It's been a bumpy and volatile ride for the cannabis industry over the past couple of years, and even many of the leaders in the market haven't escaped the bloodbath. That includes Florida-based Trulieve Cannabis (TCNNF -4.97%), one of the leading multi-state operators (MSOs) in the U.S. Here's the good news for Trulieve Cannabis and its peers: Industry growth projections are still juicy.

Some analysts predict a compound annual growth rate of 14.2% through 2030 for the U.S. cannabis market. And Wall Street has high hopes for Trulieve Cannabis, with an average price target of $16.67 (according to Yahoo! Finance), implying a 173% rise over its current stock price. Can the company get there within the next 12 months?

For Trulieve, slow and steady expansion has proved worthwhile

Trulieve Cannabis is a vertically integrated marijuana company based in Florida, where it has become one of the market leaders. But the pot grower also has a strong presence in other states, including California, Pennsylvania, Arizona, West Virginia, and Colorado.

Trulieve boasts an industry-leading 181 dispensaries (as of Dec. 31, 2022), offering dozens of options including cannabis flower, edibles, vaping products, and more. Trulieve Cannabis has achieved its current status by being more patient than its competitors. In the past few years, many pot growers have opted to spend aggressively on acquisitions, perhaps thinking that the market's massive opportunity would be large enough to generate enough revenue and profits to more than offset this spending.

Trulieve Cannabis has been much more disciplined in its spending, and although it has made acquisitions of its own, it has also been much more profitable than most of its peers. The company reported 19 consecutive quarters of profitability at one point, in an industry where many struggle to have green on the bottom line for two quarters in a row.

Growing expenses weighed earnings down but that could be temporary

That brings me to Trulieve Cannabis' performance during 2022. The company suffered from a slowdown that affected the entire industry. At first glance, Trulieve's results don't reflect that, at least not on the top line. The company's revenue in 2022 came in at $1.2 billion, 32% higher than the previous year.

But that's not an apples-to-apples comparison since Trulieve closed its acquisition of Harvest Health & Recreation, a marijuana company headquartered in Arizona, in October 2021. So it's important to take this number with a grain of salt. On the bottom line, Trulieve Cannabis reported a net loss of $246.1 million, compared to the net income of $18 million recorded during the previous fiscal year.

The company's operating expenses soared by 76.4% year over year in 2022, partly due to the aforementioned acquisition. Trulieve Cannabis' gross margin came in at 55% for the year, which, although still very respectable, is lower than the 61% it had in 2021. Trulieve Cannabis' buyout of Harvest is weighing on its expenses and the bottom line, but that might be worth it in the long run if it can pay off for revenue the way management hopes. 

Can Trulieve live up to the Street's projections?

The cannabis industry will rebound eventually, but it's hard to predict when. So it seems extremely unlikely that Trulieve will be able to more than double in the next 12 months; at the very least, one shouldn't bet on it. But that doesn't matter too much to long-term investors. The more important question is, can Trulieve Cannabis stand as one of the winners in the pot market in 10 years?

The company certainly has many of the tools it needs to accomplish that goal: a strong presence in multiple states, a vast network of dispensaries, decent financial results, and a track record on that front that rivals most of its peers. Those factors should put Trulieve Cannabis in a good position to profit from the industry's growth. But it's important to factor in the unpredictability of the pot market, too.

That's why cannabis investors should only initiate a small position in this stock and perhaps add to it as time passes and as Trulieve Cannabis continues to establish itself as a market leader.