A Florida-based operator of cannabis assets is at the center of the marijuana industry’s latest short seller attack.
On Tuesday (December 17), a short seller group called Grizzly Research issued a report targeting Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF). It led to a double-digit drop in value for the US company.
In a statement issued on Tuesday, the management team of Trulieve asked investors to recognize that this was an attempt to alter its share price by the short researchers.
“It appears today’s report is a disingenuous attempt to manipulate Trulieve’s stock price,” Trulieve said.
Kim Rivers, CEO of the American operator, said the company is prepared to take legal action against the people behind this report.
— Kim Rivers (@rivers_kim) December 17, 2019
In its report, Grizzly Research questions the methods by which Trulieve has secured financing from lenders. The report even alleges that the company represents a fraud case.
The short sellers have taken particular issue with connections between Rivers’ husband John “J.T.” Burnette and an ongoing investigation regarding an FBI corruption case in Florida.
According to a recent report from the Tallahassee Democrat, new evidence in the case prompted Burnette’s attorneys to continue the trial for at least two months.
According to the Investment Industry Regulatory Organization of Canada, shares of Trulieve faced a halt on the Canadian Securities Exchange in the early part of the trading session on Tuesday. It lasted less than 10 minutes.
Trulieve is the leading seller of medical cannabis in the Florida market. The company has also become a darling of the marijuana capital markets thanks to its performance and quarterly results.
Shares of the company currently maintain a “strong buy” recommendation on analyst aggregator site TipRanks, based on five stock ratings.
The marijuana capital market has had to contend with notorious short seller attacks by way of public reports calling on stocks to fall or even bottom out.
In one of the most infamous cases of a targeted cannabis short seller attack, this year a joint report from two bearish research firms, Quintessential Capital Management and Hindenburg Research, produced a tumult of volatility for Canadian producer Aphria (NYSE:APHA,TSX:APHA).
During the 2019 edition of the Lift & Co. (TSXV:LIFT,OTCQB:LFCOF) Cannabis Business Conference in Vancouver, British Columbia, one analyst said short sellers have become attracted to the cannabis industry given its rapid rise in attention.
“It’s got probably a bit higher profile as far as opportunities for short sellers to target a particular company,” Neal Gilmer, an analyst with Haywood Securities, said at the time.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
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The Company will have an option, prior to the closing date, to upsize the offering with the sale of an additional 25% of Units, accounting to aggregate proceeds of up to $625,000.
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