Chicago Tribune, Citing Unnamed Sources, Says Green Thumb is Under Federal Investigation
One of the country’s largest cannabis firms could be facing a federal investigation for engaging in so-called “pay-to-play” lobbying tactics, according to a stunning — albeit shaky — report from the Chicago Tribune.
According to the Tribune, Chicago-based multistate operator (MSO) Green Thumb Industries (GTI) — which boasts 56 dispensaries across 12 markets and reported $556 million in revenue in 2020 — may have illegally paid off powerful politicians in its quest to obtain lucrative cannabis licenses.
The Tribune, citing unnamed sources, reports that “investigators have been scrutinizing campaign donations and other steps Green Thumb Industries took as it sought to secure growing and distribution licenses in Illinois and several other states.”
However, the outlet did not provide any details about its sources, or note which agency was conducting the investigation. The outlet also failed to provide any facts from the investigation and said it did not know “what specific aspects of Green Thumb’s political giving, hiring or other activities” were being scrutinized.
The authors of the story, Jason Meisner and Ray Long, were also unable to provide an “exact time frame and origin of the probe.”
No charges have been filed, the paper noted, and GTI has refuted the report.
In a tweet, GTI founder and CEO Ben Kovler wrote that the company “first learned of the probe into alleged violations” only “moments” before the Tribune filed its story on Monday evening.
“These are unfounded allegations that completely undermine the lengths Green Thumb has taken since day one to compliantly grow our business,” he wrote, adding that GTI was unaware of any ongoing investigation.
“We have not been subpoenaed or had assets seized, and we are actively reaching out to the authorities to engage on these allegations,” Kovler said. “We stand by our hard earned accomplishments.”
Indeed, the consensus from the investment community, including analysts at Stifel and BTIG, is that Tribune reporters relied on “nebulous” information from unidentified sources for its report.
“We believe this is without merit and presents an opportunity for investors with the stock trading down ~ 10% this morning,” Stifel wrote.
For its part, BTIG reiterated its buy rating on GTI stock, saying that it believes the company “conducts itself above board and is a leader among its peers.”
“Given that no sources were named, it makes us wonder if there are ulterior motives at play from other industry groups,” BTIG added.
Indeed, several Twitter users — many of whom refer to themselves as members of the #MSOGang of cannabis investors — described the report as a “hit piece” and suggested they would be "buying the dip" as shares fell.
“Thankful for this opportunity to add more,” wrote TheRealTez23.
“I’m paying it no mind, but sure am glad to pick up cheap shares along the way,” added Marc Eli.
For his part, popular cannabis day trader Jason Spatafora, better known as the “Wolf of Weed Street,” called the article “dog shit.”
Another popular cannabis investor, CB1 Capital founder Todd Harrison, also questioned the veracity of the story and wondered why executives at GTI wouldn’t have been aware of the probe.
“Never underestimate motivated f*ckery,” he tweeted.
Nonetheless, the Tribune report highlighted several links between Kovler, whose Great Grandfather helped build the Jim Beam empire, and various politicians and political groups.
Over the years, GTI has hired numerous lobbyists and consultants, the Tribune said, including Michael McClain, who was recently charged with bribery by the U.S. District Court in Illinois.
The company has also donated to pro-cannabis groups that have worked to legalize cannabis across the country, including more than $600,000 to a political action committee in Ohio that failed to get recreational marijuana passed in 2019.
Of course, as Stifel points out, none of this behavior is illegal.
“The lobbying and political donations are public information (and not new information), legal and no different from any other cannabis operator’s activities or every other industry for that matter,” they wrote.
Indeed, it’s common for large cannabis firms to contribute to political campaigns and to support pro-cannabis groups lobbying for adult-use legalization across the U.S.
One other issue for GTI remains a pending lawsuit filed in 2017 by Kovler's former business partner Cary Neiman, who alleges the idea for the company was stolen after the two had struck a "handshake" deal.
Shares of GTBIF closed down nearly 12% on Tuesday following the news.