CannabisNewsWire
Editorial Coverage: The North American cannabis market
continues to accelerate as Canada rockets towards the October 17
deadline for the nationwide legalization of recreational
marijuana.
- Hydroponic market trying to keep up with booming cannabis
market set to exceed $25 billion by 2021.
- Continued expansion of cannabis cultivation and demand for
controllable production parameters are a boon to hydroponics
industry.
- Healthcare sector increasing demand for CBD from sources such
as industrial hemp.
- Regulatory reform throughout North America and Europe driving
change in overall space.
The milestone legislation appears set to open the door wider for
companies pursuing a position in the promising sector, including
those consolidating vectors within the still highly fragmented
hydroponics supply sector. The global hydroponic market alone was
worth nearly $3.5 billion last year and is set to break $10 billion
by 2023, maintaining a healthy 18.2 percent
CAGR. Recently projected revenue growth to more than $30
million next year illustrates the lofty aspirations of hydroponics
supplier Sugarmade, Inc. (OTC: SGMD) (SGMD
Profile), a company that recently reported a sequential revenue increase of some 215 percent and a
year-over-year revenue increase of approximately 228 percent for
revenues of just under $3 million in the most recent quarter.
Scotts Miracle-Gro Company (NYSE: SMG) is another
one to watch in this space, with an already well-established
presence and the recent announcement that the company will acquire
general hydroponics equipment supplier Sunlight Supply, Inc., for
$450 million. An acquisition may also benefit Aurora
Cannabis, Inc. (OTC: ACBFF), which recently announced its
procurement of MedReleaf. The huge announcement of an additional $4
billion investment in researcher, cultivator and seller of
extracts/flowers Tilray, Inc. (NASDAQ: TLRY), by
beer giant Constellation Brands, Inc., has been unmistakable
“handwriting on the wall” to many investors that the cannabis
industry is here to stay. And Canopy Growth Corporation
(NYSE: CGC) has also been bitten by the sector
consolidation bug, as evidenced by the company’s recent snapping up
of premium cannabis lifestyle brand Hiku Brands Company Ltd.
To view an infographic of this editorial, click here.
Hydroponic Picks and Shovels
With the North American Marijuana Index up 33 percent over the
last month and up nearly 550 percent over the last three years, it
appears that this could be the front end of an ongoing boom that
may have yet to even see its true heyday — something that could be
triggered by the adoption of more widespread legislative reforms
across several U.S. states, occurring in ways similar to
California’s cannabis reforms.
It is a well-known investing adage that those who developed
long-term success during California’s gold rush made their money
not from mining claims but from selling the necessary accoutrements
miners needed, such as picks and shovels. The same phenomenology
holds true today during the ongoing green rush, with hardware
manufacturers and suppliers of grow systems poised to reap the
rich, long-term rewards of an industry that is still just getting
off the ground in many respects. Leading cannabis sector analysts
at ArcView recently detailed how the North American market saw
sales growth of 33 percent last year and
projected that the market will reach $25 billion a year by 2021,
maintaining a CAGR of 28 percent.
Cannabis prohibition will most likely come to an end in the
United States, just as it has in Canada, echoing what previously
occurred with the end of alcohol prohibition. To many analysts in
the sector today, the legalization question is not if but when.
Savvy investors seem to understand the naked reality that humans
have been consuming cannabis for likely well over ten thousand
years, stretching back to the apparently widespread consumption of
seeds and oils in China, where the first recorded medical uses of
the plant occurred almost five thousand years ago. Little wonder
that the cannabidiol (CBD) market is growing by leaps and bounds,
as the infusion of CBD into healthcare products becomes more
prevalent. The Brightfield Group recently projected
faster-than-anticipated growth for the CBD market, with sales
projected to reach $22 billion or
more by 2022.
A Rollup Strategy in Hydro Hardware
Product and brand marketing outfit Sugarmade, Inc.
(OTC: SGMD), whose brands include ZenHydro.com,
CarryOutSupplies.com and BudLife Cannabis Storage Solutions, is
currently focused on increasing revenues by repeating the success
of the company’s past strategic moves, such as last year’s master
market agreement with BizRight Hydroponics, a highly successful and
rapidly growing manufacturer and distributor of intelligently
designed hardware geared specifically for the needs of the cannabis
cultivation sector. The company recently revealed that, as part of
a growing emphasis on exploiting a “picks and shovels” rollup
approach to the burgeoning cannabis sector, Sugarmade is in
acquisition talks with multiple hydroponic supply companies having
parallel competencies.
Sugarmade CEO Jimmy Chan explained in a recent shareholder
Q&A that targeting home growers as well as smaller, profitable
companies in the sector — companies that already have exceptional
hardware offerings for professional cannabis processors and
cultivators — is something that looks to be highly accretive. The
strategy is quite simple, because while there is an explosion of
new cannabis ventures in the market, few of these pioneering
entrepreneurs of profitable operations possess access to public
markets or equity-financed capital.
Branching Out into CBD and Industrial Hemp
Sugarmade’s revenue generation plan isn’t limited to relying on
expanding North American markets either. The company was obviously
happy to announce expansion into the European hydroponics supply
market recently, through a sizeable
order via Amazon UK. This announcement comes amid an ongoing
shift for the company from a majority of hydroponic-related revenue
growth occurring in California and other West Coast markets to more
geographically dispersed growth throughout other U.S. states that
are also seeing regulatory easing.
In addition, Sugarmade announced in late August that the company
has committed to investing $1 million over the next 12 months in
Hempistry, Inc., the privately held cultivator of an ultra-high CBD
strain of industrial hemp (less than 0.3 percent THC), which has
reserved 23,000 acres of prime Kentucky farmland for the task.
Moreover, Chan has been made an advisor of Hempistry, and the
company’s investment will be in the form of common shares,
positioning SGMD shareholders quite well should a Hempistry IPO
ever come to the fore. A cultivation supply agreement signed
between the two companies is the icing on the cake and demonstrates
to investors how such a rollup strategy also represents additive
revenue growth that will magnify Sugarmade’s already robust
top-line growth rate.
Sugarmade is already in formal acquisition negotiations with at
least two companies in online and retail hydroponics, as well as
other agricultural cultivation supplies, and the company has made a
special filing with the SEC to formally address these acquisitive
ambitions. Together with the industrial hemp and CBD initiative
engaged in via the Hempistry investment, SGMD’s management team
feels that shareholders are now well-positioned for considerable
upside, as the company skillfully manages its aggressively planned
growth rate and hones its focus more toward cultivation-related
revenue sources.
Cannabis-Related Hydroponics — A Tricky
Market
The retail market for hydroponics, generated by cannabis growers
who are often highly knowledgeable about different types of grow
equipment, is expected to become an increasingly contested arena in
the coming years. For a disruption-minded brand marketing company
such as Sugarmade, which is now one of the biggest publicly traded
companies in cannabis-related hydroponics, the need to speak
directly to consumers in a language they understand is readily
apparent. The BizRight deal speaks volumes, given that BizRight has
developed an impressive rapport with customers and partners over
the last seven years, becoming one of the most trusted names today
in world-class hydroponics.
Scotts Miracle-Gro Company (NYSE: SMG) had a
strong quarter recently, with consumer purchases up 5.4 percent
amid continued strength of the company’s core consumer lawn and
garden products. The aforementioned acquisition of Sunlight Supply
will reportedly bring the company’s Hawthorne Gardening segment up
to an estimated $600 million a year in total sales, giving the
company an impressive footprint across the general hydroponics
supply market.
Aurora Cannabis, Inc. (OTC: ACBFF) is one of
the biggest and fastest growing cannabis companies in the game
today, with a currently funded capacity of nearly 950,000 pounds of
product per year and an annual production target over 1.256 million
pounds post-acquisition of Ontario-based MedReleaf. With a
production footprint spanning nine Canadian and two European
production facilities, Aurora is one of the most enviably
positioned cultivators in the industry and has the scale necessary
to ensure low production costs as well as consistently high yields.
The MedReleaf acquisition brings even more high-yield cultivation
technology firepower to the table.
Tilray, Inc. (NASDAQ: TLRY), which is focused
on research, cultivation, production and distribution of medical
cannabis and cannabinoids, has seen some impressive share price
appreciation since the company’s IPO in July. The announcement in
September that the company was granted DEA approval to import a
cannabinoid study drug to the United States from Canada for use in
a neurological movement disorder (essential tremor) study has
really attracted a lot of investors to the company’s unique
offerings and global reach. Tilray’s sophisticated array of
full-spectrum and highly purified extracts deserves a second look
from investors who may just be caught up in the hype and do not
fully appreciate the company’s portfolio and value proposition.
Canopy Growth Corporation (NYSE: CGC) is riding
high on a huge capital injection from Constellation Brands, which
controls approximately 38 percent of the company post-expansion of
this important strategic partnership, which has also served as
something of a watershed moment for the cannabis industry. Canopy
is wasting no time when it comes to exploiting this new muscle,
recently announcing a multiyear supply and service agreement with
Centric Health Corp. Canopy also recently announced that its Tweed
Farms subsidiary received license amendments approving all
remaining greenhouse space at its primary site, expanding Canopy’s
total licensed grow footprint to an impressive 3.2 million square
feet.
Lean, Mean, Green Machine
Sugarmade has put together a straightforward revenue growth
strategy that has been tried and tested in other markets.
Successfully executing a rollup strategy in the highly fragmented
hydroponics space will come down to the company’s ability to
continue picking superb targets that will be genuinely accretive to
shareholder value over the longer term and directly additive to the
company’s already impressive top-line growth. The Hempistry
investment, as well as further expansion into hydroponics supply,
is a win-win for both target companies and investors alike.
For more information on Sugarmade, visit Sugarmade, Inc.
(OTC: SGMD)
About CannabisNewsWire
CannabisNewsWire (CNW) is an information service that provides
(1) access to our news aggregation and syndication servers, (2)
CannabisNewsBreaks that summarize
corporate news and information, (3) enhanced press release
services, (4) social media distribution and optimization services,
and (5) a full array of corporate communication solutions. As a
multifaceted financial news and content distribution company with
an extensive team of contributing journalists and writers, CNW is
uniquely positioned to best serve private and public companies that
desire to reach a wide audience of investors, consumers,
journalists and the general public. CNW has an ever-growing
distribution network of more than 5,000 key syndication outlets
across the country. By cutting through the overload of information
in today’s market, CNW brings its clients unparalleled visibility,
recognition and brand awareness. CNW is where news, content and
information converge.
Receive Text Alerts
from CannabisNewsWire: Text "Cannabis" to
21000
For more information please visit https://www.CannabisNewsWire.com and
or https://CannabisNewsWire.News
Please see full terms of use and disclaimers on the
CannabisNewsWire website applicable to all content provided by CNW,
wherever published or re-published: http://CNW.fm/Disclaimer
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com
303.498.7722 Office
Editor@CannabisNewsWire.net
DISCLAIMER: CannabisNewsWire (CNW) is the source of the Article
and content set forth above. References to any issuer other than
the profiled issuer are intended solely to identify industry
participants and do not constitute an endorsement of any issuer and
do not constitute a comparison to the profiled issuer. The
commentary, views and opinions expressed in this release by CNW are
solely those of CNW. Readers of this Article and content agree that
they cannot and will not seek to hold liable CNW for any investment
decisions by their readers or subscribers. CNW is a news
dissemination and financial marketing solutions provider and is NOT
registered broker-dealers/analysts/investment advisers, hold no
investment licenses and may NOT sell, offer to sell or offer to buy
any security.
The Article and content related to the profiled company
represent the personal and subjective views of the Author, and are
subject to change at any time without notice. The information
provided in the Article and the content has been obtained from
sources which the Author believes to be reliable. However, the
Author has not independently verified or otherwise investigated all
such information. None of the Author, CNW, or any of their
respective affiliates, guarantee the accuracy or completeness of
any such information. This Article and content are not, and should
not be regarded as investment advice or as a recommendation
regarding any particular security or course of action; readers are
strongly urged to speak with their own investment advisor and
review all of the profiled issuer’s filings made with the
Securities and Exchange Commission before making any investment
decisions and should understand the risks associated with an
investment in the profiled issuer’s securities, including, but not
limited to, the complete loss of your investment.
CNW HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E the Securities Exchange Act of 1934, as amended and
such forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. “Forward-looking statements” describe future expectations,
plans, results, or strategies and are generally preceded by words
such as “may”, “future”, “plan” or “planned”, “will” or “should”,
“expected,” “anticipates”, “draft”, “eventually” or “projected”.
You are cautioned that such statements are subject to a multitude
of risks and uncertainties that could cause future circumstances,
events, or results to differ materially from those projected in the
forward-looking statements, including the risks that actual results
may differ materially from those projected in the forward-looking
statements as a result of various factors, and other risks
identified in a company’s annual report on Form 10-K or 10-KSB and
other filings made by such company with the Securities and Exchange
Commission. You should consider these factors in evaluating the
forward-looking statements included herein, and not place undue
reliance on such statements. The forward-looking statements in this
release are made as of the date hereof and CNW undertakes no
obligation to update such statements.
Source:
CannabisNewsWire
Contact:
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com
303.498.7722 Office
Editor@CannabisNewsWire.net
Aurora Cannabis (NASDAQ:ACB)
Historical Stock Chart
From Mar 2024 to Apr 2024
Aurora Cannabis (NASDAQ:ACB)
Historical Stock Chart
From Apr 2023 to Apr 2024