LONG Trulieve (TRUL) thesis:
* DOJ just rescheduled medical marijuana from Schedule I to Schedule III yesterday
* This removes the 280E provision that prohibits businesses from deducting business expenses, making the effective tax rate 25% (down from 60%+ for Schedule I companies)
* FCF should go up 2-3x
* Recreational marijuana has not been rescheduled yet but there is a hearing on June 29th to do so, the administration purposefully did a 2 track process to avoid challenges
* TRUL also has $630MM of Uncertain Tax Position (UTP) that could be reclaimed, the DOJ order yesterday "encourages" the Treasury and IRS to consider "retrospective relief" from Section 280E
* TRUL trades at 5.5x EBITDA, 60% gross margin, 36% EBITDA margin
* First wave buying would just be from cash flow inflection to delever and grow
* Second wave buying would be massive if the Feds provide a new Cole memo or SAFE banking act to allow marijuana companies get proper banking services, get uplisted to NASDAQ (require custody services), and US fund flows
* TRUL should be up 50-100% on cash flow alone, and possibly 100%+ if recreational marijuana is also rescheduled and/or expanded banking services
* No narcotics have been permitted for one use but not another; chances of a rescheduling of recreational marijuana is high
Position – 3500 shares @$12.04
Posted by 185EDRIVER