It’s fair to say that Sugarmade Inc. (SGMD) has its hand in many cookie jars, as the marketing company has a diversified portfolio of investments in products and brands with disruptive potential. With products ranging from a revolutionary culinary seasoning to a unique tray held with one hand and tree-less paper, the company also finds itself generating revenue in the burgeoning legal cannabis space and well positioned to take a dominant position in the marijuana storage business, which is arguably the area of the exponential growth potential for the company.
Back in April, Sugarmade provided guidance that it expected a record June quarter, following a first quarter that generated $903,950 in sales. The rationale was relatively evident given the spate of corporate developments showing the company expanding into new markets and capturing additional market share in others.
For instance, the company penned a 10-year distribution agreement with Wagner Bartosch, getting rights to Wagner’s unique advertising supported dividers for frozen yogurt and desserts. Sugarmade also successfully completed a Kickstarter program for its Sriracha Seasoning Stix, exceeding its funding goal while production got underway in May. It’s CarryOutSupplies.com business added more than 1,000 new items to its quick service restaurant product portfolio, with more coming online each month to meet the custom printed and generic supplies needs of its more than 3,000 customers.
Expanding Cannabis Busines
Relative to its cannabis operations, a year’s worth of work culminated with the June launch of CaliGrownSupplies.com as a new business-to-business division targeting the fast-growing hydroponic supply sector. Leveraging its B2B ecommerce experience from CarryOutSupplies.com to drive traffic and efficiently fill orders, the new site offers cutting-edge products, including grow lights, grow tents, fabric aeriation grow bags, and more. Keeping with the times, all Sugarmade ecommerce sites are equipped to accept the cryptocurrency Bitcoin. Many people prefer buying Sugarmade products using Bitcoin as the rates are usually better for them. Click here to learn how to buy Bitcoin if you’re interested in this.
The site also features Sugarmade’s popular SmelPro™ cannabis transport system. SmelPro is a nearly smell-proof and discrete shipping product for cannabis.
Businesses have responded to CaliGrownSupplies.com, including Sugarmade receiving a purchase order to deliver an aggregate of $3.0 million in hydroponic supplies to various retail and online sales channels over a twelve-month period, setting the tone for a productive second half of 2017 and going forward.
This from a company with a market capitalization of approximately $8 million, even after canceling 4.3% of its outstanding shares in March.
BudLife , An Industry First
Sugarmade’s understanding of plastics, containers, transportation and ecommerce has created a compelling opportunity for the company to assume a leadership position in a large market segment. In addition to its SmelPro™ franchise, Sugarmade last month partnered with privately-held Plantation Corp., in which Sugarmade became the exclusive distributor of Plantation’s breakthrough cannabis preservation technology to some of the biggest markets in the U.S.: California, Oregon and Washington. The pact runs through 2018 with automatic renewals based upon certain milestones being met.
Like everything else, containers are getting “smarter.” Plantation’s cutting-edge technology is based upon radical integration of specialized gases and natural agents that react dynamically with a changing environment to extend the useful life of medical marijuana for up to six months. Importantly, Plantation’s patented intelligent container system achieves this extended life span and averts pathogens and disease without the need for refrigeration.
“This is a critical capability in the case of cannabis since, unlike fruits and vegetables that thrive in chilly conditions, refrigeration degrades and undermines the efficacy of the plant medical benefits,” explained Jimmy Chan, CEO of Sugarmade, in news of the partnership.
Branded BudLife , the system represents a quantum leap forward in cannabis preservation and packaging versus the antiquated methods still commonly used today, such as mason jars, plastic bags and traditional plastic containers.
There is no other industry that is experiencing the growth of legal cannabis and perhaps no other industry that could benefit more from intelligent packaging than legal cannabis. With medical marijuana now legal in 29 states, the District of Columbia, Guam and Puerto Rico, the legal marijuana business is forecast to reach $22.8 billion in 2020 from $4.6 billion in 2014, according to Arc View Market Research. Sugarmade and Plantation are taking a segmented approach, focused first exclusively on the medical component – and its $6.7 billion in estimated sales last year.
The partners understand that marijuana is a sensitive organism that requires an optimal environment to maintain its qualities. It gets a bit technical, but, ultraviolet rays, humidity, temperature and even electrical charge are all part-in-parcel to ideal storage for medical marijuana. Simply, legacy packaging does not accommodate these factors, allowing the unique qualities of cannabis constituents to be quickly diminished, including those of cannabinoids and their desired medicinal benefits and/or psychoactive effects.
Against the backdrop of expected changes from regulators to standardize cannabis and intensify laws to ensure product quality and safety, investors should not overlook the importance of innovative packaging that addresses these matters. Lawmakers, dispensaries and consumers alike will all come to expect repeatable effects of different strains of cannabis, effects that cannot efficiently (if at all) be guaranteed will existing packaging technologies.
Furthermore, Sugarmade should be able to employ a premium pricing model to ensure a preserved product, a benefit to the top and bottom lines.
The Beauty of California
Per the agreement with Plantation, Sugarmade has distribution rights to BudLife in three important states, including California, the Holy Grail of cannabis markets with over 720,000 patients and roughly 2,800 dispensaries. Medical marijuana was legalized over two decades ago in California. While details on sales can be cloudy because sales aren’t officially tracked by the state, estimates from dispensary sales pegged sales in the area of $845 million over a recent 12-month period. That dwarfs the closest peer, Colorado, which raked in $408 million in medical marijuana sales at dispensaries in 2016.
With California expected to tighten regulations with the legalization of recreational marijuana at the start of 2018, sales of medical marijuana are forecast to reach $2.6 billion in 2020.
Considering these stats, it’s not surprising that California will be the roll-out market for BudLife . A first mover advantage with respect to the technology, gravitas in other area of sales and distribution and traction with SmelPro™ puts Sugarmade in an attractive position to see its cannabis product portfolio continue to emerge as the dominate revenue generator, while other assets delivery complementary sales.
credit:420intel.com
