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
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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