Trulieve Brought Up In Burnett Trial in Tallahassee

While Florida-based cannabis company Trulieve (OTC: TCNNF) is not involved in the trial of businessman John “J.T.” Burnette, the company can’t help but get mentioned in the trial. Burnette is the husband of Trulieve CEO Kim Rivers and she has been attending the hearings as noted with court drawings. The Tallahassee Democrat has been covering the case and reported that on Monday, “Federal prosecutors laid out their case against businessman John “J.T.” Burnette during the first day of his public corruption trial, telling jurors that he and former Tallahassee City Commissioner Scott Maddox conspired together out of greed.”

According to the case, Burnette and Tallahassee City Commissioner Scott Maddox flew to Vegas in December 2016, where they met up with undercover agents posing as Mike Miller, owner of Southern Pines Development, an FBI front company; Mike Sweets, a medical marijuana entrepreneur, and Brian Butler, a “green energy” businessman.  Burnette is being charged with racketeering, extortion, fraud and making false statements. He is also accused of arranging $40,000 in payments to a consulting firm owned by Maddox friend Paige Carter-Smith but alleged to be secretly controlled by Maddox from an out-of-town vendor called Southern Pines Development. The company, which was eyeing potential development projects in town and wanted Maddox’s official help, turned out to be an FBI front. Burnette had wanted advice from Sweets for Rivers.

The Tallahassee Democrat reported that Maddox and Carter-Smith, former head of the Downtown Improvement Authority, pleaded guilty to bribery charges in 2019 and that both will testify against Burnette.

Trulieve Connection

To be clear, Trulieve is not connected to the case. Burnette though was involved in the construction of many Trulieve facilities. In 2018 his construction company received payments of
$8.7million and in the first three quarters of 2019 the construction company was paid almost $28 million. Trulieve has said in a statement, “JT Burnette is a minority owner in the construction business. Trulieve has retained the services of Burnette Construction company, as well as other construction companies over time. These service providers are chosen
because they are knowledgeable, experienced, and provide high-quality services at favorable terms. These business relationships are completely separate from the indictment case against J.T. Burnette. All transactions have been approved by independent board members and the value is provided in our public disclosure documents. They are arms-length and below market in cost to Trulieve.”

Burnette’s lead attorney, Tim Jansen told jurors this week, “He’s trying to help his wife out with Trulieve. So he contacted Mike Sweets for marijuana advice.” The Tallahassee Democrat reported, “The advice turned out to be helpful, Jansen said, adding that jurors will hear more about that.” Some shareholders have faulted Trulieve for not disclosing more information about the case, while others believe the company has adequately addressed it. The trial is expected to last several weeks.

Grizzly Report

In December 2019, stock short-seller Grizzly Reports issued a scathing report on Trulieve and highlighted the accusations that prompted the current trial. In January 2020, Trulieve filed a lawsuit in Florida state court against GRIZZLY RESEARCH LLC alleging, among other claims, defamation for publicly disseminating false and libelous statements about Trulieve to manipulate the stock price and further its own financial interests. The case has supposedly stalled due to the pandemic.

 

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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