J.T. Burnette was found guilty on five federal public corruption charges related to his real estate development activities in Florida and had no connection to his role as part-owner of Trulieve. But the conviction has cast a negative shadow on his wife, Trulieve Cannabis CEO Kim Rivers, by focusing attention and raising questions on how the company obtained its Florida business license years back and about its dealings with a construction firm that Burnette part-owns.
Burnette owns 10% of Florida-based Burnette Construction, which was contracted by Trulieve for more than $230 million of work in Florida and Massachusetts — including $96.7 million in 2020 and purchases of $76.4 million over the first half of 2021.
Lauren Newell, an associate dean and professor at the Ohio Northern University Pettit College of Law, who is an expert in marijuana and corporate law, said that “it’s not a problem per se” for Trulieve to have hired Burnette Construction. “Sometimes it can even save a company money to contract with a related party because the company may get preferential terms in the deal,” she said.
During his trial, it was also revealed that Burnette boasted to undercover agents about working with a state lawmaker/childhood friend to tweak medical cannabis licensing criteria in Florida that would prevent Trulieve competitors from qualifying.
“Investors worry about the potential for managers to use related-party dealings to enrich themselves at the expense of shareholders, and it is difficult from the outside to figure out if any related-party dealings are beneficial or harmful to shareholders,” Mike Regan, founder of Denver-based MJResearchCo, said via email with MJBiz, though he declined to comment specifically on the Trulieve-Burnette relationship.
The comments raised unwanted questions about the circumstances surrounding Trulieve’s acquisition of a license to operate in the lucrative Florida medical cannabis market, which fueled the company’s growth and ability to expand to other areas of the country. How the transactions and information are disclosed to stockholders is critical. “Full disclosure saves you, and a lack of disclosure damns you,” Newell said.
Burnette has been “found guilty of participating in a multiyear scheme to extort bribery payments of $10,000 a month to a then-city commissioner in an effort to secure real estate development projects in Tallahassee,” per MJBiz.