Quincy, Florida-based Trulieve Cannabis is weighing next steps after an audit committee investigation into “irregularities” related to its former CFO Alex D’Amico’s expenses and use of corporate credit cards uncovered conduct that was “inconsistent with the company’s policies and procedures,” according to the findings included in the company’s 10-Q filed with the Securities and Exchange Commission Wednesday.
D’Amico both sought to be reimbursed for personal expenses and made personal purchases with company credit cards during his tenure at the firm, the company and its audit committee concluded. The company estimates that D’Amico did not reimburse the company for such expenses, with the total amount “in question” between $350,000 and $400,000, the filing states.
While the company is still mulling its next step, it along with its audit committee concluded that the matter did not have a “material impact” on the company’s previously reported financial statements. “The Company is still evaluating its options, particularly with respect to the expenses submitted by Mr. D’Amico, which may include, without limitation, the Company seeking restitution from Mr. D’Amico of the amounts determined to have been improperly reimbursed and making corrective tax reports relating to any such amounts not recovered,” the filing states.
The developments related to Trulieve’s investigation come as the cannabis industry is struggling with falling marijuana prices, competition from illegal sellers, and high taxes, CFO Dive previously reported.
At the same time, the company’s CFO seat has been in a state of flux since D’Amico resigned on June 19. As he exited, Ryan Blust, the company’s vice president of finance, was tapped to serve as interim CFO. Then the company named Tim Mullany — a former CFO at Jack in the Box and RAVE Restaurant Group — to the position on July 11, only to have him step down roughly 10 days later, citing unspecified personal reasons.
That put Blust back in the interim CFO role, effective July 20. Blust, who has over 18 years of accounting experience, joined Trulieve in September 2018 and has previously served as controller at Vector Solutions, a software company and as CFO for Honeycomb Company of America, according to a July 21 company release.
In the filing Wednesday, the company stated that D’Amico’s resignation did not result from any disagreements regarding any matter related to the company’s operations, policies or practice, something many companies state when an executive departs. Mr. D’Amico did not receive any severance in connection with his resignation, the company stated.
C-suite churn is not altogether unusual in the sector. Last month, struggling cannabis retailer MedMen Enterprises named a new CEO and CFO, the latest in a string of senior leadership role changes at the company in recent years. Industry veterans Ellen Deutsch is the company’s fifth CEO in three years and Amit Pandey is its seventh CFO in five years. will take over as the company’s CEO and CFO, CFO Dive previously reported.
On Wednesday the company reported a wider second-quarter net loss of $404 million compared with $22 million in the year-earlier and saw revenue fall to $282 million in the quarter from $314 million the year earlier. Hotter temperatures and lower customer spending damped its performance, Reuters reported.
Trulieve and D’Amico did not immediately respond to requests for comment. Last month Amico, who was CFO of Trulieve for just over three years, was named CFO of CytoSorbents, a Princeton, New Jersey-based biotech firm.