Trulieve Cannabis Corp. (CSE: TRUL & OTCQX: TCNNF) (“Trulieve” or “the Company”), a leading and top-performing cannabis company based in the United States, today announced the Company has amended the terms of the issued and outstanding subordinate voting share purchase warrants of the Company (the “Warrants”) to convert the exercise price of the Warrants to USD $13.47 per share, being the US dollar equivalent of the Canadian dollar exercise price of the Warrants of $17.25. The US dollar exercise price was determined using the US dollar exchange rate published by the Bank of Canada as at the close of business on December 9, 2020 of $1.00 = USD $0.781. The Warrants are listed and posted for trading on the Canadian Securities Exchange (the “CSE”) under the symbol “TRUL.WT”. No other terms of the Warrants were changed and each Warrant remains exercisable to acquire one subordinate voting share of the Company until June 18, 2022, subject to adjustment in certain events.
The Warrants were originally issued in June and November of 2019 in connection with two public offerings of debenture units of the Company, comprised of an aggregate principal amount of USD $130,000,000 of 9.75% senior secured notes of the Company maturing in 2024 and 3,030,000 Warrants. The Company has entered into a supplemental warrant indenture dated December 10, 2020 with Odyssey Trust Company, as warrant agent, to effect the conversion of the exercise price of the Warrants to United States dollars.
The conversion of the exercise price of the Warrants to United States dollars was driven by the accounting treatment necessitated by having the Company’s warrants denominated in a currency that differs from the Company’s functional currency. Because of the Canadian denominated exercise price, the Warrants are to be classified as derivative liabilities at fair value through profit or loss in the Company’s financial statements in accordance with both IFRS and U.S. GAAP. As a result, an increase in the trading price of the Company’s issued and outstanding subordinate voting shares would result in a reduction of the Company’s net income and earnings per share under both IFRS and U.S. GAAP. Trulieve believes this dynamic may be misleading in terms of the Company’s financial performance and would not be indicative of the Company’s actual operations, as disclosed in the Company’s financial statements. The Company anticipates taking a charge in the three-month period ending December 31, 2020 for the period up and until the conversion of the exercise price of the Warrants to United States dollars, following which the Warrants will be classified as equity, and will not be classified as derivative liabilities in the Company’s financial statements. Trulieve believes this will allow the Company’s financial statements to provide greater transparency into the operating performance of the Company.
Trulieve is a vertically integrated “seed-to-sale” company and is the first and largest fully licensed medical cannabis company in the State of Florida. Trulieve cultivates and produces all of its products in-house and distributes those products to Trulieve-branded stores (dispensaries) throughout the State of Florida, as well as directly to patients via home delivery. Trulieve also operates in California, Massachusetts, Connecticut and Pennsylvania. Trulieve’s subordinate voting shares are listed on the CSE under the symbol “TRUL” and trade on the OTCQX market under the symbol “TCNNF”.