'll step down or she'll be forced out. There doesn't seem to be any investor impetus for this.
So it's not a good look for anybody here. I don't think Rivers is going to step down. I don't think Trulieve was necessarily touched by this.
I think if either the company or its CEO was dirty, was somehow complicit involved in any of this, they would be much more directly involved in trial either as defendants or witnesses. Or, one way or another, they'd be more strongly identified and involved in it. Bottom line, I don't think Trulieve investors should worry about it. However, it is something to keep an eye on and be a little bit cautious about.