Maryland Town and Trulieve Cannabis in Dispute Over Equity Deal

LOS ANGELES — An unfolding financial dispute between the small Maryland town of Hancock and the Florida-based cannabis giant, Trulieve Cannabis, highlights the intricate dynamics of municipal investments in the rapidly evolving cannabis industry.

Dating back to 2015, Hancock agreed to permit Arizona’s Harvest, a cannabis enterprise, to inaugurate a medical cannabis cultivation and processing facility within its borders. This was in exchange for a 4.99% equity stake in the business. This collaboration was viewed as a strategy for Hancock, which has been grappling with significant poverty and soaring unemployment rates, to tap into the economic potential of the budding industry.

Fast forward to 2020: Harvest transitioned its name to Harvest Health & Recreation and subsequently went public. The progression didn’t halt there — in 2021, Trulieve Cannabis acquired Harvest Health in a transaction valued at $2.1 billion.

The crux of the dispute lies in Hancock’s assertion, as reported by The Washington Post, that it is entitled to larger payouts and a closer look into Trulieve’s profits, especially with the advent of Maryland’s new adult-use cannabis market. Maryland’s foray into recreational cannabis has witnessed a robust start, with $21 million in sales recorded in its debut week and amassing over $87 million within the first month.

As per details shared by town officials with the Post, Hancock has so far received $703,193.96 from Trulieve since the inception of the equity deal.

However, the collaboration has also led to unforeseen complications for Hancock. Specifically, the town has lost out on potential federal grants due to the ongoing federal prohibition on cannabis.

Both parties are now slated for mediation on August 30, in hopes of resolving the differences. As the cannabis sector expands and more states contemplate legalization, the case of Hancock offers insights into the potential challenges and intricacies that municipalities might encounter when diving into this burgeoning market.