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Sugarmade Inc. (SGMD) Among Hemp-Related Businesses Likely to Benefit if Congress Approves Cannabis Banking Legislation

  • Sugarmade is focusing its hydroponic agricultural supplies operation on the emerging hemp industry
  • Passage of the 2018 Farm Bill opened the gates to a new wave of hemp farming that portends a possible boom market
  • The hemp industry has suffered from the same banking antipathy afflicting state-legal marijuana businesses because of federal regulation of cannabis’ drug uses
  • Congress has begun considering legislation that would potentially bar federal agencies from penalizing financial institutions that serve cannabis-related businesses

Congressional legislation that aims to open banking institutions’ doors to the cannabis industry would not only benefit state-legal marijuana businesses, but also agricultural businesses working with cannabis’ non-drug hemp plant strains, such as hydroponic equipment supplier Sugarmade Inc. (OTCQB: SGMD).

Separate bills introduced in both the House and the Senate are attempting to address public safety concerns that have arisen as 10 U.S. states have moved to legalize recreational marijuana use and as medical cannabis use has been legalized in two-thirds of states. Because recreational and medicinal cannabis drugs continue to be classified as controlled substances by the federal government’s criminal enforcement divisions, regardless of the states’ rights groundswell, bank institutions insured by the federal government have been unwilling to risk depositor insecurity by doing business with federally illegal enterprises.

The lack of banking services has led the cannabis enterprises to transact finances, including corporate taxes, in sometimes large sums of cash that can’t be legally mailed and have to be carried to their destinations, creating fears of heightened criminal vulnerability as the cash is moved. However, the new Congressional measures would “block federal agencies from being able to “prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business or service provider or to a State, political subdivision of a State, or Indian Tribe that exercises jurisdiction over cannabis-related legitimate businesses,” if the bills are approved (http://nnw.fm/Y6CgP).

Such a law would allow growers to establish secured lines of credit, use electronic cards and become better business partners – all without having to worry about safeguarding cash transfers with every company with which they do business.

Sugarmade, headquartered in Los Angeles County, has various business operations in diverse marketplaces, including packaging and paper goods for various industries and agricultural supplies. The company is one of the largest publicly traded hydroponics supply companies moving into the industrial hemp space to serve the burgeoning sector as farms have been emboldened by the passage of last year’s Farm Bill, which restored hemp to agricultural oversight, free of Drug Enforcement Agency prohibitions (http://nnw.fm/0uzLR).

Sugarmade recently inked an agreement with Kentucky-based hemp cultivator Hempistry Inc. to deliver resources for its plant micropropagation work – a process that involves cloning or “propagating” new hemp plants from existing “mother” plants that have shown a desirable genetic profile (http://nnw.fm/iw2Sv). A large portion of the minimalist hemp industry that exists in North America uses the propagation process instead of growing crops from seed, and the micropropagation process offers the additional advantage of producing a very large number of plants simultaneously, according to the company.

According to Kentucky Commissioner of Agriculture Ryan Quarles, the number of the state’s applications to farm hemp is expected to increase by about five times between 2018 and 2019 (http://nnw.fm/6XCAm). Hemp acreage is expected to soar from 16,000 acres last year to more than 50,000 acres this year, and Sugarmade is well positioned to provide many of the supplies for successful micropropagation operations as demand grows. The company has already begun processing micropropagation supply orders.

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://nnw.fm/SUGAR

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