Yesterday, Curaleaf (CURA) (CURLF) became the first company to launch medical cannabis tablets in Florida. The company has made these tablets available at all of its 26 dispensaries in the state. It aims to make this medication more palatable and convenient to use for patients.
This is Curaleaf’s latest move in a bid to increase its overall penetration in Florida’s medical marijuana market.
Curaleaf is focused on Florida’s medical marijuana market
According to iAnthus Capital’s investor presentation, the medical marijuana market in Florida will be worth $1.0 billion by 2020. iAnthus Capital estimates the number of residents in Florida to be 21 million. According to the Marijuana Policy Project, there are 240,070 registered medical marijuana patients in Florida. This number amounts to around 1.13% of the state’s total population—a significant amount compared to iAnthus Capital’s estimate of 67,385 registered patients in the state as of December 1, 2018.
According to Marijuana Business Daily, Florida is the second-fastest-growing medical marijuana market in the US. The newsletter expects average daily medical marijuana patient growth in Florida to be 609. This figure is only slightly lower than the expected patient growth of 641 in Oklahoma, which is deemed the fastest-growing medical marijuana market in the US. According to Marijuana Business Daily, registered medical marijuana patients account for 1.6% of the state’s total population.
To leverage this rapidly expanding market opportunity, Curaleaf has also been expanding its reach in Florida. On September 3, the company opened its 49th dispensary, which is also the 26th dispensary in Florida. Investors expressed their pleasure with this development by pushing up the company’s share price. On September 3, Curaleaf closed at $7.59, 7.51% higher than its previous closing price. To learn more, read Cannabis Roundup: IIPR, CRON, and CURA.
How Curaleaf is positioned against competitors in Florida
According to Marijuana Business Daily, out of the 22 vertically integrated licensees in Florida, only 13 have operational dispensaries. Trulieve Cannabis (TRUL) (TCNNF) is the leader in Florida’s medical marijuana market. The company accounts for 49.2% of the total milligrams of THC and CBD sold in the state. Curaleaf ranks third and accounts for 11.6% of total milligrams of THC and CBD sold. Trulieve and Curaleaf account for 45.8% and 14.4% of smokable flower sales, respectively.
According to Marijuana Business Daily, Trulieve CEO Kim Rivers partly attributes the company’s success in Florida to its first-mover advantage in the smokable flower market. On March 18, Governor Ron DeSantis removed the ban on the sale of smokable medical marijuana in Florida. On March 21, Trulieve became the first company to sell smokable medical marijuana in Florida at its Tallahassee dispensary. Curaleaf can also benefit from being the first entrant into the medical marijuana tablet market in Florida.
Share prices fall despite the good news
Despite this positive news, Curaleaf shares fell 6.00% to $7.43 yesterday. This performance was likely a response to a press release issued by Pomerantz Law Firm announcing the filing of a class action lawsuit against the company. This lawsuit represents all parties that purchased Curaleaf’s securities from November 21, 2018, to July 22, 2019.
According to the press release, in the lawsuit, Curaleaf is being held responsible for materially false and misleading statements and a lack of disclosure about material adverse facts. The company sold CBD products as drugs and dietary supplements as well as unapproved animal drugs on its website. Subsequently, on July 22, the company received a warning letter from the FDA for violations of the Federal Food, Drug, and Cosmetic Act. This, in turn, pushed the company’s share price down 7.27% on July 23. The class action lawsuit alludes to this drop as damaging to shareholder interest. To learn more about the warning letter, read Curaleaf Stock: Latest Updates for Investors.
Curaleaf has been a solid performer in 2019
Despite these challenges, Cannabis Market Cap ranks Curaleaf as the seventh most valuable cannabis company based on market cap. On September 10, Forbes Russia named Curaleaf Chair Boris Jordan the first billionaire based on wealth from the cannabis industry.
Based on its closing price on September 12, Curaleaf stock was up 56.66% YTD (year-to-date). Its stock was also up 13.72% in the last month. To learn more about Curaleaf’s recent stock performance, read Cannabis Roundup: ACB, TGOD, CURA, and APHA.
The two US analysts tracking Curaleaf have an average target price of $12.5 on its stock. This target indicates a potential upside of 68.33% in the next 12 months based on its September 12 closing price. In Canada, eight analysts are tracking the company. They have given it an average target price of 18.02 Canadian dollars, which implies an 83.69% upside based on its last closing price. To learn more about Curaleaf’s valuation and price target in August, read Curaleaf: Target Price and Valuation Multiple after Q2.