Michigan has quickly evolved into one of the largest cannabis markets in the United States after going legal in 2020. Recent sales data shows that Michigan is on pace to generate more than $1 billion in cannabis sales in 2021. That would make Michigan one of the largest cannabis markets in the U.S.
Here are some more details from MJ Biz Daily.
Michigan’s medical and recreational marijuana market continues to post record monthly numbers, with sales reaching $115.4 million in March, more than twice that of March 2020.
Michigan’s sales have been robust since the state’s adult-use market launched in 2019, totaling more than $500 million in the first full year of the program.
The state has 260 recreational cannabis stores and 410 medical marijuana dispensaries, according to Detroit Metro Times.
This sales data ranks Michigan as one of the largest cannabis markets in the U.S. And, looking forward, Michigan’s cannabis industry should see record sales growth for the rest of the year. At the beginning of the year, Michigan issued 45 new permits to sell recreational cannabis and 46 new permits to sell medical cannabis. Those new permits increase the number of dispensaries in Michigan by 14%.
Naturally, investors want to know how they can capitalize on Michigan’s booming cannabis market. Today I am going to reveal a promising young cannabis company that is an early leader in Michigan.
Young Company To Play Michigan’s Cannabis Market
Red White and Bloom Brands (CSE: RWB, OTCQX: RWBYF) is a direct play on Michigan’s high-growth cannabis industry. Headquartered in Vancouver, British Columbia, RWB has a market cap of $215 million and is an early industry leader in high-growth Michigan.
On the retail side of the business, RWB owns eight dispensaries in Michigan. RWB also owns two more dispensaries that are waiting to be licensed and eight ‘turn-key’ dispensaries in the pipeline.
On the cultivation side, RWB owns three cultivation facilities in Michigan, one new indoor facility that is currently under construction and another indoor facility that has been acquired and is ready to build out. All together, this would give RWB 545,000 square feet of production capacity in Michigan.
While Michigan is RWB’s largest market, this company has operations in a total of seven states, including California, Arizona, Oklahoma, Florida, Massachusetts and Illinois. Take a look at the chart below.
This portfolio of assets is producing impressive results for RWB.
RWB reported third-quarter third-quarter results in December with huge revenue growth. Here are some more details from the earnings report.
Unaudited pro forma revenue, which includes the company’s pending Michigan acquisition of PharmaCo and Completed acquisition of Platinum Vape and assumes the acquisitions had occurred on Jan. 1, 2020, would have been approximately CDN$48-million for the current quarter and CDN$128-million for the nine months ended Sept. 30;
This report tells me that RWB should be able to produce more than $100 million USD in revenue in 2021. This is an important number because RWB currently has a market value of $215 million. That means RWB has a market value of just 2X annual sales, making this one of the most undervalued companies in the entire U.S. cannabis sector.
RWB Shares are on Sale
RWB shares rallied big in 2020. However, in 2021 shares have fallen into a bear market and are down 30% from the 52-week high.
The relative strength index is a popular technical indicator that signals when a stock is either overbought or oversold. The relative strength index below the chart is signaling that shares are the most oversold they have been in six months.
The Big Picture on Michigan and Red, White and Bloom
The Michigan cannabis market has quickly grown into one of the largest and fastest-growing markets in the U.S. Sales are on pace to break $1 billion in 2021.
Red, White and Bloom is one of the largest cannabis companies in the U.S. and an early leader in Michigan. Shares are down 30% from the 52-week high. In addition, the relative strength index is signaling that this is an attractive entry point.
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About the Author & Cannabis Stock Trades
Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.
Mr. Vodicka brings his expertise and guidance to the members of Cannabis Stock Trades.
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