Sugarmade Inc. (OTCMKTS:SGMD) and its BudCars Cannabis Delivery Service has announced that it will apply for expansion into cannabis growing to the Bureau of Cannabis Control of California.
Sugarmade wants to expand to cannabis growing
The application for expansion into cultivation is part of the company’s strategic plan of partially verticalizing the BudCars model. This is a process that the company’s movement believes will enhance its gross profitability in the long term as well as offer a quick potential pathway to the development of branded products. Already Sugarmade has secured 5,000 sq. ft. property for indoor cannabis growing that is close to the Sacramento BudCars hub.
The company’s CEO, Jimmy Chan, indicated that BudCars could benefit significantly from verticalization as a high-growth high margin business. He added that the move to expand into cultivation will be a beneficial one for the company. This is because the company has cultivation expertise, a premium cultivation facility as well as direct access to end-market consumers. Chan also added that BudCars is a fast-growing delivery service, and as a result, the company will have a marketplace edge in terms of the ability to establish a branded marijuana product line.
BudCars report record sales in May
The BudCars Delivery Services has been performing exceptionally, and in May, it reported record gross profits and margins for sales. The company reported a sequential monthly growth of 46% and continued to show strong signs in the first half of this month, where gross profits grew around 9.9% per weekly basis.
This impressive performance offers the company a glimpse of a performance per operational unit expected as it nears the launch of the first BudCars hub in Los Angeles. The Los Angeles market is considered the largest legal municipal marijuana market globally, and the company anticipates that it will add around $20 million in sales per year from the LA hub. Chan indicated that as the company nears the launch of its first LA hub, the Sacramento hub has continued to outperform.
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