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Sugarmade Inc. (SGMD) Establishes Pattern of Growth, Expansion in California Cannabis Space

  • More than a dozen California cities are opening new recreational cannabis licensing opportunities this year, article reports
  • SGMD has established a pattern of growth through the years, investing in a number of subsidiaries with active operations in the California cannabis sector
  • Company also completed the acquisition of Lemon Glow and its assets, interests, property and rights

The cannabis space appears set for growth in California, according to an MJBizDaily report (https://ibn.fm/aKmrF). The potential growth bodes well for Sugarmade (OTC: SGMD), an emerging leader in the sector that is 

“More than a dozen California cities are opening new recreational cannabis licensing opportunities this year, either by embracing the legal marijuana industry for the first time or by increasing the number of available business permits,” the MJBizDaily article reported. “Several other cities, meanwhile, are laying the groundwork for new markets down the road by drafting and/or developing cannabis ordinances. The rollout of new adult-use markets and business opportunities come as cities across the state are eager to bring in additional tax revenue after the pandemic and other factors depleted public coffers.

“The ongoing shift is a welcome sign for the state’s struggling marijuana sector, which remains forbidden in the vast majority of California cities and, at the same time, must compete against a thriving illicit market,” the article continued. “The retail expansion is far and wide, from urban centers in San Diego and San Jose to small towns such as Madera in the Central Valley and Oxnard along the southern California coast.”

Sugarmade is working to position itself establish in the growing California cannabis delivery marketplace. The company has established a pattern of growth through the years, investing in a number of subsidiaries with active operations in the California cannabis sector. The company’s portfolio brands include Nug Avenue, SugarRush and Lemon Glow.

Sugarmade owns a 70% stake in NUG Avenue, a cannabis delivery service based in southern California. The service offers hand-selected, top-shelf products from Stiiizy, Kanha, PlugPlay, BigChief and others. The cannabis delivery service that covers same-day service of a variety of products, including flower, pre-rolls, vapes, extracts, edibles, concentrates and capsules. The service covers delivery in Los Angeles County, Orange County, San Bernardino County and Riverside County. 

In addition, last year Sugarmade completed the acquisition of Lemon Glow and its assets, interests, property and rights (https://ibn.fm/8l1xt). “We are setting the stage to improve margins while expanding end-market access, and to grow, refine, produce, distribute in the largest and fastest-growing cannabis market on the planet,” said Sugarmade CEO Jimmy Chan. The acquisition was designed to position the company to achieve that objective with a significant capacity to scale as demand for California-grown cannabis is expected to grow when federal legalization takes place.

Sugarmade believes these significant changes in the marketplace create an opportunity to invoke a new short-term strategy while the company’s long-term plans to cultivate at its new Lemon Glow facility are developing. In May of last year, Sugarmade closed on the acquisition of Lemon Glow Company and announced plans to acquire the necessary approvals and permits to cultivate up to 32 acres of the 640-acre property. Sugarmade is also working to obtain a conditional use permit number from the community development department of the county of Lake, California, which the company believes is an important step toward gaining the full conditional use permit that will allow cannabis cultivation on the property.

In addition, for the 2022 cannabis cultivation season, Sugarmade is embarking on a new and bold strategy to enter into contract cultivation arrangements with local Lake County, California, cultivators that have decided not to engage in their own cultivation efforts this year. These operators have already made significant investments in infrastructure and have highly specialized personnel available that SGMD can utilize on a contract basis for production of cannabis.

The company observed that, by contracting with the owners of these already available resources, it will gain immediate access to the marketplace based on an advantageous cost model that will place the company on par or, in some cases, at a superior cost position, when compared to many of the larger cannabis cultivation and distribution companies in the industry. 

Sugarmade officials are in negotiations with several local permitted and licensed operators that are agreeable to a partnership arrangement with Sugarmade to manage operations for cannabis cultivation. Officials are also in active negotiations on the distribution side of the business that will allow Sugarmade to bring this cultivated cannabis to the marketplace. 

Invoking this dynamic short-term strategy, while continuing to develop the company’s longer-term strategy to fully develop the large Lemon Glow property for cultivation, will allow Sugarmade to significantly advance the timeframe for gaining market share in this industry based on a cost model that will allow the company to produce strong margins this cultivation season.

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

NOTE TO INVESTORS: The latest news and updates relating to SGMD are available in the company’s newsroom at http://ibn.fm/SGMD

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