We at Insider Financial have been covering cannabis stocks since the first Green Rush of 2014. Names like Terra Tech (TRTC), Growlife (PHOT), and HEMP dominated the discussion. When Green Rush 2.0 happened in 2018 and 2019, it was the big Canadian players that got all the attention – Canopy Growth Corp (CGC), Aurora Cannabis (ACB), and Tilray (TLRY). All these stocks crashed and burned due to toxic financing and poor management. However, through the carnage emerged a new breed of player- cannabis companies focused solely on the U.S. and vertically integrated. The one we have liked the most is Trulieve Cannabis.
First up, here’s a little background info for those not familiar with Trulieve Cannabis. Trulieve is a vertically integrated “seed-to-sale” company and is the first and largest fully licensed medical cannabis company in the State of Florida.
Trulieve cultivates and produces all of its products in-house and distributes those products to Trulieve-branded stores (dispensaries) throughout the State of Florida, as well as directly to patients via home delivery. Trulieve also operates in California, Massachusetts, and Connecticut.
Trulieve is listed on the Canadian Securities Exchange under the symbol TRUL and trades on the OTCQX market under the symbol TCNNF.
60 Florida Stores
Trulieve Cannabis just opened a brand-new Florida dispensary. Merritt Island will be home to the Company’s 60th dispensary in its home state of Florida and 62nd nationwide. The 6,500 sq. ft. location will directly support patients throughout Brevard County and along the Space Coast.
Located off the Merritt Island Causeway, the dispensary supports Trulieve’s goal of expanding and ensuring direct, reliable patient access to medical cannabis across its home state of Florida. It also joins the Company’s 59 other dispensaries statewide, including the nearby Melbourne, Titusville, and Port St. Lucie locations.
Dispensary Business Model
In stores and online, patients find Florida’s largest selection of THC and CBD products, available in a variety of delivery methods, including edibles, smokable cannabis, concentrates, tinctures, topical creams, vaporizers, and more. Trulieve also offers home delivery statewide for patients and convenient in-store pick-up at its 60 dispensaries in locations across the state from Pensacola to Key West.
To assist patients with ordering, Trulieve has made its entire catalog of products available for online ordering, with in-store pickup, curbside pickup (at select locations), or statewide home delivery options available. In addition, patients can schedule a 30-minute complimentary virtual consultation with a Trulieve certified consultant. Patients can speak to a trained and certified consultant to help navigate questions on products and devices and review their doctor’s recommendation.
Huge Florida Market
The Office of Medical Marijuana Use recently announced the registry was quickly approaching 425,000 registered medical marijuana patients with an active ID card, with Trulieve consistently selling approximately half of the state’s overall volume, per the Florida Department of Health. To support the state’s rapidly growing patient base, there are over 2,600 registered ordering physicians in the State of Florida.
Trulieve Cannabis Q2 Results
In Q2, Trulieve Cannabis reported the following results.
- Achieved record revenue of $120.8 million, an increase of 26% on a sequential quarter-to-quarter basis
- Adjusted EBITDA was $60.5 million, or 50% of revenue, representing the 10th quarter of consecutive growth and profitability
- Achieved free cash flow of $39.6 million
- Sustained strong cash position with cash and cash equivalents of $150.3 million on June 30, 2020
- Achieved GAAP adjusted margin of 75%
For the full year, Trulieve Cannabis expects revenue of between $465 million and $485 million. Adjusted EBITDA is forecast to come in between $205 million and $225 million.
Trulieve Cannabis Bottom Line
Currently trading with a market cap of around $2.1 billion, Trulieve Cannabis trades at just 10x EBITDA and 4.32x sales. This is awfully cheap for a cannabis stock. Canopy, on the other hand, has a market cap of $5.32 billion and trades at 16x sales. As you can see, Trulieve Cannabis is not only the best in class cannabis play, it’s also tremendously undervalued.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in OTCMKTS:TCNNF, or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.