Trulieve's Rally Is A Chance To Exit

Alan Brochstein, CFAInvesting Group LeaderFollow5ShareSavePlay(23min)CommentsSummaryTrulieve has surged on cannabis rescheduling hopes, but I maintain a strong sell rating and recommend rotating into other cannabis stocks or the sidelines.TCNNF's valuation appears attractive at 4.8x 2025E EBITDA, but significant tax liabilities and aggressive margin assumptions present material downside risk.Florida remains critical, with 70% of TCNNF's stores, but flat unit sales and falling dollar volumes signal market saturation and margin pressure.Rescheduling would end 280E taxation, improving cash flow, but does not guarantee regulatory or listing changes; the outlook for 2026 EBITDA is negative. Maria Vonotna/iStock via Getty Images Trulieve (TCNNF) has soared on the recent news that cannabis rescheduling may happen, with the stock rallying 66% on 12/12 and now up 91% in 2025. In April, it printed an all-time low of $3.02 and has increased moreThis article was written byAlan Brochstein, CFA72.53K FollowersFollowAlan Brochstein, CFA, is one of the first investment professionals to focus exclusively on the cannabis industry. Alan got his start as a financial professional in the securities industry in 1986, managing investments in institutional environments until he founded AB Analytical Services in 2007 in order to provide independent consulting to registered investment advisors. He is also the managing partner of New Cannabis Ventures, a leading provider of relevant financial information in the cannabis industry since 2015. Alan has run the investing group 420 Investor, for investors interested in the publicly-traded cannabis stocks that he moved to Seeking Alpha in 2023, since 2013. As the leader of the investing group 420 Investor, Alan closely covers 20 stocks and shares investment news as it comes out, previews of their earnings reports and analysis of them afterwards. Other features of the group include: a model portfolio, 10 videos per week with chart analysis, 3 summary pieces weekly, a monthly newsletter, and chat for questions Learn More.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow do Trulieve's tax liabilities impact its risk profile and valuation?TCNNF's $616.3M in uncertain tax liabilities could convert to debt if not forgiven, raising effective multiples to 7.3x 2026E EBITDA and undermining perceived value.What are the forward margin and growth risks for TCNNF versus peers?Projected 2026 EBITDA margin of 34.1% is aggressive given Florida saturation; a drop to 30% would materially raise valuation multiples and compress returns.How should investors position around the cannabis rescheduling catalyst for TCNNF?While rescheduling ends 280E taxation, it may not drive operational or listing changes; I see better risk/reward in Verano or Green Thumb Industries over TCNNF.Recommended For You