This weed stock is a buy, analyst says

Beacon Securities analyst Russell Stanley reiterated his “Buy” rating and C$20.00 target on Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News, Analysts, Financials CSE:TRUL) on Dec. 17, after the company closed an upsized private placement of senior secured notes that Stanley said underscores strong investor demand and further strengthens the balance sheet.

Trulieve completed the issuance of 10.5% senior secured notes due December 2030, upsized from the originally announced C$100-million offering but still below the C$150-million maximum management discussed during its early-November earnings call. The notes were issued at par and are redeemable at par, plus accrued and unpaid interest, beginning in December 2027.

Trulieve reiterated its intention to list the notes on the CSE following the expiry of the four-month hold period, with proceeds earmarked for capital expenditures and general corporate purposes.

As Stanley noted, the financing follows Trulieve’s recent redemption of US$368-million in 8% senior secured notes that were otherwise due next year. On a net basis, he estimates the company has reduced total debt by approximately US$228-million and lowered annualized interest expense by roughly US$15-million, based on coupon rates. He now expects Trulieve to exit the fourth quarter with approximately US$290-million in cash and equivalents after factoring in both the redemption and the new issuance.

Trulieve, headquartered in Tallahassee, Florida, is a multi-state cannabis operator active in nine states, with a dominant position in Florida and leadership positions in Pennsylvania and Arizona.

Stanley also pointed to the sharp rally in cannabis equities following renewed speculation around U.S. federal reform. Trulieve shares are up roughly 80% since last Thursday’s close and 125% from their November 19 low, after media reports suggested President Trump was close to a decision on rescheduling cannabis under the Controlled Substances Act. Trump subsequently confirmed he was “very strongly” considering rescheduling, and CNN reported that an executive order advancing the process could be imminent.

Rescheduling would eliminate the application of IRC 280E, which currently disallows normal business expense deductions and has resulted in an effective tax rate of roughly 275% on Trulieve’s trailing earnings before tax. While Trulieve has already discontinued paying 280E taxes, Stanley said rescheduling would materially reduce risk, improve reported earnings and, more importantly, represent the first meaningful federal reform milestone, potentially opening the door to additional changes such as cannabis banking reform or U.S. exchange listings.

Despite the recent rally, Stanley said valuation remains attractive. Trulieve trades at approximately 7.2 times his fiscal 2026 Adjusted EBITDA estimate, representing a 26%discount to the average multiple of the other large U.S. multi-state operators. Near-term share price performance will remain driven by rescheduling developments, but Stanley also cited progress on Florida adult-use legalization, fourth-quarter results and potential M&A as additional catalysts.

Stanley maintained his forecasts calling for Trulieve to generate US$1.19-billion in revenue and US$427-million in Adjusted EBITDA in fiscal 2025, followed by US$1.20-billion in revenue and US$415-million in Adjusted EBITDA in fiscal 2026.

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