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What’s the Deal With Green Thumb Stock?

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Green Thumb Industries (TSXV:GTII) has been under fire of late.

There’s been some pretty damning allegations highlighting some serious concerns with this stock. That said, the fact this stock has been a four-bagger for investors suggests there’s a lot of momentum behind this name.

Here’s what to make of these allegations.

Intriguing headline-making article spurs conversation

A recent article in the Chicago Tribune spelled out some pretty intriguing allegations.

The article alleged the Illinois-based company is currently being probed for possible wrongdoing in regards to political donations. The investigation centres on reviewing Green Thumb’s campaign donations. Apparently, there’s concern that the cannabis player has been exchanging donations in exchange for access to growing and distribution licences in various states.

As per reports, no charges have been filed against Green Thumb or any member of the management team as of yet. There are no details concerning the timeline or origin of this investigation. Furthermore, it is not clear which federal agency is carrying out the probe.

A spokesperson of Green Thumb Industries revealed that the company was unaware of any ongoing investigation.

Green Thumb denies “baseless” allegations

The company claims that it came to know of this alleged probe through this article. Indeed, no such probe is ongoing, as per Green Thumb’s official press release following the article. Additionally, the company notes that these allegations are baseless.

Furthermore, the CEO and founder of Green Thumb, Ben Kovler, has called out the Chicago Tribune for publishing baseless allegations that are against the corporate values of the company. According to him, the reporter did not mention any credible sources and did not provide any evidence. Therefore, he has demanded the article be retracted.

Indeed, it appears this situation is one investors don’t know what to make of right now. Green Thumb has been a volatile stock of late, and the stock has jumped around on this news.

The company’s management team has fully denounced any wrongdoing and suggests there’s nothing to see here. Additionally, Green Thumb has reassured the investors that this company has secured all its licences via competitive state-specific licensing programs as well as through mergers and acquisitions.

Bottom line

How cannabis companies obtain licences varies in specific jurisdictions. Personally, I don’t quite know what to make of the news.

Indeed, it does appear via the strong response from Green Thumb that investors may have nothing to worry about. However, this is a unique risk that has been brought to investors’ attention right now.

Indeed, for investors in the cannabis space, this appears to be yet another risk to factor into one’s models. That said, in Green Thumb’s case, this may be a non-newsworthy event.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned.

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