Why Trulieve Cannabis Corp (OTCMKTS:TCNNF) Might Break Out of Its Funk

Why Trulieve Cannabis Corp (OTCMKTS:TCNNF) Might Break Out of Its Funk


As traders search for opportunistic support levels in the cannabis patch, one stock that might start to catch some eyes is Trulieve Cannabis Corp (OTCMKTS:TCNNF). Shares are bouncing at the psych $10/share level in recent days after pulling back about 40% since April. Helping to further flesh out the story, the company just announced that its founders have entered into a voluntary lock-up agreement with the company to lock up nearly 60% of the “subordinate voting shares of the company, assuming the conversion of all issued and outstanding multiple voting and super-voting shares of the company”, which should control speculation about how much supply can come onto the market at any given time.

According to the release, “The voluntary lock-up agreement stipulates that these shareholders will not offer to sell, contract to sell or otherwise dispose of any of Trulieve securities subject to the lock-up agreement, or enter into any transaction to such effect, directly or indirectly, in addition to other restrictions, on or before July 25, 2020. Effective January 25, 2020, an additional 15%, or 11,205,960, of the subordinate voting shares of the Company subject to the lockup agreement shall be released from the restrictions of the lockup agreement. 54,047,133 of the subordinate voting shares of the Company shall remain subject to the lockup agreement restrictions until July 25, 2020.”

Trulieve Cannabis Corp (OTCMKTS:TCNNF) promulgates itself as a company that, through its subsidiary, Trulieve, Inc., engages in the cultivation, possession, distribution, and sale of medical cannabis in the United States.

It offers a suite of Trulieve branded products with approximately 125 SKUs, including nasal sprays, capsules, concentrates, syringes, and cannabis flower in tamper-proof containers for vaporizers, topical creams, tinctures, and vape cartridges.

The company distributes its products to Trulieve branded stores (dispensaries) in Florida, as well as takes orders online and by phone for delivery. As of November 20, 2018, the company operated 21 dispensaries. Trulieve Cannabis Corp. is headquartered in Quincy, Florida.

According to company materials, “Trulieve is a vertically integrated “seed to sale” company and is the first and largest fully licensed medical cannabis company in the State of Florida. Trulieve cultivates and produces all of its products in-house and distributes those products to Trulieve branded stores (dispensaries) throughout the State of Florida, as well as directly to patients via home delivery. Trulieve is listed on the Canadian Securities Exchange under the symbol TRUL.”

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As noted above, TCNNF just announced that its founders have entered into a voluntary lock-up agreement to bottle up about 60% of the share supply.

Recent action has seen 3% added to market cap over the trailing month as the stock has consolidated around a band of chart support. But volume has been swelling, with a 38% rise in average volume levels relative to the longer term levels that have defined the action for this stock.

“This extension of the lock-up period demonstrates the continued confidence the company founders have in the execution of our long-term strategy,” said Kim Rivers, CEO of Trulieve. “As we continue with our expansion efforts, guided by the strategic vision of bringing high-quality products and industry-leading customer service to new cannabis markets throughout the United States, we believe this lock-up extension will further enhance shareholder value.”

Currently trading at a market capitalization of $317.4M, TCNNF has a significant war chest ($33.4M) of cash on the books, which must be weighed relative to about $47.4M in total current liabilities. One should also note that debt has been growing over recent quarters. TCNNF is pulling in trailing 12-month revenues of $133.9M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 1485.9%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $TCNNF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $TCNNF, either long or short, and we have not been compensated for this article.

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