SHWZ - Schwazze (SHWZ) - Adding More Dispensaries

New Boulder Dispensaries. Schwazze has announced an agreement to acquire the assets of BG3 Investment, LLC, which consists of two marijuana retail stores located in Boulder, Colorado. This brings the number of dispensaries to 19, including nine acquired year-to-date. As part of the purchase, Schwazze also acquired Black Box Licensing, which contains intellectual property. We view the acquisition as another step in Schwazze's goal to become the leading cannabis dispenser in Colorado.Terms of the Deal. Schwazze is paying $3.5 million for the assets, consisting of $1.9 million in cash and $1.6 million of common stock, which equates to approximately 670,000 SHWZ shares at the current market price. The transaction represents a 3.5 times multiple of projected 2021 adjusted EBITDA for the two dispensaries. The deal is expected to close during the third quarter of 2021.BG3 dba Drift. The Drift dispensaries are known for scouring the four corners of Colorado for the finest cannabis. At Drift, one will find over two dozen strains from a handful of the finest artisan growers. Interestingly, one Drift location actually has a drive up "window." Customers can preorder then pick-up the order once it has been processed.Boulder Market. Home to the University of Colorado and many unique boutique businesses, Boulder is the fourth largest market for recreational cannabis in the state, trailing only the Denver metropolitan area. In 2020, total Boulder county sales were $125.5 million. We anticipate the market to remain strong in the future.Maintaining Outperform. We are maintaining our Outperform rating and $4.00 twelve month price target. At our price target, SHWZ shares would trade at 4x projected 2021 revenue and 13.8x projected 2021 EBITDA on a fully diluted basis. Read More >>