The following discussion of our financial condition and results of operations
should be read together with our consolidated financial statements and the
related notes included elsewhere in this Quarterly Report on Form 10-Q and the
consolidated financial statements and accompanying notes thereto and
Management’s Discussion and Analysis of Financial Condition and Results of
Operations included in our 2021 Form 10-K. This discussion contains
forward-looking statements and involves numerous risks and uncertainties,
including but not limited to those described in the “Risk Factors” section of
this Quarterly Report on Form 10-Q and in “Part I, Item 1A-Risk Factors” in our
2021 Form 10-K. Actual results may differ materially from those contained in any
forward-looking statements. You should read “Cautionary Note Regarding
Forward-Looking Statements” and “Risk Factors” contained herein and in our 2021
Form 10-K.

Overview

We are a vertically integrated cannabis company and multi-state operator which
currently holds licenses to operate in ten states and has received notice of
intent to award a license in an eleventh state. Headquartered in Quincy,
Florida, we are the market leader for quality medical cannabis products and
services in Florida and we have market leading retail operations in Arizona and
Pennsylvania. By providing innovative, high-quality products across our brand
portfolio, we aim to be the brand of choice for medical and adult-use customers
in all of the markets that we serve. We operate in highly regulated markets that
require expertise in cultivation, manufacturing, retail and logistics. We have
developed proficiencies in each of these functions and are committed to
expanding access to high quality cannabis products and delivering exceptional
customer experiences.

All of the states in which we operate have adopted legislation to permit the use
of cannabis products for medicinal purposes to treat specific conditions and
diseases, which we refer to as medical cannabis. Recreational marijuana, or
adult-use cannabis, is legal marijuana sold in licensed dispensaries to adults
ages 21 and older. Thus far, of the states in which we operate, only Arizona,
California, Colorado, Connecticut, Massachusetts and Nevada have adopted
legislation permitting commercialization of adult-use cannabis products. As
previously disclosed, on October 1, 2021, we completed our previously announced
acquisition of Harvest Health & Recreation Inc. (“Harvest”) and, as a result of
the acquisition, our operations have expanded significantly effective as of such
date. As of May 2, 2022, we operated 165 dispensaries, with 115 dispensaries in
Florida, 19 affiliated dispensaries in Pennsylvania, 17 dispensaries in Arizona,
five dispensaries in California, three dispensaries in Maryland, three
dispensaries in Massachusetts, two dispensaries in West Virginia and one
dispensary in Connecticut, and we operated cultivation and processing facilities
in Arizona, Colorado, Florida, Maryland, Massachusetts, Nevada, Pennsylvania,
and West Virginia.

As of March 31, 2022, we employed over 9,000 people, and we are committed to
providing patients and adult consumers, which we refer to herein as “customers,”
a consistent and welcoming retail experience across Trulieve branded stores and
affiliated retail locations. As of March 31, 2022, the majority of our revenue
was generated from the sale of medical cannabis products in the State of Florida
and to a lesser extent Arizona and the Commonwealth of Pennsylvania. To date,
neither the sale of adult-use cannabis products, nor our operations in
California, Connecticut, Colorado, Maryland, Massachusetts, Nevada, or West
Virginia, have been material to our business.

Our business and operations center around the Trulieve brand philosophy of
“Customers First” which permeates our culture beginning with high- quality and
efficient cultivation and manufacturing practices, focus on the consumer
experience at Trulieve branded and affiliated retail locations, at our in-house
call center and where available at customer residences through a robust home
delivery program. Our investments in vertically integrated operations in several
of our markets afford us ownership of the entire supply chain which mitigates
third-party risks and allows us to completely control product quality and brand
experience. We believe that this contributes to high customer retention and
brand loyalty. We successfully operate our core business functions of
cultivation, production and distribution at scale, and are skilled at rapidly
increasing capacity without any interruption to existing operations.

Trulieve has identified five regional geographic hubs in the U.S. and has
established cannabis operations in three of the five hubs: Southeast, Northeast,
and Southwest. In each of our three regional hubs we have market leading
positions in cornerstone states and additional operations and assets in other
state markets. Our hubs are managed by national and regional management teams
supported by our corporate headquarters in Florida.

Southeast Hub

Our southeast hub operations are anchored by our cornerstone market of Florida.
Trulieve was the first licensed operator in the medical market in Florida with
initial sales in 2016. Publicly available reports filed with the Florida Office
of Medical Marijuana Use show Trulieve has the most dispensing locations and the
greatest dispensing volume across product categories out of all licensed medical
marijuana businesses in the state as of December 31, 2021. Trulieve cultivates
and produces all of its products in-house and distributes those products to
customers in Trulieve branded stores (dispensaries) throughout Florida, as well
as via home delivery.

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As of March 31, 2022, Trulieve operated cultivation and processing facilities
across thirteen sites and 113 retail dispensaries throughout the state. In
accordance with Florida law, Trulieve grows all of its cannabis in secure
enclosed indoor facilities and greenhouse structures. In furtherance of our
customer-first focus, we have developed a suite of Trulieve branded products,
including flower, edibles, vaporizer cartridges, concentrates, topicals,
capsules, tinctures, dissolvable powders, and nasal sprays. This wide variety of
products gives customers the ability to select the product that consistently
delivers the desired effect and in their preferred method of delivery.

In Georgia, Trulieve received a Notice of Intent to award a Class 1 Production
License from the Georgia Access to Medical Cannabis Commission in July 2021. The
Notice of Intent to award is a notice of the Georgia Access to Medical Cannabis
Commission’s expected contract award to Trulieve GA pending resolution of a
protest process. If the contract is awarded, Trulieve GA will hold one of two
Class 1 Production Licenses in the state and will be permitted to cultivate
cannabis for the manufacture of low tetrahydrocannabinol, or THC oil.

Northeast Hub

Our northeast hub operations are anchored by our cornerstone market of
Pennsylvania.

We conduct cultivation, processing, and retail operations through its direct and
indirect subsidiaries with permits for retail operations and grower/processor
operations in Pennsylvania. These subsidiaries operate cultivation and
processing facilities in McKeesport, Reading, and Carmichael, Pennsylvania to
support our affiliated network of retail dispensaries and wholesale distribution
network across the state.

We operate three medical dispensaries in Maryland and conduct wholesale sales
supported by cultivation and processing in Hancock, Maryland. As of May 2, 2022,
we operate three retail dispensaries in Massachusetts, serving medical and adult
use customers in Northampton and adult use customers in Worcester and Framingham
as of May 2, 2022. Our retail operations are supported by cultivation and
manufacturing operations in Holyoke. We commenced wholesale sales in September
2021. Trulieve was the first to offer sales of clones supporting home grow for
residents in the Massachusetts market in August 2021.

We operate a medical cannabis dispensary located in Bristol, Connecticut. Under
Connecticut’s adult-use cannabis legislation, which was enacted July 1, 2021,
Trulieve can seek regulatory approval to expand sales at this dispensary to
include adult use sales.

We operate two medical dispensaries in Morgantown, and Weston, West Virginia,
supported by cultivation and processing operations in Huntington, West Virginia.
As of May 2, 2022, Trulieve has been awarded and has acquired permits to operate
up to a total of ten dispensaries in West Virginia.

Southwest Hub

Our southwest hub operations are anchored by our cornerstone market of Arizona.
In Arizona, Trulieve holds a market-leading position, offering medical and adult
use customers a wide range of branded and third-party products, including brand
partner products. We also serve medical and adult use customers in California.
Trulieve conducts wholesale operations in Nevada and Colorado, serving the
medical and adult use markets in each state.

Recent Developments

On January 28, 2022, the Company closed on a second tranche private placement of
8% Senior Secured Notes (the “2026 Notes”) for aggregate gross proceeds of $75.6
million. The 2026 Notes bear interest at a rate of 8% per annum, payable
semi-annually in equal installments until the maturity date, unless earlier
redeemed or repurchased. The 2026 Notes mature on October 6, 2026, and may be
redeemed in whole or in part, at the Company’s option, at any time, on or after
October 6, 2023, at the applicable redemption price set forth in the agreement.

On February 14, 2022, the Company completed an acquisition whereby Trulieve
acquired a cultivation operation from CP4 Group, LLC, in Phoenix, Arizona
(“Watkins”). Total consideration was $27.5 million consisting of cash.

Components of Results of Operations

Revenue

We derive our revenue from cannabis products which we manufacture, sell, and
distribute to our customers by home delivery and in our dispensaries, as well as
sales of cannabis products to wholesale customers in select markets.

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Gross Profit

Gross profit includes the costs directly attributable to product sales and
includes amounts paid to produce finished goods, such as flower, and
concentrates, as well as packaging and other supplies, fees for services and
processing, allocated overhead which includes allocations of rent,
administrative salaries, utilities, and related costs. Cannabis costs are
affected by various state regulations that limit the sourcing and procurement of
cannabis product, which may create fluctuations in margins over comparative
periods as the regulatory environment changes.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel costs related to the
dispensaries as well as marketing programs for our products. As we continue to
expand and open additional dispensaries, we expect our sales and marketing
expenses to continue to increase.

General and Administrative

General and administrative expenses represent costs incurred at our corporate
offices, primarily related to personnel costs, including salaries, incentive
compensation, benefits, and other professional service costs, including legal
and accounting. We expect to continue to invest considerably in this area to
support our expansion plans and to support the increasing complexity of the
cannabis business. Furthermore, we expect to continue to incur acquisition,
transaction, and integration costs related to our expansion plans, and we
anticipate a significant increase in compensation expenses related to recruiting
and hiring talent, accounting, and legal and professional fees associated with
becoming compliant with the Sarbanes-Oxley Act and other public company
corporate expenses.

Depreciation and Amortization

Depreciation expense is calculated on a straight-line basis using the estimated
useful life of each asset. Estimated useful life is determined by asset class
and is reviewed on an annual basis and revised if necessary. Amortization
expense is recognized using the straight-line method over the estimated useful
life of the intangible assets. Useful lives for intangible assets are determined
by type of asset with the initial determination of useful life derived during
the valuation of the business combination. On an annual basis, the useful lives
of each intangible class of assets are evaluated for appropriateness and
adjusted if appropriate.

Other Income (Expense), Net

Other income (expense), net consist primarily of interest expense, interest
income, loss on sale of non-operational assets, and the revaluation of
derivative liabilities.

Provision for Income Taxes

Provision for income taxes is calculated using the asset and liability method.
Deferred income tax assets and liabilities are determined based on enacted tax
rates and laws for the years in which the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.

As we operate in the cannabis industry, we are subject to the limits of IRC
Section 280E under which we are only allowed to deduct expenses directly related
to the cost of producing the products or cost of production.

Results of Operations

Revenue

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)
Revenues, net of discounts $ 318,348 $ 193,823 64%

Revenue for the three months ended March 31, 2022 was $318.3 million, an
increase of $124.5 million, from $193.8 million for the three months ended March
31, 2021. The increase in revenue is the result of an increase in organic growth
in retail sales due to an

37
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increase in products available for purchase and overall patient count, increased
retail locations, as well as expansion of the wholesale business. During the
period the Company made acquisitions such as Harvest and Keystone Shops,
expanded business into new states such as Massachusetts and West Virginia, and
opened additional dispensaries in existing markets such as Florida, all of which
contributed to the increase in revenue.

Cost of Goods Sold

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)
Cost of goods sold $ 140,198 $ 58,559 139%
% of total revenues 44 % 30 %

Cost of goods sold for the three months ended March 31, 2022, was $140.2
million, an increase of $81.6 million, from $58.6 million for the three months
ended March 31, 2021. Cost of goods sold increased due to expansion of the
business and increased revenue. Cost of goods sold as a percentage of revenue
increased from 30% for the three months ended March 31, 2021, to 44% for the
three months ended March 31, 2022 due to increased depreciation related to
capital expenditures to support business growth, and expansion into new markets
which are not fully vertical, resulting in the sale of third party products, and
therefore yield lower margin than our vertical markets.

Gross Profit

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)

Gross profit $ 178,150 $ 135,264 32%
% of total revenues 56 % 70 %

Gross profit for the three months ended March 31, 2022, was $178.2 million, up
$42.9 million or 32% from $135.3 million for the three months ended March 31,
2021. Gross profit as a percentage of revenue decreased from 70% for the three
months ended March 31, 2021, to 56%, for the three months ended March 31, 2022.
The decrease is due to increased wholesale business which is generally lower
margin than retail sales, increased depreciation related to capital expenditures
to support business growth, and expansion into new markets which are not fully
vertical, resulting in the sale of third party products, and therefore yield
lower margin than our vertical markets.

Sales and Marketing Expenses

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)
Sales and marketing expenses $ 72,862 $ 44,558 64%
% of total revenues 23 % 23 %

Sales and marketing expense increased by 64% from $44.6 million for the three
months ended March 31, 2021 to $72.9 million for the three months ended March
31, 2022. The increase in sales and marketing expense is the result of a higher
headcount for the year, as we continue to add additional dispensaries in efforts
to maintain and further drive higher growth in sales and market share as well as
expanding into new markets. This increased headcount resulted in higher
personnel costs, which is the primary driver for the increase year over year.

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General and Administrative Expenses

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)

General and administrative expenses $ 33,546 $ 12,709 164%
% of total revenues

11 % 7 %

General and administrative expense for the three months ended March 31, 2022,
increased by 164% to $33.5 million from $12.7 million for the three months ended
March 31, 2021. The increase in general and administrative expense is the result
of entering new markets, ramping our infrastructure to support growth
initiatives, continued acquisitions resulting in additional transaction and
integration costs and increased go-forward compliance costs. General and
administrative expenses included acquisition and transaction costs of $3.3
million for the three months ended March 31, 2022.

Depreciation and Amortization Expenses

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)

Depreciation and amortization expenses $ 29,305 $ 5,434 439%
% of total revenues

9 % 3 %

Depreciation and amortization expense for the three months ended March 31, 2022,
was $29.3 million, up $23.9 million from $5.4 million for the three months ended
March 31, 2021. The overall increase in depreciation and amortization expenses
was due to investment in infrastructure that resulted in a higher number of
capitalized assets from the additional dispensaries and cultivation facilities.
Furthermore, amortization expense increased due to acquisitions and acquired
intangibles.

Impairment and Disposal of Long-lived Assets

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)
Loss on impairment and
disposal of long-lived assets $ 13,780 $ – 100%
% of total revenues 4 % –

Loss on impairment and disposal of long-lived assets for the quarter ended March
31, 2022, increased to $13.8 million from zero for the three months ended March
31, 2021. The increase is primarily due to the write off of certain leases due
to market changes in our Southeast hub and the disposal of certain long-lived
assets.

Total Other Expense, Net

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)
Total other expense, net $ 18,823 $ 7,936 137%
% of total revenues 6 % 4 %

Total other expense, net for the three months ended March 31, 2022, was expense
of $18.8 million, an increase of $10.9 million from expense of $7.9 million for
the three months ended March 31, 2021. The overall increase is primarily the
result of an increase in interest expense related to additional finance leases
to support business growth and loss on disposal of non-operational assets during
the three months ended March 31, 2022.

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Provision for Income Taxes

Three Months Ended
March 31, Change
2022 2021 %
(in thousands)
Provision for income taxes $ 42,316 $ 34,549 22%

Income tax expense for the three months ended March 31, 2022, increased to $42.3
million from $34.5 million for the three months ended March 31, 2021. Under IRC
Section 280E, cannabis companies are only allowed to deduct expenses that are
directly related to production of the products. The Company’s quarterly tax
provision is subject to change resulting from several factors, including
regulations and administrative practices, principles, and interpretations
related to tax. The increase in income tax expense is primarily due to the
increase in gross profit as a result of increased revenue.

Net Income

Three Months Ended
March 31,
2022 2021 Change
(in thousands)

Net (loss) income and comprehensive income $ (32,482 ) $ 30,078 -208%

Net loss for the three months ended March 31, 2022, was $32.5 million a decrease
of $62.6 million, from net income of $30.1 million for the three months ended
March 31, 2021. The decrease was driven primarily by lower gross margin,
increased sales and marketing and general and administrative costs related to
the expanded organization, losses on disposal of long-lived assets, increased
other expense, and increased tax expense, as due to the restrictions of 208E,
the Company is not able to deduct many of their operating expenses for tax
purposes.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have funded our operations and capital spending through
cash flows from product sales, loans from affiliates and entities controlled by
our affiliates, third-party debt, and proceeds from the sale of our capital
stock. We are generating cash from sales and are deploying our capital reserves
to acquire and develop assets capable of producing additional revenues and
earnings over both the immediate and long term to support our business growth
and expansion. Our current principal sources of liquidity are our cash and cash
equivalents provided by our operations and debt and equity offerings. Cash and
cash equivalents consist primarily of cash on deposit with banks and money
market funds. Cash and cash equivalents were $267.2 million as of March 31,
2022.

We believe our existing cash balances will be sufficient to meet our anticipated
cash requirements from the report issuance date through at least the next twelve
months.

Our primary uses of cash are for working capital requirements, capital
expenditures and debt service payments. Additionally, from time to time, we may
use capital for acquisitions and other investing and financing activities.
Working capital is used principally for our personnel as well as costs related
to the growth, manufacture, and production of our products. Our capital
expenditures consist primarily of additional facilities and dispensaries,
improvements in existing facilities and product development.

To the extent additional funds are necessary to meet our long-term liquidity
needs as we continue to execute our business strategy, we anticipate that they
will be obtained through incurrence of additional indebtedness, additional
equity financings or a combination of these potential sources of funds. There
can be no assurance that we will be able to obtain additional funds on terms
acceptable to us, on a timely basis, or at all. The failure to obtain sufficient
funds on acceptable terms when needed could have a material adverse effect on
the results of operations and financial condition.

Cash Flows

The table below highlights our cash flows for the periods indicated.

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Three Months Ended March 31,
2022 2021
(in thousands)

Net cash provided by operating activities $ 45,147 $

59,591

Net cash used in investing activities (83,828 ) (53,362 )
Net cash provided by financing activities 72,248

9,508

Net increase in cash and cash equivalents 33,567

15,737

Cash, cash equivalents, and restricted cash,
beginning of period 233,659

146,713

Cash, cash equivalents, and restricted cash, end
of period $ 267,226 $ 162,450

Cash Flow from Operating Activities

Net cash provided by operating activities was $45.1 million for the three months
ended March 31, 2022, a decrease of $14.4 million, compared to $59.6 million net
cash provided by operating activities during the three months ended March 31,
2021. This is primarily due to the current net loss versus net income in the
prior year period, and increases in net working capital requirements, including
inventory, as we ramp the business to support our growth.

Cash Flow from Investing Activities

Net cash used in investing activities was $83.8 million for the three months
ended March 31, 2022, an increase of $30.5 million, compared to the $53.4
million net cash used in investing activities for the three months ended March
31, 2021. The increase is primarily due to the acquisition completed during the
period.

Cash Flow from Financing Activities

Net cash provided by financing activities was $72.2 million for the three months
ended March 31, 2022, an increase of $62.7 million, compared to the $9.5 million
net cash provided by financing activities for the three months ended March 31,
2021. The increase was primarily due to proceeds from the closing of the second
tranche of the Senior Secured Notes.

Funding Sources

Private Placement Note Liabilities – “June Warrants” and “November Warrants”

On June 18, 2019, we completed an offering using our Canadian prospectus of
70,000 units (the “June Units”), comprised of an aggregate principal amount of
US$70.0 million of 9.75% senior secured notes maturing in 2024 (the “June
Notes”) and an aggregate amount of 1,470,000 subordinate voting share warrants
(each individual warrant being a “June Warrant”) at a price of US$980 per June
Unit for gross proceeds of US$68.6 million. Each June Unit was comprised of one
June Note issued in denominations of $1,000 and 21 June Warrants.

On November 7, 2019, we completed an offering using our Canadian prospectus of
60,000 units (the “November Units”), comprised of an aggregate principal amount
of US$60.0 million of 9.75% senior secured notes maturing in 2024 (the “November
Notes”) and an aggregate amount of 1,560,000 subordinate voting share warrants
(each individual warrant being a “November Warrant”) at a price of US$980 per
November Unit for gross proceeds of US$61.1 million. Each November Unit was
comprised of one November Note issued in denominations of $1,000 and 26 November
Warrants.

Private Placement Note Liabilities – Secured Promissory Notes

On October 6, 2021, the Company closed on a private placement of 8% Senior
Secured Notes (the “”Notes”) for aggregate gross proceeds of $350.0 million and
net proceeds of $342.6 million. The Notes were issued at 100% face value, bear
an interest rate of 8% per annum payable semi-annually in equal installments
until the maturity date, unless earlier redeemed or repurchased. The Notes
mature on October 6, 2026 and may be redeemed in whole or in part, at any time
from time to time, on or after October 6, 2023 at the applicable redemption
price set forth in the trust indenture dated as of June 18, 2019 (the “Base
Indenture”), as supplemented by a supplemental trust indenture dated as of
October 6, 2021 (the “Supplemental Indenture” and, the Base Indenture as
supplemented by the Supplemental Indenture, the “Indenture”), by and between the
Company and Odyssey Trust Company, as trustee. The Company used a portion of the
net proceeds to redeem certain outstanding indebtedness of Harvest, and intends
to use the remaining net proceeds for capital

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expenditures and other general corporate purposes. The Indenture governing the
Notes contains covenants that, among other things, limit the ability of the
Company and its restricted subsidiaries to, among other things, declare or pay
dividends or make certain other payments; purchase, redeem or otherwise acquire
or retire for value any equity interests or otherwise make any restricted
payments; conduct certain asset sales or consolidate, merge or transfer all or
substantially all of the assets of the Company and its subsidiaries on a
consolidated basis; make certain restricted investments, incur certain
indebtedness or grant certain liens, or enter into certain affiliate
transactions. These covenants are subject to a number of other limitations and
exceptions as set forth in the Indenture.

On January 28, 2022, the Company closed on a second tranche private placement of
8% Senior Secured Notes for aggregate gross proceeds of $75.6 million. The Notes
bear an interest rate of 8% per annum payable semi-annually in equal
installments until the maturity date, unless earlier redeemed or repurchased.
The Notes will mature on October 6, 2026, and may be redeemed in whole or in
part, at the Company’s option, at any time, on or after October 6, 2023, at the
application redemption price set forth in the Indenture.

Balance Sheet Exposure

As of March 31, 2022, the entirety of our condensed consolidated balance sheet
is exposed to U.S. cannabis-related activities. We believe our operations are in
material compliance with all applicable state and local laws, regulations, and
licensing requirements in the states in which we operate. However, cannabis
remains illegal under U.S. federal law. Substantially all our revenue is derived
from U.S. cannabis operations. For information about risks related to U.S.
cannabis operations, please refer to the “Risk Factors” section of this
Quarterly Report on Form 10-Q and “Part I, Item 1A – Risk Factors” in our 2021
Form 10-K.

Contractual Obligations

As of March 31, 2022, we had the following contractual obligations to make
future payments, representing contracts and other commitments that are known and
committed:

<1 Year 1 to 3 Years 3 to 5 Years >5 Years Total
(in thousands)
Accounts payable
and accrued
liabilities $ 109,810 $ – $ – $ – $ 109,810
Notes payable 9,543 2,525 15 930 13,013
Private placement
notes 1,874 130,000 425,000 – 556,874
Operating lease
liabilities 23,079 44,439 42,739 113,321 223,578
Finance lease
liabilities 13,043 27,877 22,816 44,327 108,063
Construction
finance
liabilities 22,892 47,341 48,980 421,629 540,842
Total $ 180,241 $ 252,182 $ 539,550 $ 580,207 $ 1,552,180

Off-Balance Sheet Arrangements

As of the date of this filing, we do not have any off-balance-sheet arrangements
that have, or are reasonably likely to have, a current or future effect on the
results of operations or financial condition of, including, and without
limitation, such considerations as liquidity and capital resources.

Management’s Use of Non-GAAP Measures

Our management uses financial measures that are not in accordance with generally
accepted accounting principles in the U.S., or GAAP, in addition to financial
measures in accordance with GAAP to evaluate our operating results. These
non-GAAP financial measures should be considered supplemental to, and not a
substitute for, our reported financial results prepared in accordance with GAAP.
Adjusted EBITDA is a financial measure that is not defined under GAAP. Our
management uses this non-GAAP financial measure and believes it enhances an
investor’s understanding of our financial and operating performance from period
to period because it excludes certain material non-cash items and certain other
adjustments management believes are not reflective of our ongoing operations and
performance. Adjusted EBITDA excludes from net income as reported interest,
provision for income taxes, and depreciation and amortization to arrive at
EBITDA. This is then adjusted for items that do not represent the operations of
the core business such as inventory step-up for fair value adjustments in
purchase accounting, integration and transition costs, acquisition and
transaction costs, other non-recurring costs, expenses related to the COVID-19
pandemic, impairments and disposals of long-lived assets, the results of
entities consolidated as VIEs but not legally controlled and operated by the
Company, and other income and expense items. Integration and transition costs
include those costs related to integration of acquired entities and to
transition major systems or processes. Acquisition and transaction costs relate
to specific transactions such as acquisitions whether contemplated or completed
and regulatory filings and costs related to equity and debt issuances. Other
non-recurring costs includes miscellaneous items which are not expected to
reoccur

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frequently such as inventory adjustments related to specific issues and unusual
litigation. Adjusted EBITDA for the period ended March 31, 2021, has been
adjusted to reflect this current definition. Additionally, certain
reclassifications have been made to Adjusted EBITDA for prior periods to conform
to the current period presentation.

Trulieve reports Adjusted EBITDA to help investors assess the operating
performance of the Company’s business. The financial measures noted above are
metrics that have been adjusted from the GAAP net income measure in an effort to
provide readers with a normalized metric in making comparisons more meaningful
across the cannabis industry, as well as to remove non-recurring, irregular and
one-time items that may otherwise distort the GAAP net income measure.

As noted above, our Adjusted EBITDA is not prepared in accordance with GAAP, and
should not be considered in isolation of, or as an alternative to, measures
prepared in accordance with GAAP. There are a number of limitations related to
the use of Adjusted EBITDA rather than net income, which is the most directly
comparable financial measure calculated and presented in accordance with GAAP.
Because of these limitations, we consider, and you should consider, Adjusted
EBITDA together with other operating and financial performance measures
presented in accordance with GAAP. A reconciliation of Adjusted EBITDA from net
income, the most directly comparable financial measure calculated in accordance
with GAAP, has been included herein immediately following our discussion of
“Adjusted EBITDA”.

Adjusted EBITDA

Three Months Ended
March 31,
2022 2021 Change
(in thousands)
Adjusted EBITDA $ 105,544 $ 90,797 16%

Adjusted EBITDA for the Three months ended March 31, 2022 was $105.5 million, an
increase of $14.7 million from $90.8 million for the three months ended March
31, 2021. The following table presents a reconciliation of GAAP net income to
non-GAAP Adjusted EBITDA, for each of the periods presented:

Three Months Ended March 31,
2022 2021
(in thousands)
Net (loss) income and comprehensive
(loss) income attributable to common
shareholders $ (31,975 ) $ 30,078
Add impact of:
Interest expense 17,877 7,899
Provision for income taxes 42,316 34,549
Depreciation and amortization 29,305

5,434

Depreciation included in cost of goods
sold 10,692

3,667

EBITDA 68,215 81,627
Inventory step up, fair value 385 2,528
Integration and transition costs 5,274 390
Acquisition and transaction costs 3,297 1,652
Share-based compensation 4,564 741
Other non-recurring costs 8,629 –
COVID related expenses 431 3,822
Loss on impairment and disposal of
long-lived assets 13,780 –
Loss on divestment and sale of
non-operating assets 2,681 –
Results of entities not legally
controlled 23 –
Other (income) expense, net (915 )

37

Change in fair value of derivative
liabilities – warrants (820 ) –
Total adjustments 37,329 9,170
Adjusted EBITDA $ 105,544 $ 90,797

43

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