Trulieve’s Stock Price Increases After Securing Slang Deal

Trulieve’s (CNSX: [stock_market_widget type=”inline” template=”generic” color=”default” assets=”TRUL.CN” markup=”{symbol} {currency_symbol}{price} ({change_pct})” api=”yf”]) stock price increased on Tuesday morning after it tied up an exclusive supply deal with Slang Worldwide (CNSX: SLNG).

Trulieve has 24 dispensaries spread across Florida and it produces and distributes between 60% and 80% of the state’s medicinal cannabis.

The deal gives Trulieve sole rights to Slang’s broad portfolio through its U.S. subsidiary, National Concessions Group, Inc., which trades as Organa Brands. The Slang range includes the likes of O.penVAPE, Bakked, District Edibles, and Magic Buzz.

Trulieve has 24 dispensaries spread across Florida and it produces and distributes between 60% and 80% of the state’s medicinal cannabis, according to the Florida Department of Health. It also has a dispensary in Palm Springs, California, and it is expanding into Massachusetts as well.

Its share price closed at C$15.54 on Friday, Feb. 15, and then opened at $15.95 Tuesday after a three-day weekend caused by Presidents’ Day in the U.S. and Family Day in Canada. Within an hour of trading the price had increased $16.49 – a gain of 6.1% since the end of last week – after news of the deal with Slang was announced.

Chief executive Kim Rivers said that Slang’s expansive portfolio of edibles, concentrates, and vaporizers would allow it to expand patient access and offer more consistent products of a higher quality to patients across Florida. The number of patients in the Sunshine State has risen by more than 300% to break through the 180,000 barrier since 2017.

Florida’s Cannabis Market Ready to Soar

Florida’s cannabis market is expected to shoot up from $456 million in 2018 to $1.7 billion in 2022.

Researchers at Arcview expect Florida’s cannabis market to shoot up from $456 million in 2018 to $1.7 billion in 2022, with 550,000 patients expected to be buying medicinal marijuana by then. Companies like Liberty Health Sciences are pursuing ambitious expansion plans in Florida, with chief executive George Scorsis pledging to “aggressively expand” retail locations after opening a 10th dispensary in Dania Beach last week, but Trulieve remains the market leader there.

It has dispensaries in Miami, Orlando and Jacksonville, as well as other smaller cities, and it also delivers directly to patients’ homes across the state. The Florida Department of Health needs to approve some of Slang’s edibles, but the deal bolsters Trulieve’s range considerably and helps it stand out in a lucrative but increasingly competitive Florida market.

Trulieve’s share price has increased in line with the cannabis industry in 2019. It decreased to C$9.26 on Dec. 27, 2018, down 58.3% from an all-time of $22.20 on October 2 as cannabis stocks fell into bear market territory. Yet it has rallied in 2019, reaching an annual high of $16.47 on Feb. 5. It has now exceeded that value today, with its market cap going past $125 million.

Trulieve’s Strengths and Weaknesses

Trulieve’s dominant position counts in its favour, as it has established brand recognition and enjoyed early mover advantage. However, its footprint is limited compared to rival stocks like Acreage, MedMen, Curaleaf, iAnthus, and Harvest Health, operators with a presence in 10 or more states. That leaves Trulieve more exposed to any damaging regulatory changes in Florida, although the state appears keen on the medicinal cannabis industry.

It is also worth noting that common shareholders have a limited say in the direction of the company, although its liquidity is reasonable and it enjoys a slightly better price to sales ratio than most of the aforementioned rivals. It is also one of the strongest U.S. cannabis stocks when it comes to sales per diluted share.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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J.L. Corriveau
J.L. Corriveau
February 23, 2019 1:04 pm

Martin, good analysis thank you. Question: my personal opinion is that here in the 21st Century economic & political climate a female CEO can get a Co. some extra ‘benefit of the doubt’ in & under certain circumstances. Kim’s smart, do you think this could be a benefit to the Co. & it’s shareholders in this Industry & State..?