It hasn't been easy to make a buck investing in the marijuana sector, no matter its ultimate potential when and if de facto legalization occurs in the U.S. Even one of its brighter lights, Trulieve Cannabis (TCNNF -5.30%), has seen its share price wither. Yet I wouldn't abandon hope for the legitimate pot business generally, and particularly this smart operator.
Up in smoke
Yes, it's tough to believe in the future of publicly traded weed companies. Like many of its peers, Trulieve hasn't been a stock market favorite for a while. A $1,000 investment into its equity made just three years ago would have melted to slightly under $610 as I write this.
Image source: Getty Images.
That latter figure would have been notably lower, though, if it wasn't for a recent price spike following the glimmer of hope that was Trulieve's latest earnings release.
No, it wasn't profitable in its second quarter, but for a weed business it wasn't far underwater either -- non-GAAP (adjusted) net loss was $8 million, against breakeven the previous year. And it's at least maintaining the revenue line, which was essentially unchanged at $302 million.
Meanwhile it's still in expansion mode, having opened three dispensaries during the quarter (two in its home state of Florida, and the other in Ohio). Better, it's got plenty of the green -- no, not marijuana, rather cold, hard cash. Thanks to the fact that it's cash flow-positive and its cash, equivalents and restricted cash grew by almost 13% year over year to $401 million.
Trudging toward reform
The big play in the pot business is to find a company that has enough scratch to survive the lean times we're currently in. Both the (admittedly slow) potential decriminalization of marijuana by the Drug Enforcement Agency (DEA) and a financial services reform bill are making their way through the corridors of Federal power, on plenty of public support for change to our pot laws.
I think this will happen eventually, and patient investors in the better marijuana purveyors will do well. Hanging on to an investment in Truelieve should reap rewards.
