Trulieve Cannabis Corp (CNSX:TRUL) Climbs As State Rules Against Dispensary Caps

Benjamin A. Smith
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Trulieve Cannabis Corp (CNSX:TRUL) (OTCMKTS:TCNNF) scored a major victory today, after a year of wrangling with Florida’s judicial system.

The company announced that it has won a suit alleging the statutory caps on the number of dispensaries permitted for each licensed medical marijuana treatment center were unfairly and wrongly applied. This would have limited Trulieve Cannabis to a maximum of 25 dispensaries under Florida law—with the retail cap increasing by five stores for every 100,000 new patients—had the ruling been upheld. As of January 2019, the state cap on dispensaries is 30 per licensed medical marijuana business, known as a Medical Marijuana Treatment Center (MMTC).

With Trulieve v. DOH Case No. 2018-CA-000698 successfully won by the plaintiff, it effectively allows the company to continue with aggressive expansion plans in a state in which it sells around 2/3’s of all medical cannabis. It puts the company in better position of fending-off competitors and thwarting inevitable market share contraction by allowing it to expand into markets that were previously restricted. Several large U.S. multi-state operators are rapidly looking to enter the Florida market, which has among the highest medical marijuana patient ratios per capita in the U.S.

Giving additional color on her decision, Judge Karen Gievers ruled that limiting the number of dispensary retail locations was unconstitutional. In fact, she went a step beyond by striking down the entirety of the 48-page law altogether. Among other things, she ruled that voters approval of Florida Medical Marijuana Legalization (Amendment 2) in 2016 did not grant the state authority to limit dispensary locations. Said Gievers, “The evidence clearly and conclusively establishes beyond any doubt that the imposition of regional and statewide caps on the number of dispensaries for each licensed (MMTC) does not support Voter-Approved constitutional goals.”

This is the second time in the past year judge Karen Gievers has materially ruled in favor of the unconstitutionality of cannabis policy in-state. On May 25, 2018, she ruled that SB 8’As ban on smoking medical marijuana was unconstitutional. She said that Amendment 2 provided patients with “the right to use the form of medical marijuana for treatment of their debilitating medical conditions as recommended by their certified physicians, including the use of smokable marijuana in private places.”

In response to today’s news, Trulieve stock continues to climb. At publishing time, TRUL climbed $0.91 to $16.35 (↑5.89%) on higher than average volume run-rates—although not exceptional by any means. The next near-term price action hurdle are presumably the dual November peak highs of $17.49 and $16.74, respectively.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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