The Only Pure Play on Colorado’s $2 Billion Cannabis Market

Colorado Skyline

In 2014, Colorado became the first U.S. state to legalize recreational cannabis. Since then, sales have boomed, hitting a new all-time high of $2 billion in 2020.

Today I will reveal how to invest in this powerful trend with a secret cannabis stock that is one of the most undervalued in the industry.

COVID-19 didn’t even put a dent in the Colorado cannabis industry, and sales soared to a new high. The Rocky Mountain state just reported another record-breaking year of cannabis sales.

Here are some more details from Marijuana Moment.

Colorado’s total marijuana sales surpassed $2 billion in 2020, the highest amount since legalization, the state’s Department of Revenue (CDOR) said Tuesday.

State dispensaries brought in $175,145,246 in November, a 17 percent increase from 2019. In return, the state reaped $32,383,094 in revenue from taxes and fees.

Colorado’s sales were $1.7 billion in 2019 and $1.5 billion in 2018. The state brought in $387,480,110 in taxes and fees in 2020. Since the state began collecting tax revenue on marijuana sales in February 2014, Colorado has brought in almost $1.6 billion in taxes on nearly $9.8 billion in total sales.

The Colorado cannabis market should continue to grow for many years as the state adds more cultivation facilities and dispensaries.

Leading cannabis market research firm Arcview and BDS Analytics expect the annual cannabis sales and patient numbers to grow in the next two years.

Colorado Legal Spending (In Billions)

Cannabis Stock Unknown to Everyday Traders

How do you play this powerful trend? Perhaps with a secret cannabis stock that most investors have never heard of.

  • It is the only pure-play cannabis stock in Colorado.
  • The company owns 17 dispensaries, 1 cultivation site, 1 manufacturing facility.
  • This is one of the most undervalued stocks in the cannabis sector.

Schwazze (OTC: SHWZ) is headquartered in Denver, Colorado, and has quickly grown into one of the biggest players in the Colorado cannabis industry.

This cannabis powerhouse currently owns 17 cannabis dispensaries in the Denver and Southern Colorado region. It also owns one cultivation site and one manufacturing facility in the state.

There are two traits that make Schwazze such an interesting and unique cannabis stock:

#1 – Schwazze Is a Pure Play on Colorado

Schwazze is one of the few cannabis stocks operating in Colorado. Beyond that, it is the only cannabis stock that I know of that operates exclusively in Colorado. For example, Curaleaf Holdings (OTC: CURLF) has a footprint in Colorado too – but it also operates in more than a dozen other states. However, Schwazze only operates in Colorado, giving investors direct exposure to the state.

#2 – Schwazze Shares Are Undervalued Compared to Its Peers

Schwazze is one of the most undervalued cannabis stocks in the sector. Schwazze just announced that it expects pro-forma revenue of $95 million in its current fiscal year. The company has a market cap of $125 million. That gives Schwazze a forward price-to-sales ratio of 1.25, a massive discount to its U.S. peers.

By comparison, Curaleaf has a forward P/S ratio of 10. I like Curaleaf, and I expect the company and shares to do well. However, Schwazze offers more value.

Schwazze Shares Just Hit a New 52-Week High

This company may not be unknown for long. SHWZ has been getting more attention from investors lately, driving its share price higher.

Shares are up more than 100% in 2021 and recently hit a new all-time high. Schwazze looks a little overbought in the short run, but this stock still has plenty of potential in the long run.

The Big Picture on Colorado and Schwazze

Colorado is one of the largest cannabis markets in the U.S. The state’s sales hit a new all-time high of $2 billion in 2021, and leading cannabis market research firm Arcview BDS Analytics is predicting more growth in the next two years.

Schwazze is one of the largest cannabis companies in the state and a great way to play the trend. It is the only pure-play cannabis stock on Colorado and shares look undervalued compared to its peers. Traders will want to keep a good eye on Schwazze this year.

Michael Vodicka
Editor, Cannabis Stock Trades

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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