The stocks of U.S. cannabis operators tumbled Tuesday after a news report said federal investigators were looking into whether Chicago-based
Green Thumb Industries
had improperly influenced the Illinois politicians involved in legalizing and licensing pot sales.
Shares of Green Thumb (ticker: GTBIF) sank13% in over-the-counter trading, to close at $25.35. Monday evening, the Chicago Tribune reported that federal investigators were scrutinizing Green Thumb’s campaign donations and lobbying activities. The newspaper attributed the information to anonymous sources.
Other stocks that fell:
(CRLBF). They all dropped more than 5% during the day.
“These are unfounded allegations that completely undermine the lengths Green Thumb has taken since day one to compliantly grow our business,” spokesperson Linda Marsicano told Barron’s. “We are not aware of such an investigation, we have not been subpoenaed or had assets seized, and we are actively reaching out to the authorities to engage on these allegations.
“Green Thumb Industries first learned of the probe into alleged violations regarding obtaining licenses from a Chicago Tribune reporter who cited unnamed sources moments before he published the story,” she wrote in an email. “We stand by our hard earned accomplishments.”
The Tribune reported that it was unclear when the probe began, or what aspects of Green Thumb’s political activities were being scrutinized.
Cannabis companies are sensitive to allegations of impropriety because their product is illegal under federal law; 15 states and the District have legalized recreational sales. Lobbying efforts by the industry—and its opponents—continue at both the state and federal levels.
Stifel GMP analyst Andrew Partheniou told clients that Green Thumb’s dip on the news was a great buying opportunity. “We believe this is without merit,” he said in a Tuesday note. “[Green Thumb] has the best track-record among U.S. operator peers with no previous conflict with regulators and a high commitment to compliance.”
The analyst pointed out that Trulieve was rattled in 2019, when its chief executive’s spouse was indicted in a corruption case that has not as yet touched the Florida cannabis company, or gone to trial. He has pleaded not guilty. Trulieve stock is up over 200% since then, Partheniou said.
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