Sugarmade Inc. (OTCMKTS:SGMD) has announced the signing of a non-binding Letter of Intent with LMK Capital LLC.
Sugarmade to cultivate cannabis in 5-acre property in California
The companies have agreed to negotiate a definitive lease agreement to access 40 acres of property in Northern California. The company plans to use 5 acres of the property in operating a regulated and licensed cannabis growing enterprise. Jimmy Chan, the CEO, CFO, Chairperson of Sugarmade, and majority stockholder, is the main shareholder of LMK.
Commenting on the LOI signing, Chan said that the company continues to make strategic steps in broadening its exposure to growth trends in the cannabis industry. He added that Sugarmade sees this as a secular growth trend, which is very much in the early innings. Chan said that he believes the positioning of Sugarmade in California puts it near the epicenter of the trend, thus standing a chance to benefit from opportunities significantly.
The company is also committed to enhancing the verticalization of its operations as a context of the investment in BudCars cannabis delivery operations. Chan said that if the company will manage to finalize the lease, it will boost a significant broadening of margins in the increasing BudCars sales volume.
Sugarmade betting on the growth of BudCars sales volume for its branded products
Currently, the company holds a 40% interest in BudCars and has the option of acquiring an additional 30% stake. Since BudCars is a fast-growing distribution channel, the company is optimistic that it will have a direct marketplace channel where it can establish its branded cannabis product line. This will then enable the distribution of the products through several distribution partners at competitive prices.
Analysis of BudCars’ in-house indicates that control of more than 5 acres of the Northern California property has the potential of yielding around 2,628,700 grams (8,000 pounds) of cannabis flowers annually. It is important to note that the LOI is non-binding, and there is no certainty that the parties will sign a definitive lease agreement.