Sugarmade, Inc. (OTC: SGMD)

Sugarmade, Inc. (OTC: SGMD) is a holding company that provides capital, strategic guidance, and operational resources to a growing portfolio of investments across several industries, including real estate, hospitality, food service packaging, cannabis cultivation, manufacturing, and distribution.

The company's strategic plan is to identify and capitalize on investment opportunities that can be strengthened by leveraging Sugarmade's core competencies and the expertise of its leadership team to enhance efficiency and maximize operational synergy.

Utilizing shared accounting, technology, and marketing resources, Sugarmade aims to drive cost savings and streamline operations. The company's existing industry partnerships help its subsidiaries support growth and establish beneficial relationships. Through these efforts, Sugarmade seeks to achieve sustainable growth and generate long-term value for its shareholders.

Brand Portfolio

Sugarmade has investments in a number of subsidiaries with active operations in the California cannabis sector and complementary verticals. These include:

• Lemon Glow – Located on a hilltop in northern California, this wholly owned subsidiary maintains 640 acres of rich farmland that is ideal to yield high potency cannabis flowers. The company estimates yields of 64 tons of dry trimmed flowers per year at full production, which would make Lemon Glow one of the largest outdoor cannabis farms in California.
• Jerusalem Grade Farm – In June 2022, Sugarmade announced its entry into a letter of intent to acquire 40% of the business and associated property of RMI Ventures (dba Jerusalem Grade Farm) in Lake County, California, including 21.38 acres of licensed outdoor canopy area. The RMI acquisition followed Sugarmade's entry into a collaborative cannabis cultivation contract to produce approximately 25,000 pounds of "Fresh Frozen" cannabis.
• SugarRush™ – This wholly owned subsidiary holds a Management Services Agreement with Canndis Inc., a California cannabis micro license holder. Through this agreement, Sugarmade holds management responsibilities and operational control over manufacturing and distribution of cannabis produced at Jerusalem Grade Farms.
• CarryOutSupplies.com – This wholly owned subsidiary serves clients nationwide as a leader in paper and plastic take-out supplies, including customized products. It offers a wide array of high-quality products ranging from custom plastic cold cups to logo-printed food containers.

Creation of Dynamic Public Company Targeting Hospitality Sector

On February 23, 2023, Sugarmade announced its entry into a binding letter of intent to acquire the real estate assets and businesses of Treasure Mountain Holdings LLC and Victorville Treasure Holdings LLC. Upon completion, the company's management team expects the transactions to result in two new dynamic growth-oriented business entities: a legacy OTC company engaged in the legal cannabis marketplace and a new Nasdaq-listed company involved in hospitality, entertainment and multimedia flex-makerspace operations that holds significant real estate and other assets away from the "plant-touching" cannabis arena.

In addition to the intrinsic value of the real estate controlled by Treasure Mountain Holdings and Victorville Treasure Holdings, including the Hilton Garden Inn Palm Springs/Rancho Mirage and the Holiday Inn Victorville which carry a combined value of $70 million, Sugarmade intends to introduce TheMediaBox, a new state-of-art branded multimedia flex-makerspace concept targeting aspiring content creators, as a way to maximize space utilization and increase revenue and brand awareness at these properties.

"This deal will carry multiple synergistic elements and tremendous value creation," Jimmy Chan, CEO of Sugarmade, stated in the news release. "TheMediaBox is an idea whose time has come, and this is the perfect vehicle to launch it. We are embarking on a new chapter that stands to deliver significant value to our shareholders as we expand our asset base and revenue streams and diversify our model with an eye toward a major exchange listing."

Market Opportunity

The California cannabis industry has continued to record tremendous growth since voters approved a measure to legalize recreational use of the plant in 2016. In 2022, California retail stores sold about $5.3 billion worth of cannabis products – almost 20% of total legal sales in the U.S. Since 2018, cumulative cannabis sales in the Golden State have exceeded $20.5 billion, according to data from Cannabis Business Plan.

Those figures highlight California's status as the largest legal cannabis market in the world. With roughly 28 million residents over the age of 21, California is more than twice the combined size of the four states (Arizona, New Jersey, Montana and North Dakota) that legalized cannabis in 2020.

Management

Jimmy Chan is the CEO of Sugarmade. He is an experienced business executive instrumental in growing multiple business operations with a strong expertise in international trade and banking, international manufacturing and importation. He is also the founder of CarryOutSupplies.com, a company that revolutionized the custom-printed paper supplies subsector of the quick service restaurant industry, which merged with Sugarmade in 2014.