Canopy Growth (NYSE:CGC) is the world’s largest cannabis company, but it isn’t making nearly as much money as Florida’s leading operator of dispensaries. Trulieve Cannabis (NASDAQOTH:TCNNF) took an early lead in the state’s heavily regulated medical marijuana market, and it has a good chance to hold on to that lead.
Trulieve Cannabis enjoys some advantages that Canopy Growth investors can only dream of, and it’s already producing positive cash flows. Here’s why Trulieve stock has a much better chance of outperforming the market than Canopy in the years ahead…
An enviable position
Florida didn’t vote to legalize medical cannabis until 2016, and there are already 207,869 patients with active ID cards that allow them to enter any of the 114 licensed dispensaries across the state and purchase their prescription. Since Canopy Growth listed on a major U.S. stock exchange, it can’t operate south of the border. Trulieve, which is headquartered near the state capital, was in the right place at the right time, with licenses for 14 shops before the state decided to limit the number of retail locations to 25 per operator, plus five additional locations after 100,000 patients enrolled.
That means out-of-state competition from Curaleaf (NASDAQOTH:CURLF), and its peers should remain limited to 30 retail locations each. With 14 locations grandfathered in, Trulieve can raise its store count from 26 at present to 44 locations and remain the most popular licensed retail outlet in the state.
While most states allow dispensaries to stock their shelves with products from independent vendors, approved medical marijuana treatment centers are the only businesses allowed to grow and process the cannabis products they sell in Florida. Curaleaf and other out-of-state operators need to build or buy a vertically integrated business that can track everything from seed to sale before opening its doors. There are only so many businesses with that kind of money to burn.
Something you don’t see enough of
With a head start in a heavily regulated market, Trulieve can provide a better quality product at competitive prices and still produce a profit for shareholders. Meanwhile, Trulieve’s competitors are…
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