As the second half of the year begins, the long-term outlook for the marijuana industry continues to blossom. A relatively new report (“State of the Legal Cannabis Markets”) from the duo of Arcview Market Research and BDS Analytics finds that worldwide licensed dispensary sales are on track to grow from $10.9 billion in 2018 to $40.6 billion by 2024. That’s a compound annual growth rate of bit over 24% over this six-year period.
But here’s the real kicker: This figure doesn’t even include cannabinoid-based pharmaceutical sales or cannabidiol sales outside of licensed dispensaries, which could be a huge market in the United States. Suffice it to say, there’s plenty of potential for cannabis investors to make money over the long run.
Despite this potential, marijuana stocks have had a rough go of things in the second quarter. Supply issues in the U.S. and Canada, along with a persistent black-market presence, have sapped near-term sales and profit projections for most pot stocks. Of course, this could also mean that bargains abound.
In July, I view one small-cap marijuana stock as the most attractive in the entire cannabis landscape, which makes it my top marijuana stock to buy this month. Ladies, gentlemen, and investors alike, I’d like to direct your attention to…
U.S. dispensary operator Trulieve Cannabis(NASDAQOTH:TCNNF).
Four reasons Trulieve Cannabis is down considerably since early April
Let’s begin by addressing the reasons behind Trulieve’s more than 30% decline since early April. The way I see it, there are four variables that could be causing concern among Wall Street and investors.
The first worry likely revolves around the company’s expected lock-up expiration for approximately 75.5 million shares. This lock-up, which disallows insiders from selling any of their holdings for a period of 180 days following a public offering, was extended voluntarily by insiders for a period of six months in mid-January. This halted all sales of insider stock prior to July 25, 2019. But with Wall Street having witnessed the carnage on Tilray‘s lock-up expiration, there’s clear worry that insider selling could put pressure on Trulieve’s share price within a few weeks.
Secondly, competition is picking up in Trulieve’s home market of Florida. With 29 of the company’s 31 open dispensaries in that state, any brand-name competition is unwelcome. Curaleaf Holdings has around half of its open dispensaries in Florida — Curaleaf leads all dispensary operators in terms of operational retail stores — while MedMen Enterprises has announced plans to enter Florida with up to 30 stores. These well-known brands have the potential to steal market share from Trulieve.
Thirdly, there’s the growing possibility that Florida may have a recreational marijuana legalization amendment on the ballot in 2020. Without the need for…
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