Trulieve added to S&P Total Market and Completion indices after Delaware redomicile

Passive funds that track the entire U.S. stock market can now own a cannabis company, after Trulieve Cannabis Corp. NYSETRLV said on Tuesday its shares had been added to the S&P Total Market Index and the S&P Completion Index. Vanguard's Extended Market Index Fund, which tracks the Completion Index and buys its members outright where it can, held US$95.4 billion on Aug. 31.

Shares rose 3.1 per cent to US$11.86 by 1:04 p.m. in New York on Tuesday, against Monday's close. The 1.6 million shares that had changed hands by then already matched the whole of the previous session, which ended at US$11.50.

Trulieve is a vertically integrated medical cannabis operator based in Tallahassee, Florida, with dispensaries and production in Florida, Georgia, Pennsylvania and West Virginia.

The addition covers the Total Market Index, the Completion Index and the health care sub-index of each, the company said. The Completion Index is the Total Market Index without the S&P 500, so it carries the mid, small and micro caps the headline benchmark leaves out.

"Trulieve's addition to S&P indices represents another important step forward following Trulieve's listing on the New York Stock Exchange and domestication to the U.S.," chief executive Kim Rivers said in the release. "Index inclusion raises visibility for Trulieve, ultimately improving liquidity and attracting new institutional investors."

Two Steps Made the Shares Eligible

S&P's U.S. indices take only companies domiciled in the United States whose shares trade on an eligible American exchange, and the methodology names the over-the-counter markets as ineligible. Trulieve's subordinate voting shares began trading on the NYSE on June 10. The company completed its move from British Columbia to Delaware on Aug. 11, after shareholders approved it on Aug. 5 and the British Columbia Supreme Court issued its final order the day before.

Read more: Trulieve set to become first NYSE-listed cannabis company

S&P reconstitutes the Total Market Index after the close of the third Friday in September, which fell on Sept. 18, and screens candidates against a reference date five weeks before that. Volume in Trulieve reached 12.7 million shares on Sept. 18, roughly eight times the sessions on either side of it and the heaviest since the June listing.

Peers on the Canadian Exchanges Stay Outside

Glass House Brands Inc. NYSEGLAS was the second U.S. cannabis company to reach the New York Stock Exchange, where its shares began trading on June 30. Curaleaf Holdings, Inc. TSECURA OTCMKTSCURLF and Green Thumb Industries Inc. CNSXGTII OTCMKTSGTBIF trade in Toronto or on the Canadian Securities Exchange and over the counter in the United States, none of which S&P's rules accept. Green Thumb said on Sept. 21 it would start a US$50 million buyback of its own shares on Sept. 23.

Read more: Glass House joins Trulieve on New York Stock Exchange after rescheduling momentum

Both NYSE listings followed the rescheduling of medical marijuana to Schedule III in April, which opened the way to registration with the Drug Enforcement Administration and to exchanges that had kept cannabis operators out. Three months of that listing have left Trulieve's shares about where they started, at US$11.86 on Tuesday against the US$11.50 close of their June 10 debut. The stock has traded between US$7.82 and US$12.76 over the past year.

Second-quarter revenue was US$271 million at a 60 per cent gross margin, the company reported on Aug. 7. Adjusted earnings before interest, taxes, depreciation and amortization came to US$98 million, and cash stood at US$325 million at the end of June. Trulieve runs 207 dispensaries and 3.5 million square feet of cultivation and processing space.

The Total Market Index rebalances again on the third Friday of December, the next time S&P weighs companies that have changed their domicile or their listing since the last review.