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Sugarmade, Inc. (SGMD) Invests in Hempistry to Reinforce Its CBD Market Position

  • Sugarmade invests $1 million in Hempistry through common stock to boost ultra-high CBD hemp growing
  • The U.S. industrial hemp market is projected to hit $1 billion in revenue in 2018
  • Legislative process underway to legalize commercial production of industrial hemp by removing it from the Controlled Substances Act

Sugarmade, Inc. (OTCQB: SGMD) is a product and brand marketing company that targets brands with disruptive potential and invests in them. Currently, the company has made a commitment to invest in Hempistry Inc. to the tune of $1 million. This investment will boost Hempistry’s efforts to produce ultra-high CBD-content hemp that is grown in Kentucky.

SGMD, headquartered in Monrovia City, California, has made impressive progress into the industrial hemp space. The main operations have been in hydroponics and restaurant supply. Other brands under its fold include CarryOutSupplies.com, ZenHydro.com and BudLife.

The investment in Hempistry is a strategic one for SGMD, as the U.S. industrial hemp market is forecast to grow to $1 billion in revenues in 2018. The expected compound annual growth rate (CAGR) for industrial hemp through 2022 in the U.S. alone is expected to be 14 percent.

Hempistry Inc. is a Nevada-based privately-held corporation focusing on the growth of ultra-high CBD industrial hemp. This hemp strain contains not more than 0.3 percent THC, the ingredient found in marijuana that is responsible for its recreational function.

The $1 million investment will be made over a 12-month period. It is aimed at boosting Hempistry’s activities, mainly the planting of the 23,000 acres of prime farmland in Kentucky with a new strain of hemp.

As part of the deal, Sugarmade seeks to enter into a cultivation supply pact with Hempistry, thus opening more revenue opportunities. The investment will be in common stock, which means that shareholders will potentially benefit, should Hempistry announce an IPO in the future.

The cannabis market is a varied and increasingly complex industry. The plants and products from this industry can be broadly divided into two groups: hemp (and CBD) in one category and marijuana (and THC) in the other. Unlike THC, which is mainly for recreational use, CBD has fueled prospects and actual development of medical marijuana products. It is this potential for phenomenal growth that SGMD is riding in its decision to invest in Hempistry.

In a snapshot, the United States sold over $820 million worth of hemp-based products in 2017, 23 percent of which comprised CBD-derived products. By 2022, the hemp market will have grown to $1.9 billion, according to projections, with $646 million coming from CBD and its derivatives.

The business model of Sugarmade, Inc. is closely tied to CBD, and this means growth opportunities and innovation for the company. Hemp is gaining mainstream acceptance and use with products in categories such as textiles, personal care products, supplements and food manufactured out of CBD.

Much of the hemp currently used in CBD products is imported from China and Canada. In 2015 alone, imports into the United States for hemp totaled $78.2 million, excluding paper products, textiles and construction materials.

Sugarmade’s investment strategy is expected to be further strengthened by the 2018 Farm Bill that is currently before the U.S. Senate. As part of the legislation, industrial hemp is being pushed out of the Controlled Substances Act. This means that farmers will find it easier to grow hemp not just for CBD, but for other agricultural purposes as well. The last Farm Bill created an environment in which farmers could legally set up test production of hemp for CBD, but not widespread cultivation.

Apart from the direct monetary investment, Sugarmade, Inc. recognizes the need for innovation through research and implementation of new products to boost and sustain growth.

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

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