2 Marijuana Stocks That Have a Killer Advantage

The marijuana industry is on a roll. Even amid a global pandemic, sales have kept rising thanks to marijuana’s categorization as an “essential item” in Canada and the U.S. during the lockdown. Moreover, with U.S. state legalization ramping up, it seems the industry is gearing up for even more success.

That said, in an evolving industry like marijuana, it is always wise to have some kind of a competitive edge over your peers. U.S. cannabis companies, in general, are doing exceptionally well. But Illinois-based Green Thumb Industries (OTC: GTBIF) and Florida-based Trulieve Cannabis (OTC: TCNNF) hold an added advantage.

Both businesses have established a strong footing in their respective home markets and are ready to take advantage of new legal markets. Let’s take a look at their progress so far and where they are headed in 2021.

Green Thumb Industries is taking full advantage of the new recreational market in Illinois

Green Thumb’s exceptional performance is evident from its first quarter of 2021 results (ended March 31). Management stated the new recreational market in its home state of Illinois contributed to a bulk of its sales in the first quarter. The state made recreational cannabis legal in January 2020 and saw close to $669 million in sales that year just from the adult-use market. Total legal sales including medical hit the $1 billion mark. 

Revenue for the company grew 89.5% year over year in Q1, to $194.4 million, driven by higher growth from all 12 states it operates in. Green Thumb attributed this growth to increased foot traffic in its 56 retail stores, as well as 13 new store openings during the quarter. The company also managed to reduce its selling, general, and administrative expenses to $59 million, or 30% of total revenue in the first quarter, versus 44% of total revenue in the year-ago period. This helped it achieve another quarter of positive adjusted earnings before interest, tax, depreciation, and amortization (EBITDA). Positive EBITDA shows how well a company has a hold on its operating expenses, while net profits are the total earnings after all deductions (tax, interest, depreciation, and amortization) are made. 

Luckily, Green Thumb managed to succeed on both counts. Its adjusted operating EBITDA came in at $71 million, versus $25.5 million in the year-ago period. Net profits for the quarter came in at $10 million, compared with a net loss of $4.2 million in first quarter of 2020.

But this growth… Continue reading at The Motley Fool