Grizzle sat down for an exclusive interview with Kim Rivers, the CEO of cannabis market leader Trulieve.
Kim confirms if recent rumors of sales spikes across North America are true and takes us through how Trulieve is adapting in a COVID-19 world.
Full of unique insights on the company and the cannabis market you won’t find anywhere else.
Scott: Alright, welcome back to Grizzle. I’m really pumped about this video because we have a special guest with us today and it’s none other than Kim Rivers of Trulieve. Kim, thanks for being with us.
Kim Rivers: Thanks so much for having me. Appreciate it.
Scott: So, for those of you who don’t know, Trulieve, really quickly. They’re the largest grower and seller of cannabis in Florida. And then they’re also top four. If you look at the entire United States based on revenue, they’re one of our favorite stocks for a number of reasons. But that’s not why we’re here today. There’s a pandemic going on. It is changing our lives in many different ways. So we wanted to bring Kim on to kind of talk through what she has seen on the ground and some of the ways that Trulieve is having to pivot to deal with what’s going on in a COVID-19 world. So, Kim, I see you’re probably in your quarantine bunker right now as we are as well.
Kim Rivers: Yes, I am.
Scott: Ok. So just maybe to help our viewers out to start. Could you take us through what’s going on in the states where you operate? I mean are you open for business? Is it delivery only retail shops? Just really quickly, kind of a hit on the different states. What’s going on?
Kim Rivers: Sure, of course. And in all of the markets that we’re currently operating in, we service medical patients. And in California, we also have — a portion of our business is recreational. And then Massachusetts, we’re building out. And that’s probably where we’re the most impacted currently. And just because we are mid construction and things in Massachusetts have kind of come to a halt, our temporary pause, as we say in the construction arena. And then also the CCC, which is a regulating body for Massachusetts, has put a hold on any additional inspections. And also for folks that are up and operational in Massachusetts, only medical has been able to stay open for business and say recreational businesses in Massachusetts currently are shut down, unfortunately. And in Connecticut, we have a very robust medical dispensary that’s continuing to operate. And again, California dispensary is continuing to operate in Florida. We are medical and we have been deemed essential. And so all and all of our forty five dispensaries in Florida continue to operate, of course, with significant shifts in the way that we do business. And so since Florida is our primary state, it’s our home state. And that’s certainly where we have the most activity and we can kind of focus there. It has been really interesting because while the government has allowed us to remain open for business in Florida, the customers are really shifting their behavior, which makes sense because I think you and I and the world has been shifting our behaviors.
Kim Rivers: And so with a stay at home order issued by the governor a couple of weeks ago, what we’ve seen is we’ve seen a dramatic shift to pick up. Pick up only really for a lot of customers and then, of course, an increase in our ramp and our delivery platform. And so just as a reminder, Trulieve has delivered across the state since our first store opened a number of years ago. However, recently that number of deliveries has increased dramatically, we’re actually up about 500 percent in our deliveries. We now have approximately 200 vehicles that are on the road day in, day out. When COVID hit, we immediately offered free delivery to our senior patients to try and encourage them to take advantage of delivery. So that’s a big segment of the market and the increases that we’re seeing. In addition, on pickups previously, that was a very fast growing — that was a fast growing segment of our business. However, it has grown again way over 100 percent in pick-ups. And actually that pickup platform now represents about 65 percent of our transactions and OF our business. And so where previously we were really primarily, I would say a walk in retailer. That has flipped completely.
Kim Rivers: So, we are primarily a pickup slash delivery retailer now with a walk in representing, I would say 20, 25 percent of our business at this point in time. So it’s just been a complete pivot for us in terms of how we do business, how we’re communicating with customers and how we’re getting them the medicine that they need in our, you know, from our stores or through our delivery platform.
Scott: Yes. It sounds like a huge shift in a short amount of time, right?
Kim Rivers: Yes. Yes. That’s right. And what’s been — I think what’s been really fascinating to me is just how the team has worked very quickly to optimize and build upon infrastructure that we had previously — you know, that’s previously existing. So a couple of other interesting stats. Our call center volume immediately increased from about 20,000 calls a week to about sixty five thousand (65,000) calls a week. And I think that it makes sense, right, because we’re asking consumers to behave differently. Right. They’re having to go through a different process to do business with us. In addition, you know, folks are at home. And so we have time. And, you know, folks are anxious. They want to connect with someone. They want to understand, if I’m ordering delivery for the first time, how long is that going to take? You know, when is my delivery going to be there? If I have questions about safety protocols and so forth. So, you know, we saw a huge shift there. We immediately came in and implemented some technology to answer this most frequent question. So we added a status tab where folks can actually track how their order is moving through the process and we also added some additional queuing and additional communication where we’re actually communicating more regularly with our patients throughout the order process. And these calls have now come back down. But, you know, really, again, the team jumping in and all hands on deck and really making sure that we don’t miss a beat and that our customers are able to get their products has been really, really impressive to watch.
Scott: Interesting. You know also from a technology point of view, we cover tech pretty closely. So out here, what everyone at Silicon Valley is saying, they seem to be–, even though this is a not a positive situation we’re in, they seem to be cautiously optimistic that this shift to everyone being at home has pushed some of these tech businesses forward in months, maybe years. So just working on the technology front. Are there changes you’ve made or that you think you may make that maybe it’s a new normal? Like there’s different ways you’re doing business and why not go back to the way it was?
Kim Rivers: Yeah, no, absolutely. I would say that again, those pushes from us to our customers with respect to where their order is, when they can expect their order. We’ve also implemented, you know, what we’ve used for quite some time. It’s called Wheatly. It’s an app that our stores use to keep folks places in line. Now, we’re actually utilizing that in a more optimal way to let folks know. So, for example, you know, I don’t know if you’ve ever used like a CBS or a check-in situation where you can check in from home and you have a better visibility. Right? In terms of when your time is going to be up in line. And so we’re implementing those technologies. We’re also, you know, really leaning on our delivery platform to optimize routing. And again, be able to get more efficiencies out of our delivery fleet. But I think that from a technology standpoint, kind of the biggest Aha’s, I think we’ve had a generation in the US who wasn’t indoctrinated into technology.
You know, unlike the rest of us right? I know I’ve got kids at home who, you know, they’re on Zoom meetings with their teachers. And that’s just a normal part of life. And it’s no big deal. But we’ve got an age demographic, you know, that the trends are a little bit older who have maybe avoided technology up until this point. And I think that the biggest shift I think that we’ve seen is that that demographic now is being forced to adapt technology. They’re embracing it. And I think that we’ll have in technology companies certainly, we will have a larger audience post COVID than they did previously. And so I think that a question still remains with respect to whether or not delivery is going to really be adopted at the rate that we’re seeing now. I think primarily in cannabis, because there still is the requirement that you’re present, you’re signing for your delivery. Right? That makes sense now because we’re all at home and you know, we’re there. I’m not sure.
Post COVID, depending on how workforce macro scenarios change or not, you know, how sticky that that part is. I think that we will certainly see an uptick from where it was pre. And I definitely think that, you know, again, the pickup scenario, more online order ahead type scenarios. It is not only for Cannabis, but I think for many industries, will likely remain.
Scott: So, can you just give some background — delivery has spiked for you now. But what kind of percentage of orders were delivery before this, would you say?
Kim Rivers: Pretty low. So really, I mean, and it makes sense when you kind of think about our model. So we would, you know, whenever we would have an area that had high delivery statistics, that would be an indicator that we needed to put a store there. So we would put a store there and then delivery would come down in that area. Right? And so — So it went from, you know, way under 10 percent, maybe 5 percent, 6 percent kind of at year end. Now it’s approaching 20 percent and growing. We give a week. And so, you know, which is still a significant portion of our business. And I think that, again, as we optimize delivery more and more, I had talked in the past about really trying to get to that same day delivery model.
You know, we are not at same day right now as delivery has grown 500 percent. But we are next day. And in a lot of, you know, I would say the vast majority of orders. And so trying to continue to optimize getting to a point where, you know, we’re more similar to call it a grocery delivery and less so, you know, the cable guy is the goal. Right? And so, you know, you can order in the morning. And hopefully by that afternoon if needed. Right? You have product available. And also where you’re able to schedule your time. So that’s additional technology that we’re working on, where you can actually schedule your delivery time in a more precise timeframe and you can do that remotely. And again, adding that this technology layer so that the customer can be more in control of their experience.
Scott: Seems like it could be powerful. If you do the same day, then it’s where they could have made a purchase and they’re not because they had to wait an extra day. Now it’s just the same option for them. So maybe there’s more purchases that happen that way.
Kim Rivers: Yeah, that’s certainly a theory, right, that we’re excited about. And being in a position to be able to test.
Scott: So as we’re talking about sales, you know, I’ve heard publicly people I talked to on Twitter, people in the industry, that there has been a sales surge across North America. Just wondering, you know, if you look at like the last two weeks of March so far in April. Are you seeing sales trends you’d say are different than you typically see this time of year?
Kim Rivers: Yes. I mean, this week, of course, is going into four twenty (4/20). So this week we always have very strong sales. I would say in general, probably across the industry. And, you know, although that’s a little different, we had to certainly alter the way that we’re celebrating 4/20 this year as opposed to what we had planned. You know, there’s not going to be celebrations and food trucks and concerts and those types of things. And so that’s been an interesting shift. But, yeah, I can tell you that, you know, we looked at — so there was a spike for us. And really in Florida, particularly, we analogize it to pre-hurricane kind of buying patterns. It’s really — it feels fairly similar. So there were two instances in Florida where, you know, stay at home orders were issued, one more on the local level and one more at the state level. And prior to and leading up to those orders, we certainly saw a spike in sales. And the week of March 13th, I’ve got a data for you here. Week of March 13th, we saw demand increased by 17 percent in oil and thirty seven percent in flour. So significant, significant increases. And it’s normalized now. So what we haven’t seen is we haven’t seen it kind of go off a cliff, as has been reported in some of our more recreational markets. And we have seen it go back to kind of that generalized trend that we were seeing. Call it pre-COVID. And so still increasing. But then two areas of spikes that again tracked that the stay at home, the stay at home orders being issued.
Scott: It feels to me like just as this industry matures, it has similar demand patterns to like alcohol or beer. Is that kind of your feeling here?
Kim Rivers: Yeah, I mean, I think that. Right? I think that certainly in times of stress, there are times of concern that a normal pattern will be interrupted. I think that it certainly is, you know, is an industry and it’s a product that folks, you know, want to have available to them. And, you know, I think the concern over the inability to get. Right? And again, I analogize it to hurricane buying, which I think holds true, quite frankly, with unnecessary medication as well as alcohol. So I guess that, you know, it sort of falls into that spectrum. And so I would actually argue that maybe it has more of an impact, because you do have a certain group of individuals who have, you know, significant medical needs and concerns that if they’re not able to have access to, you know, to medication that they need, that obviously has — can have dramatic consequences for them. And then, of course, coupled with the fact that, you know, yeah, if you’re stuck and you’re at home and, you know, you’re dealing with a heightened level of anxiety or heightened level of stress that, you know, in general, of course, you know, cannabis can be a good a good counter to that.
Scott: So it’s a good point on the medical front, for sure. I’m wondering, are you seeing any mix shift in the products that people want? Is there less flour being purchased or is it kind of similar to what it was prior?
Kim Rivers: For us, it’s been the opposite. So I know that I’ve seen that and heard that trend in other markets. And I’m not sure if, again, as a reminder, in Florida, we don’t have edibles available yet. And so whereas I think in some other markets it’s been said that, you know, flour has been you know, edibles have been maybe substituting out for more flour. In Florida, we’re certainly I mean, the flour demand is incredibly strong. That same week that I just mentioned, you know, we had 62 percent of the market in flour. And again, there was a 37 percent increase in flour purchases. [00:14:51] So I think that and perhaps I mean, we’ve hypothesized that maybe the fact that, as we know, flour has a bit of a different shelf life, maybe a different consumption profile than oil where, you know, oil products you can purchase.
And then they do tend to last. And certainly can last for a good a good while. So depending on how you’re storing your flour, depending on types of our products that you’re buying and we certainly see in that flour segment, traditionally those customers tend to come back in more frequently. So those are our more frequent maybe, you know, less on a per ticket, but a more frequent buyer. And so, you know, that could be a bit of what we’re seeing with respect to, again, just the continued increase in flour. We just haven’t in Florida yet hit what I’ll call the top of that flour market yet. Right? And wheat flour came on board in March and it’s been steadily increasing from a demand perspective. And we just haven’t seen it where it’s peaked out and then kind of settled back down or normalized yet. So that trend is continuing.
Scott: You guys have strong growth in patients and everything. So that’s still playing out in Florida, right?
Kim Rivers: That’s right. So it’s a dynamic mix, right? We don’t have a stagnant customer base in Florida. We’re still adding, you know, approximately twenty five hundred, I think last week was twenty six hundred patients per week. And it’s been great to see that, that has continued. That’s one thing that we’ve obviously been watching through this, is whether or not patient growth rate potentially slows down as a result of COVID. And so far, there was one week that it was off by about a little less than, I think a thousand patients, but then it rebounded right back. So that’s been an interesting thing to watch as well.
Scott: Yeah, that’s good data. So I was thinking maybe I’ll move on to logistics a little bit because people are talking about that as well. Are you guys seeing any logistics bottlenecks, getting access to consumables, anything like that? Or do you see any problems on the horizon or what’s it looking like on the ground?
Kim Rivers: I mean, thankfully, like I said, our supply chain has been, you know, working around the clock to make sure that, you know, we’re able to service our patients. We’ve shifted pretty early on. Historically, we’ve held about a three week supply of product at our store level. We immediately pivoted to an eight week supply of product just to ensure that there were no interruptions, that if there were any issues with anything, you know, downstream or even movement around the state, that we had product available at store level. And so I think that was an important, important shift that we made pretty early. And, you know, we haven’t seen any. I mean, again, with the way that we order and the way that we have demand planning and we thankfully with our partners warehouse, for example, our vape products, which of course would be one of the things that’s talked about just because of the Chinese influence there. We have products that’s actually warehoused for us by our vendor stateside. So that hasn’t been an issue for us. And again, our processing facility has just been doing an amazing job, making sure that our stores are fully stocked and that we increased inventory drops. So we have more inventory drops going to stores to be able to handle the increased demand that we have been experiencing. And I would just say that the only area where we along with I think the general population is having some issues around. And again, we’ve been able to meet the demand so far is just making sure that PPE is sourced and available for all of our employees. We have put up Plexiglass now. Shields and that’ll be finished up this week. And all of our dispensaries, of course, have social distancing cues. And in some of the other. But, you know, again, we want to make sure that access to supplies, access to masks, gloves, et cetera, is there for all of our employees.
Scott: So I’m curious, are you seeing any easing in access to PPE or is it still kind of as tight as it was two weeks ago, three weeks ago?
Kim Rivers: So the issue right now is just shipping. It’s getting it right? It’s not necessarily being able to source it. It’s just the timelines in which we’re actually receiving it. So timelines getting pushed back. And it’s really — it has to do with, I think, just, you know, the carriers being overwhelmed, whether it’s FedEx, U.P.S., DHL. And so I think it’s more of that than it is actually being able to, you know, make the purchase. Whereas, you know, a few weeks ago, it was making the purchase. Thankfully, we had, like I said on hand, a decent amount. And then now it’s just a replenishing of those items. And then there are different jurisdictions that now have require that any patient entering a store or any customer entering any store, quite frankly, is required to have a face mask. So now we’re not only supplying PPE for our folks, but also for, to some extent — right? Our customers. So that’s been the only area that I would say it’s been a little bit touch and go.
Scott: So it sounds like you’ve kind of pivoted pretty well. You have a good inventory of everything. Is there anything logistics wise you’re watching to see that there could be a strain or just to look out or is it kind of across the board? You just need to be cognizant of what’s going on?
Kim Rivers: Well, I mean, look, I mean, this is not — I would love to be able to say this has been, you know, smooth sailing. No issues. You know, that’s just not, that’s not reality. Right? And, you know, I think we’re basically running the same or increased — I mean, a lot of cases volume out of our stores with approximately half the P.O.S. is running because we’re not going to, you know — we’re basically for social distancing. Right? To not have patients, you know, one next to one another or quite frankly, employees, one next to another in our stores. And so, you know, it’s been to get that balance correct between on a per store basis. How many of those registers should be dedicated for pickup? How many of those registers should be dedicated for walk in? I’m running pilot programs for curbside pickup.
Running Mobile hub Pilot programs for drive through locations. And again, all of the backup house logistics for the increases that we’ve seen in delivery. And they’ve all come online kind of in mass and simultaneously. And so it’s been, you know, a lot to ask of our employees, quite frankly, to be fluid and to shift with us. It’s been fantastic in that we’ve been able to get management at the store level, real time data with how they’re doing, so to stay within our parameters. So we obviously want to make sure that our customers have a consistent experience and that, you know, that they’re still getting their product within the time that we’ve promised. And so making sure that we’ve got good eyes and visibility around how stores are doing. If stores are getting, you know, backlogged, seeing that real time so that we can add additional resources. And we’ve hired a lot of folks. We’ve actually on boarded, I think, close to 200 over the last month.
Scott: Yes, that’s a good sign.
Kim Rivers: And, you know, some of that is just, you know, ensuring that I mean, there’s going to be a percentage of our workforce. Right? That isn’t coming in for a variety of reasons. And some of them child care related, some of them just, you know, underlying health concern related, et cetera. And so making sure, though, that the team is there to support again, the demand is as important. And H.R. has done a fantastic job — and coupled with marketing. I mean, so it really has been, like I said, just an all hands on deck effort. And to your point. Right? And it’s kind of, you know, forced change and maybe more rapidly than we would have otherwise gone through it. But, you know, in cannabis, we say the only thing constant is change, so.
Scott: Yeah. You’re used to though tight? It’s part of the chorus.
Kim Rivers: Yeah, absolutely. And it’s like I said, I mean, I’m just — I’m incredibly proud of the team and incredibly thankful that we’ve got folks who understand the importance of the business and understand the importance of the products that we bring to market and remain really passionate, enthusiastic about serving the patients.
Scott: So right in the beginning of the interview, you mentioned that some of the permitting in Massachusetts is basically on hold. Just curious. So would you say general permitting, regulatory, that kind is on hold while this whole thing is figured out?
Kim Rivers: So, we actually had a store inspection in Florida on Tuesday. So, yes. So I would say that Florida has maintained and, you know, staff and is maintaining a commitment to work with us to continue to get approvals through. The increase in vehicles that I mentioned, those had to be approved by the state. Hires had to be approved by the state. So, you know, we are continuing expansion plans certainly in Florida and the state has been has been working with us and has really been great. And in being, I would say almost, you know, responding more quickly than usual understanding. Right? That we are essential and that, you know, they’re working to make sure that we can service customers.
Scott: That’s great. That’s great. You know, Kim, I don’t want to take you for all of your time. This has been really insightful, really interesting for all of you listening. So this is some really solid data that you have to start to learn about Trulieve. I’d recommend you go read up more on them. They’re one of our favorite companies. And I think you’re going to be very happy with what you found. So thank you Kim.
Kim Rivers: Thanks so much again for having me. Appreciate it.
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