While 2020 has been difficult due to the COVID-19 pandemic, it’s been a stock picker’s dream, especially Q4. We have not seen this many 10, 20, 50, 100, and 200 baggers in our 25 years of trading pennies. The big run in penny stocks started with TSNP (initial coverage here) and then spilled over into ENZC (initial coverage here). CBD of Denver is just the latest multi-bagger for our readers and subscribers this quarter.
We wrote up CBD of Denver on November 17th when the stock closed at $.0015. We said that CBD of Denver was an extremely undervalued play, which you can read here. After yesterday’s move to $.0328, some saw potential gains of 2000%.
Our subscribers have fared even better as they were alerted at $.001. Those that got in at the alert price saw potential gains of 3180%!!
We always alert our subscribers first before we publish for our regular readers. This is the value of having a subscription to Insider Financial, which you can sign up for here. We alert our subscribers with our best ideas before our regular readers.
In this article, we take a look at CBD of Denver and discuss what’s happening and what we think is next in terms of price action.
CBD of Denver
First up, here’s a little background info for those not familiar with CBDD. CBD of Denver, Inc. is a full-line CBD and Hemp oil company selling Black Pearl CBD hemp products and the owner of CBD Social Network.
CBD of Denver offers a superior CBD product that is full-spectrum without depending on THC to activate the benefits of cannabidiol. Black Pearl CBD has 0% THC but is not an Isolate where the THC is stripped from the product rendering it ineffective. CBBD uses a proprietary technique adding terpenes as the activation ingredient, resulting in a product that is the finest in the industry.
Swiss Pilot Program
CBD of Denver just announced a Swiss pilot program to permit temporary production and distribution of marijuana.
In June 2020 the lower house of Switzerland’s Federal Assembly approved a bill for a five-year pilot research program for the temporary production and distribution of cannabis to adults for recreational purposes. Marijuana Business Daily reported that it could lead to the normalization of cannabis in Switzerland.
“If the pilot program is successful, CBD of Denver, Inc, Rockflowr Exchange, Rockflowr Production and Rockflowr Retail could dramatically benefit by using their expertise in CBD and hemp industry to move into the very lucrative marijuana business” explained Marcel Gamma.
The pilot program is intended to provide scientific arguments for a national debate on the opportunity to legally regulate cannabis for adult consumers, according to an expert quoted in the Marijuana Business Daily article. The upper house, the Conseil des Etats approved the bill in September. The bill includes a provision that the cannabis is to be grown by Swiss farmers.
CBD of Denver Q3 Results
For Q3, CBD of Denver reported that gross revenues increased nearly 10-fold over the second quarter to $5,963,820.00 with gross profits of $484,666.00. Rockflowr GmbH generated the bulk of that revenue and is still growing. Rockflowr has been able to source hemp flower from the United States in large quantities and its distribution has grown to more than 7 countries in Europe.
CBDD has agreed to a working relationship with a Denver based company to supply up to two tons of hemp per month to CBDD’s Rockflowr subsidiary.
Sourcing product from the United States gives Rockflowr a steady supply of high-grade hemp flower. They have been expanding at a rapid pace and opening a supply chain from Denver is allowing them to broaden their sales base in Switzerland and throughout Europe.
CBD of Denver BULK SALE
Driving Q3 results has been a deal that CBD of Denver signed over the summer. On June 30, Rockflowr GmbH entered into an agreement for 24 months with a Swiss company for the sale of bulk CBD flower.
The first purchase by the customer was signed on July 7, for 500 kgs (more than half a ton) of Hybrid Indoor CBD Flower. This one sale amounted to 341,500 CHF or approximately $363,000 USD in revenue. They agreed to purchase an additional 1,000 kgs per week for an initial 3-month trial period. Total revenue per week could exceed 680,000 CHF or 2,728,000 CHF per month.
CBD WELT 24
CBD Welt 24, GmbH is also expanding its production/distribution of pollen and is currently looking to purchase a larger pollen extraction machine. Selling pollen has become a very profitable segment of their business. CBD Welt 24 is not only selling raw pollen but also pressing the pollen into blocks, similar to Hashish, only without the THC. CBD Welt 24 is still on track to harvest every month and is seeking to expand its operations.
Biomass can be purchased for as little as 30,000 CHF a ton. CBD of Denver can convert one ton of Biomass into 200 – 250kg of Pollen. Pollen is then sold for up to 450CHF a kilo. Once the pollen is extracted the leftover biomass is converted into CBD oil. CBDD already sells pollen to customers in Germany.
CBD Welt 24, GmbH, has leased a new indoor grow facility in Zurich. The facility has 40 1000-watt lights and has room to support approximately 1,200 plants. The company expects the first harvest sometime this month.
BLACK PEARL CBD WEBSITE
CBD of Denver has 2 new products for their Black Pearl CBD website. The first product is a CBN/CBG gel cap which will be sold in 30 count bottles. Reports show that CBN and CBG can help with sleep and relaxation. The second product is a CBD pain stick containing 3.8% full-spectrum CBD.
CBD of Denver MARKET OPPORTUNITY
CBD stocks have been hurt by two things this year – the FDA and COVID-19. FDA scrutiny of CBD stripped food products from the menu in 2019. However, the FDA appears on a path to legal clarity via a bill such as HR 8179 or a change in FDA enforcement policies. The CBD industry expects actionable guidance by the FDA in 2021 and a vaccine or treatment for COVID-19 should exist by this timeline.
Overall, cannabis and CBD stocks have underperformed the market over the past year. Recently, market sentiment has started to shift towards the bulls. A big part of the enthusiasm surrounds the upcoming Biden/Harris administration. Vice President-elect Kamala Harris said on the debate stage that the Biden/Harris administration is in favor of cannabis legalization on the federal level.
Known as the MORE Act, the bill passed by a mostly party-line 228-164 vote. However, the Republican-controlled Senate is unlikely to take up the legislation.
The measure, sponsored by Rep. Jerry Nadler, D-N.Y., would remove marijuana from the federal list of controlled substances and expunge some marijuana-related criminal records. It would still be up to states to pass their own regulations on the sale of marijuana.
Congressman Matt Gaetz of Florida was one of a handful of Republicans to vote for the legislation and the only Republican co-sponsor of the legislation. Gaetz said on the House floor the bill was necessary because current federal prohibitions on marijuana “constrains” the states. Noteworthy about Gaetz is that Trulieve Cannabis, which we have called best in its class, is a company in his district.
Why This Matters
The bill’s likely passage comes as more states have legalized marijuana and public opinions on the topic have shifted.
Four more states passed marijuana legalization measures in the November elections, bringing the total number of states with legal marijuana use for adults to 15. Medical marijuana is legal in 36 states.
President-elect Joe Biden has called for the decriminalization of marijuana and the expunging of convictions for marijuana use. Biden’s campaign website said he supported the legalization of medical marijuana and would leave decisions on recreational use up to the states.
CBD of Denver Bottom Line
CBD of Denver has the market’s attention now. On Friday, CBDD recorded over $32 million in dollar volume on 20,000 trades. Heavy dollar volume with a lot of trades is a signal we look for. This means that momentum and bigger traders are coming into the stock.
Even at current levels, CBD of Denver has a market cap of just $70 million. CBDD still remains cheap as it just reported revenues grew 1000% in Q3 to $5,963,820.00 and gross profits of $484,666. Furthermore, CBD of Denver has just $261,000 in debt.
While shares closed off the highs on Friday as profit-taking came in, CBD of Denver remains part of a core portfolio of penny stocks to own. Look for new highs still to come.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in OTCMKTS:CBDD or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.