CannabisNewsWire
Editorial Coverage: As hemp production increases, Californian
legislators have extended the duration of thousands of cannabis
cultivation licenses to support the state’s thriving industry.
Sugarmade Inc. (OTCQB: SGMD) (SGMD
Profile) is supporting many of these companies that
have cultivation licenses by providing cultivation and extraction
equipment. Canopy Growth Corporation (TSX: WEED) (NYSE:
CGC), one of the biggest companies in the sector, is
increasing its growing capacity while helping educate about
medicines. Cronos Group Inc. (TSX: CRON) (NASDAQ:
CRON) is leaning into new technology, with new facilities
for R&D and processing. The Green Organic Dutchman
(TSX: TGOD) (OTCQX: TGODF) (TGODF
Profile) has tapped into the demand for organic
produce and is now expanding into global CBD market. GW
Pharmaceuticals Plc (NASDAQ: GWPH) (OTC: GWPRF) is
developing powerful new medicines, in which hemp could help tackle
previously uncurable illnesses.
- California is one of the largest regions for cannabis and hemp
cultivation.
- Recent legislative moves show that the state’s politicians are
hemp friendly.
- Demand for hemp and cannabidiol (CBD) continues to soar.
- Companies are responding with increased production,
acquisitions and new technology.
To view an infographic of this editorial, click here.
The Land of Mass Licensing
The past year has seen substantial growth in the Californian
hemp industry, and with that growth came challenges for the state’s
governing bodies. The state is home to one of the largest legalized
recreational cannabis markets in the world, and Californian
authorities have reportedly issued
over 10,000 licenses to producers, processors and retailers
involved in the cannabis industry. This includes those working with
hemp, a non-psychotropic form of cannabis, and CBD, a chemical
derived from hemp.
The swift growth of the state’s industry almost triggered a
crisis this spring, as thousands of temporary licenses were set to
expire before authorities had time to process permanent licenses.
The state senate stepped in to extend the duration of temporary
licenses and protect law-abiding business owners from a bureaucracy
struggling to keep up with demand.
The legal move to extend the licenses may indicate the state’s
political attitude toward the industry and holds promise for
companies working in California.
A Friendly Place to Work
For companies working with hemp and related products, California
is possibly the most business-friendly place in the world to be
based. The state is headquarters for a wide range of companies
working in the sector, from producers and retailers to companies
providing support services, such as Sugarmade Inc.
(OTCQB: SGMD).
Based in Monrovia, California, Sugarmade develops brands and
products with disruptive potential. Over the past few years, this
strategy has led the company to develop a growing focus on hemp and
the surrounding sector, a space filled with innovation,
fast-developing new practices and promising potential.
Rather than being cultivator or retailer, however, Sugarmade is
a supplier of vital materials to the hemp industry. The company
sells hydroponic equipment and supplies needed for growing
consistent, high-quality crops in secure, climate-controlled indoor
facilities. SGMD is moving deeper into the market by extending its catalog to include extraction equipment,
essential in the process of acquiring valuable CBD from hemp
plants.
California is home to so many of these companies for a number of
reasons. The state is one of the largest markets in the world by
population for hemp and related products, with only Canada matching
it in scale. In addition, California is one of the first areas to
become friendly to the industry, passing groundbreaking legislation
in the 1990s allowing the space to progress.
This attitude has been both supported and encouraged by a
political establishment that appears to look favorably on the
industry. The Californian senate, having seen thousands of new
businesses such as Sugarmade spring up, is eager to nurture these
entities for the jobs and wealth they bring to the state’s economy.
This general support is reflected in the government’s decision to
extend temporary licenses to prevent new businesses from faltering
just as they had been established.
Staggering growth has caused challenges for the
Californian authorities in providing licenses. The federal legalization of hemp in December added to
interest in the industry and pressure on the licensing system. The
state’s responsiveness to problems within the system has shown how
serious it is about hemp and creating a friendly environment for
the likes of Sugarmade and its customer base.
The Hemp Revolution
The situation in California appears to reflect a much wider
pattern in the hemp industry, across the United States and
beyond.
Ten years ago, hemp was barely even mentioned in conversations
about business. As a source of useful materials, its use had fallen
out of fashion with the end of the age of sail, during which it had
provided fibers for ropes and canvas. But then a shift came, as
companies in the cannabis space looked for other options they could
market. As a nonpsychoactive ingredient, CBD could be sold in
markets where cannabis itself couldn’t. And hemp offered a rich
source of CBD without many of the complications surrounding the
rest of cannabis.
Since then, demand for CBD has rocketed. The component is used
in a wide range of products including cosmetics, health foods, and
vaping liquids. Companies have emerged specifically to cater to the
hemp market, and those companies have turned to the likes of
Sugarmade for the equipment they need.
The popularity of CBD among consumers has also rocketed,
leading to shortfalls in supply. The 2018 Farm
Bill, which legalized the hemp trade at the federal level in the
United States, will help with meeting this demand in the long term.
But the bill is no magic bullet, and companies need time to gear up
in the new commercial environment that has been created.
This gearing up has led to increased demand for cultivation
equipment, creating shortages
in that area. Cultivators have bought everything that Sugarmade
can provide, as hydroponics
companies see a boom in sales alongside the hemp companies they
serve.
Dealing with Demand
Sugarmade has made a variety of moves — in California and beyond
— to meet this growing demand.
Expansion is obviously critical to making the most of this
opportunity, and the company has entered a period of serious growth
in its sales, product lines and bottom line. As a critical link in
the hemp supply chain, Sugarmade is not just in a position
to grow, the company must grow in order to meet customer
needs.
One of the key tactics in this expansion has been SGMD’s use of
acquisitions and agreements. The company acquired Sky Unlimited LLC
and, through it, the AthenaUnited.com online sales operation,
increasing its sales capacity. Sugarmade has also struck deals with companies such as Hempistry,
BizRight Hydroponics and Plantation Corp, ensuring smooth supply
chains and greater capacity to meet surging demand.
Adding new technology to its catalog has allowed Sugarmade to
make better use of this moment. The company is moving to supply next-generation extraction machinery and
develop artificial intelligence systems to monitor
hemp crops. By providing its customers with the latest
technology, Sugarmade may be better able to distinguish itself from
its competitors and ensure the profitability of its customers, for
its own long-term good.
Space for Growth
With customer demand firmly outstripping supply, the hemp sector
is creating a space in which a wide range of businesses can
flourish.
One of the most important is Canadian company Canopy
Growth Corporation (TSX: WEED) (NYSE: CGC), which was the
largest cannabis company in the world by market capitalization as
of April this year. Like Sugarmade, Canopy Growth Corporation has
taken big steps to continue expanding and claim a larger share of
the hemp and related markets. The company has increased its
production capacity through a mixture of acquisitions and ongoing
work to increase its existing licensed production facilities.
Acquisitions have also featured in its work further down the supply
chain, such as acquiring hemp skin care company This Works.
Like Sugarmade, Cronos Group Inc. (TSX: CRON) (NASDAQ:
CRON) is looking to new technology to support its
expansion. The company recently announced the creation of an R&D facility, which has the
potential to provide new products for a curious and often
experimental customer base. To support such innovations, the
company is also acquiring a
state-of-the-art fermentation and manufacturing facility, which
will allow Cronos to produce cultured cannabinoids.
The Green
Organic Dutchman (TSX: TGOD) (OTCQX: TGODF) has
focused on a specific sector of the customer base, setting itself
up as a source of organic and sustainably grown products. The
creation of two new production facilities will allow the company to
tap into rising demand, increasing its
growing capacity from 156,000kg to 202,500kg. And with the
growing popularity of hemp-CBD products, the company is setting up a global strategic hemp division to give it
greater global reach in an important part of the sector.
GW Pharmaceuticals Plc (NASDAQ: GWPH) (OTC:
GWPRF) is applying the power of cannabidiol to tackle
otherwise untreatable diseases. The company’s 20 years of
experience in the sector is currently being applied to seizures
associated with tubular sclerosis complex, for which one of its
drugs recently underwent successful clinical
trials. GW has become a world leader in cannabinoid medicines,
whose value is increasingly widely recognized.
With hemp and related sectors growing so fast, California’s
senators appear to have made a wise decision to smooth the way for
local cultivators. Both customers and businesses in the state and
beyond may see the benefits.
For more information on Sugarmade, visit Sugarmade Inc.
(OTCQB: SGMD)
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