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Sugarmade Inc. (SGMD) and Hempistry Ink Supply Contract amid Boom in Kentucky Hemp Industry

  • Hemp industry’s growth exhibiting boom trends in wake of the 2018 Farm Bill’s passage, altering regulatory oversight of the plant
  • Sugarmade is focusing efforts on supporting the nascent hemp industry with hydroponic growth supplies
  • The company has also signed a supply agreement with Kentucky-based private hemp cultivator Hempistry to support Hempistry’s micropropagation work
  • Micropropagation helps growers ensure plant quality by cloning “mother” plants that exhibit preferred genetic traits

Hydroponic agriculture supplier Sugarmade Inc. (OTCQB: SGMD) is preparing to significantly expand its operations in the hemp cultivation industry following recent regulatory changes in the agriculture sector and a new agreement with Kentucky-based hemp cultivator Hempistry Inc. to deliver resources for its plant micropropagation work.

Hemp cultivation is beginning to flourish, after decades of federal prohibition in the United States ceased with President Donald Trump’s signing of the 2018 Farm Bill late last year. Limited research cultivation gave way to full-scale agricultural potential for raising hemp crops, creating anticipation for hydroponics specialty product suppliers such as Sugarmade that are functioning as supportive industries for the boom in grower interest.

Sugarmade’s supply contract with Hempistry for the latter’s micropropagation operations is expected to be an ongoing relationship, as Hempistry grows domestically and into the international arena.

Micropropagation is a process that involves cloning or “propagating” new hemp plants from existing “mother” plants that have shown a desirable genetic profile. Much of the hemp cultivated in North America is grown through this propagation process rather than from seed, and the micropropagation process not only ensures exact replicas of the best mother plants but also allows for a very large number of plants to be readied simultaneously, according to the company.

“With at least 42,000 acres of hemp expected to be planted in Kentucky and considering an average plant density per acre of well over 1,000, farmers in Kentucky will need hundreds of millions of clones over the coming years,” Sugarmade CEO Jimmy Chan, who is also a Hempistry director, stated in a news release. “When these numbers are multiplied over the many other hemp cultivation states, it is easy for anyone to see the strong demand scenario that is quickly developing.”

Kentucky found itself in a position of eminence amid the long-running debate over the Farm Bill’s passage, which was championed by Senate Majority Leader Mitch McConnell, the senior congressman from the Bluegrass State. McConnell pushed for the bill’s passage in large measure to ensure that hemp could be legally grown as an agricultural product without Drug Enforcement Administration prohibition (http://ibn.fm/OrSSG) in an effort to revive the state’s flagging flagship industry. The bill’s success and successive agricultural efforts in Kentucky have led the media to begin branding (http://ibn.fm/cEUm7) the state as the ‘Silicon Valley of Hemp’.

Kentucky farming officials have begun to pin their hopes on hemp as an up-and-coming successor to the state’s tobacco industry, which has a long-controversial history because of tobacco’s impact on users’ health.

“We don’t know if industrial hemp will replace tobacco, but we are going to champion it,” Kentucky Commissioner of Agriculture Ryan Quarles told news outlet CNBC (http://ibn.fm/Kz9i4).

According to the commissioner, the number of the state’s applications for hemp cultivation this year is expected to increase about five times from 2018. Hemp growth is on track to top 50,000 acres this year, up from 16,000 acres for last year, according to the report. With the boom in hemp cultivation occurring this planting season, many of the supplies required for successful micropropagation operations are in very short supply, which makes the Hempistry agreement particularly valuable to both companies.

Sugarmade acquired an option last year to invest up to $1 million in the Hempistry operation at a locked-in 2018 valuation. Privately-held Hempistry expects to engage in both direct cultivation and co-op cultivation activities with local farmers this year. Chan noted that Sugarmade has already commenced processing of micropropagation supply orders.

CNBC’s report notes that Hemp Business Journal expects the hemp industry to reach $1.9 billion in revenues by 2022, up 90 percent from about $1 billion in 2018, while a bullish estimate by researcher Brightfield Group forecasts that the hemp-derived CBD-infused product market could reach $22 billion during the same time period.

For more information, visit the company’s website at www.Sugarmade.com

NOTE TO INVESTORS: The latest news and updates relating to SGMD are available in the company’s newsroom at http://ibn.fm/SUGAR

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