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Saturday, May 28, 2022

The Exciting Story of Sugarmade Inc (OTCMKTS: SGMD)

Sugarmade Inc (OTCMKTS: SGMD) has seen a significant surge after the Company announced it conservatively estimates that its first LA hub will add at least $20 million in annualized sales, with a similar anticipated gross margin profile.

The Company announced record growth for its BudCars Cannabis Delivery Service (“BudCars”) during the month of May up 46% on a sequential month-over-month basis), and continued strong signals so far during the first half of June, with gross profits growing 9.9% on a week-over-week basis.

Sugarmade Inc (OTCMKTS: SGMD) is a product and branding marketing company investing in operations and technologies with disruptive potential. Sugarmade sees opportunities in business operations that combine the best areas of on-demand consumer distribution with certain areas of synergistic manufacturing and packaging to create a business model that capitalizes on the many changes in the cannabis industry.

All the excitement on Suraremade revolves around the Comnpanies newest acquisition Budcarsñ Budcars offers a wide range of cannabis products for delivery to the greater Sacramento, California metropolitan area.  The greater Sacramento-Roseville-Folsom metropolitan statistical area, according to data from the State of California, is California’s third-largest consisting of approximately 2.4 million people with growth of approximately 20% over the past decade.  The Sacramento area population is showing growing acceptance of cannabis usage and delivery and scores above the 50% percentile in terms of cannabis usage per capita.  Budcar’s pricing philosophy is to price for value via a strategy of directly acquiring products from farms and processors.  By maintaining its own cars, California licenses, and its own fulfillment center, Budcars is able to maintain tight cost controls allowing some of these savings to flow to consumers via lower prices.

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On June 16 SGMD announced record growth in gross profits and gross profit margins for BudCars sales during the month of May (up 46% on a sequential month-over-month basis), and continued strong signals so far during the first half of June, with gross profits growing 9.9% on a week-over-week basis.

The Company believes this performance data provides a template for its per unit operational performance anticipated as it gears up to launch its first Los Angeles hub next month. The Los Angeles cannabis market is arguably the biggest municipal legal cannabis market in the world, and the Company conservatively estimates that its first LA hub will add at least $20 million in annualized sales, with a similar anticipated gross margin profile.

“As we gear up to open our first new hub in the Los Angeles regional market, we continue to see very good signs from our Sacramento hub, with the very rapid topline growth clearly translating to the bottom line as margins hold up and even improve,” commented Jimmy Chan, CEO of Sugarmade. “As we recently reiterated, BudCars is not a delivery business comparable to GrubHub or Uber Eats. It is a top cannabis retail business with very consistent 46-52% gross margins on a wholesale inventory with very secure logistical underpinnings. This differentiation has been a source of misunderstanding, and it is critical to fully appreciating our value proposition and our strategy as a Company moving forward.”

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Currently trading at a $3.5 million market valuation SGMD has been on the riser. SGMD is an exciting story developing in small caps; the company just announced record growth for its BudCars Cannabis Delivery Service during the month of May up 46% on a sequential month-over-month basis), and continued strong signals so far during the first half of June, with gross profits growing 9.9% on a week-over-week basis.According to a recent pr the Company announced it conservatively estimates that its first LA hub will add at least $20 million in annualized sales, with a similar anticipated gross margin profile. We will be updating on SGMD when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with SGMD.

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Disclosure: we hold no position in SMGD either long or short and we have not been compensated for this article.

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