To be blunt, marijuana stocks have not had a good year. Things certainly looked hopeful after more than a dozen pot stocks gained at least 70% during the first quarter, but pretty much all year-to-date cannabis gains have since gone up in smoke.
In Canada, persistent supply issues have kept legal pot from reaching dispensaries, with Health Canada slow to review and approve cultivation and sales licenses, and the country’s most populous province, Ontario, allowing far too few retail stores. Meanwhile, a number of recreationally legal U.S. states have been taxing the daylights out of consumers. The end result throughout North America is a continued push back to the black market.
Yet despite these growing pains, there’s one marijuana stock…
that stands out head-and-shoulders above its peers. If you’re looking a true top performer in the cannabis space, considering dialing up vertically integrated multistate operator Trulieve Cannabis (OTC:TCNNF) as the top marijuana stock to buy in December.
A brief synopsis of why Trulieve Cannabis’ stock hasn’t gone through the roof
However, before I begin digging into the many reasons Trulieve can potentially deliver green for your portfolio, I find it beneficial to examine the risks that could thwart this thesis. And make no mistake about it — every single publicly traded company has investment risks, including Trulieve Cannabis.
The obvious elephant in the room for Trulieve, which operates cultivation farms, processing sites, and retail stores in the U.S., is that marijuana remains an illicit substance as a result of its Schedule I classification. Even with the federal government allowing states to legalize and regulate their own marijuana industries, this scheduling can lead to a host of problems, such as limited access to non-dilutive forms of financing, including loans and lines of credit. Cannabis businesses can also be exposed to Section 280E of the U.S. tax code, leading to exceptionally high effective corporate income tax rates.
Another key concern for Trulieve would be the growing presence of competitors in its home market of Florida. Even with a relatively small number of cannabis business licenses being issued in the state, MedMen Enterprises has plans to open up to 30 stores in the Sunshine State, with peers Liberty Health Sciences and Curaleaf Holdings already having 19 and 26 respective open retail locations in Florida. MedMen and Curaleaf, in particular, have done a solid job with branding, which has the potential to eat into Trulieve’s margins.
Along those same lines, there’s the possibility that Florida could choose to legalize recreational marijuana in an upcoming election (right now only medical weed is legal). If residents vote in favor of adult-use pot, Trulieve will be forced to establish its brand all over again, given the penchant for recreational sales to cannibalize medical marijuana sales over time. However, with so many new competitors in the state, this wouldn’t be easy.
Here’s why Trulieve is the pot stock you should buy in December
Now that we’ve covered some of Trulieve Cannabis’ biggest challenges, let’s go over the many reasons it’s the marijuana stock to buy this month.
The first reason to consider adding Trulieve to your portfolio is its truly dominating position in Florida. The company is about to open its 40th store in the state, which is far more than any of its peers. Even though Trulieve has a presence in a few other states, it’s primarily chosen to focus its efforts on the Florida market. In doing so, it’s…
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