November is a potentially big month for the U.S. marijuana industry. With Election Day just two days away, we could see up to five states waving the green flag on adult-use cannabis or medical marijuana. A green sweep on Nov. 3 would mean 36 states have legalized medical pot, with 15 of those also allowing recreational weed consumption and/or sale…
There’s little question that marijuana has the potential to be a fast-growing, moneymaking industry this decade. However, investors are finding out that they need to be exceptionally picky in a largely unproven industry (at least from the standpoint of being regulated). But that doesn’t mean there aren’t bargains available to investors.
My top marijuana stock to buy in November should excel no matter who wins the presidency or what the political makeup of Congress looks like come 2021. Ladies and gentlemen, say hello to Trulieve Cannabis (OTC:TCNNF).
Even top stocks face growth challenges
As is customary when I lay out my thesis for a pot stock as a top buy in a given month, let’s first take a look at some of the challenges Trulieve Cannabis investors might contend with.
Arguably the biggest concern for Trulieve is the company’s single-state reliance. Though it has a presence in four states, with a fifth pending via acquisition, 64 of the company’s 66 operational dispensaries are located in Florida. The medical marijuana-legal Sunshine State has become quite the battleground for well-known vertically integrated multistate operators (MSO). Trulieve is being forced to go toe-to-toe with the likes of Curaleaf Holdings, Liberty Health Sciences, and MedMen Enterprises.
What’s concerning about this single-state focus is the likelihood of an adult-use legalization constitutional amendment appearing on the ballot in Nov. 2022. You might be thinking, “Hey, isn’t that great news for an MSO that holds a clear-cut retail advantage in the Sunshine State?” While the answer is possibly yes, we don’t know how lawmakers will frame the language regarding licensing in a recreationally legal environment, assuming a statewide constitutional amendment becomes law. This is to say that recreational sales could cannibalize medical weed sales beginning in 2023, and Trulieve isn’t guaranteed to have a smooth transition into an adult-use-legal environment.
Trulieve Cannabis has also been the target of a short-seller report from Grizzly Research. The short-side firm, which may hold a short position in the companies it reports on, alleged in December 2019 that Trulieve produces low-quality cannabis, has suspicious profits, and “extensive ties” to investigations being conducted by the Federal Bureau of Investigation. For its part, Trulieve has…
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