Trulieve: "Seed-to-Sale" in Medical Cannabis

11/30/2020 5:00 am EST

Focus: CANNABIS

Ryan Irvine

President, KeyStone Financial

Trulieve Cannabis Corp. (TCNNF) is a vertically integrated “seed-to-sale” company. It is the first and largest fully licensed medical cannabis company in Florida, owning over 50% of the market, explains Ryan Irvine, founder of KeyStocks and contributing editor to Internet Wealth Builder.

The company cultivates and produces all of its products in-house and distributes them to Trulieve branded stores (dispensaries) throughout the state, as well as directly to patients via home delivery. Trulieve also has operations in California, Massachusetts, and Connecticut.

Trulieve is a successful cannabis company, operating in highly regulated markets. That requires expertise in cultivation, manufacturing, retail, and logistics.

The company has developed proficiencies in each of these functions and is committed to utilizing predictive analytics to stay abreast of sales trends, patient demographics, and evolving demand.

In states that require cannabis companies to be vertically integrated, ownership of the entire supply chain mitigates third party risks and allows Trulieve to completely control product quality and brand experience. This results in high patient retention and brand loyalty.

The company successfully operates the core business functions of cultivation, production, and distribution at scale, and is skilled at rapidly increasing capacity without any interruption to existing operations.

The Trulieve brand philosophy of “Patients First” permeates the company’s culture, beginning with high-quality cultivation and GMP-certified product manufacturing.

This approach continues through the consumer experience at Trulieve stores, at the company’s in-house call centre, and at patient residences, through a robust home delivery program.

Revenue has increased quarter-over-quarter, driven by Trulieve’s increased customer base and continued dispensary openings. After a busy third quarter, Trulieve had 68 dispensaries nationwide and 66 in its home state of Florida.

In September, Trulieve announced that it has entered into definitive agreements to acquire cultivator and producer PurePenn LLC and Pioneer Leasing & Consulting LLC as well as dispensary operator Keystone Relief Centers LLC, doing business as Solevo Wellness.

This deal expands Trulieve's cultivation footprint with the addition of one of Pennsylvania's leading growers and producers. As well, it adds three fully operational dispensaries in premier Pittsburgh-area locations to Trulieve's rapidly growing retail footprint of 60 dispensaries nationally.

Given Trulieve’s strong financial performance in the first half of 2020, the company expects full year financial results to materially exceed previously issued revenue and adjusted EBITDA guidance ranges, driven principally by continued market share gains and operating leverage.

As an emerging segment that is subject to significant regulatory risk, we consider cannabis related stocks to hold a higher than average level of risk. Investments in this space are appropriate for investors with a higher tolerance for risk.

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