No. 1 Florida Pot Company Ready to Deliver More Returns to Investors

Trulieve Cannabis Corp More Upside Ahead for this Pot Company
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Trulieve Cannabis Corp, a Weed Stock to Think About

Since Florida legalized medicinal cannabis in 2016, the market has been flourishing. Among the marijuana companies operating in the Sunshine State, one deserves special attention: Trulieve Cannabis Corp (OTCMKTS:TCNNF, CNSX:TRUL).

Like many cannabis companies, Trulieve stock is currently listed on the Canadian Securities Exchange and is sold in the U.S. over the counter. But that doesn’t change the fact that the company is focused on the medical cannabis market in Florida.

Headquartered in Tallahassee, Trulieve runs a vertically integrated “seed-to-sale” cannabis business and is the first fully licensed medical cannabis company in the state of Florida.

Right now, the company cultivates and produces all of its products in-house and distributes them to Trulieve-branded dispensaries located across the state. Moreover, Trulieve also distributes products to patients directly through its home delivery program.

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Of course, there are other companies currently running vertically integrated operations in the medical marijuana market. However, in the state of Florida, Trulieve is by far the most dominant player.

According to its latest investor presentation, the company is behind 65% of all medical cannabis dispensed in Florida (in milligrams). (Source: “Investor Presentation  May, 2019,” Trulieve Cannabis Corp, last accessed June 7, 2019.)

Today, Trulieve has more than 660,000 square feet of cultivation space, capable of producing 32,096 kilograms (70,760 pounds) of crops annually.

At the same time, the company is building an additional 48,000 square feet of indoor growing area, which is scheduled to be completed in the second quarter of its fiscal-year 2019. Once completed, the additional square footage would add another 5,720 kilograms (12,610 pounds) to the company’s production capacity.

As I mentioned earlier, this is a company that operates from seed to sale. Other than growing cannabis plants, Trulieve also has its own product line and distribution network.

The company’s current product line consists of more than 195 stock keeping units (SKUs). Its retail network consists of 27 brick-and-mortar locations in Florida and a statewide delivery program.

To give you an idea of the company’s reach in the Sunshine State, here are some numbers: Trulieve has more than 158,000 unique patients, with each patient averaging two visits per month. The company’s physical retail stores serve over 3,500 patients on a daily basis, while the call center for its home delivery program receives more than 2,400 calls per day. (Source: Ibid.)

Trulieve Stock Chart

Chart courtesy of StockCharts.com

Trulieve Runs a Fast-Growing Business

Looking at the TCNNF stock chart above, we see that the company is trading at a lower price than it did eight months ago. Considering that there were quite a few pot stocks that shot through the roof during this period, Trulieve stock’s performance may seem a bit underwhelming.

But there’s nothing underwhelming about the company’s business.

In 2018, Trulieve generated $102.8 million in revenue, representing a whopping 419% increase year-over-year. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) came in at $45.6 million, up a staggering 5,600% from the $0.8 million earned in 2017. (Source: “Trulieve Reports Record Revenue for the Fourth Quarter and Full Year 2018,” Cision, April 10, 2019.)

The company’s growth momentum is continuing in the current year. In the first quarter of 2019, Trulieve’s revenue surged another 192% year-over-year to $44.5 million. (Source: “Trulieve Reports Another Quarter of Record Revenue,” Cision, May 28, 2019.)

Meanwhile, the company’s adjusted EBITDA more than tripled from $6.1 million in the first quarter of 2018 to $19.0 million.

And there are quite a few things that could cheer up investors going forward. For instance, management expects Trulieve Cannabis Corp to earn $220.0 to $240.0 million of revenue and $95.0 to $105.0 million in adjusted EBITDA in full-year 2019.

Considering that the company generated $45.6 million in adjusted EBITDA on $102.8 million of revenue in 2018, achieving the guidance would translate to triple-digit growth rates in both financial metrics.

Furthermore, while Trulieve dominates the medical cannabis market in Florida, it is also expanding its presence outside the state. The company recently acquired Life Essence, Inc. in Massachusetts and plans to have cultivation and processing facilities open in the fourth quarter of 2019.

Trulieve has also acquired Leef Industries, LLC, a licensed medical and recreational cannabis dispensary in Palm Springs, California. That dispensary has been open for business since last May and now has over 200 SKUs.

Analyst Take

Add it all up and you’ll see that Trulieve Cannabis Corp is well positioned to continue its growth momentum.

Meanwhile, TCNNF stock is one of the few solid marijuana stocks that hasn’t shot through the roof already. For investors searching for pot stocks with big upside potential in the next few years, Trulieve is a name that deserves a serious look.