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Sugarmade, Inc. (SGMD) Scaling Up in Cannabis Space with Acquisitions and Agreements

  • Scaling up with acquisitions and agreements in cannabis and hemp sectors
  • SGMD to gain synergy from application of hydroponics to cannabis cultivation
  • Revenue guidance for 2019 raised to $70 million

With California’s legal cannabis market expected to grow “more than 18 percent annually to hit $5.6 billion by 2020” (http://cnw.fm/Cxzx0) and the hydroponics market on “a CAGR of 6.5%” (http://cnw.fm/E2Nyv) from 2018 to 2023, California-based Sugarmade, Inc. (OTCQB: SGMD) has positioned itself at the confluence of two great market movements. The state was the first to buck the trend of prohibition when, in 1996, it passed the Compassionate Care Act, which legalized medical cannabis. In 2016, it made adult use legal as well, and, on January 1, 2018, sales of recreational pot officially began. Now, with demand for cannabis set to rise rapidly, attention is turning toward the supply sector and the cultivation and storage technologies like those now available from SGMD. The company’s partnership with Plantation Corp. has given it a toehold in the cannabis storage space, and its master marketing agreement with BizRight Hydroponics Inc. gives it immediate scale, expected to be around $30 million per annum.

Sugarmade’s strategy revolves around the supply of equipment and technologies to support the legal cultivation, processing and storage of cannabis and other agricultural products. Its marketing and distribution agreements open the doors to three major cannabis markets. The deal with Plantation Corp. makes SGMD the exclusive distributor for BudLife in California, Oregon and Washington. BudLife is a unique patent-protected device for the long-term storage of cannabis that’s designed to preserve quality. Modern methods of cultivating cannabis are able to produce high grades of cannabis. However, the quality of cannabis degrades quickly, creating a risk that large quantities of inventory may become unsaleable.

The BudLife products are meant to significantly reduce this risk and allow growers and distributors to store and control the release of their higher quality products at optimal times. Consumers can also use BudLife to preserve the quality of their cannabis flowers for later consumption. SGMD thinks that BudLife will be a game changer for the cannabis industry. The industry has been lacking an effective storage device that will preserve THC levels, prohibit terpene degradation and safeguard the other important properties of cannabis.

A year ago, Sugarmade announced the creation of the industry’s largest publicly traded cannabis and hydroponics supply company. The announcement was made after the signing of a master market agreement with industry leader BizRight Hydroponics, Inc., a highly successful manufacturer and distributor to the hydroponics and cannabis markets. BizRight offers a range of hydroponics-related products, including HPS grow lights, electronic ballasts, HPS Bulbs, nutrient mixes, environmental control products, pH measurement and calibration solutions and other cannabis-related grow and storage products. BizRight operates the ZenHydro.com website and other e-commerce properties, and it sells various products to distributors and retailers.

Sugarmade has already established itself as a successful enterprise by supplying generic and custom printed products to the quick service restaurant sub-sector of the restaurant industry. Through its CarryOutSupplies subsidiary, the company provides the quick-serve restaurant sector with essential supplies such as cups, spoons and bottles. CarrryOutSupplies allows smaller establishments to gain the marketing and advertising benefits of customized printed products without tying up large amounts of working capital.

Sugarmade is also seeing opportunity in the hemp market. The company is to invest in Hempistry, Inc., a privately held Nevada corporation, which has begun planting an ultra-high cannabidiol (CBD) industrial hemp strain in Kentucky. Additionally, Sugarmade expects to sign an agreement with Hempistry for hemp cultivation supplies. Hempistry has already begun planting and has signed an agreement reserving up to 23,000 acres of prime Kentucky farmland for its exclusive use for hemp cultivation.

On Thursday, December 20, 2018, the Farm Bill – H.R.2, the Agriculture Improvement Act of 2018 – was signed into law by the president. Now, industrial hemp has been removed from Schedule I and no longer falls under the CSA’s definition of “marijuana.” Going forward, the cultivation of hemp will be regulated like any other agricultural crop.

Sugarmade is also in the process of acquiring Sky Unlimited, LLC, which through its AthenaUnited.com operations and website offers multiple popular hydroponic brands to several growing agricultural cultivation sectors. This planned acquisition has prompted Sugarmade to raise its revenue guidance for calendar 2019 from $30 million to $70 million.

For more information, visit the company’s website at www.Sugarmade.com

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