CannabisNewsWire
Editorial Coverage: The rapid growth of the cannabis sector is
pushing companies to innovate expansion strategies.
- Among the companies affected are hydroponics suppliers, which
sell vital equipment to cultivators.
- Hydroponics companies, like others in cannabis, are using
mergers and acquisitions to benefit from a bullish market.
- A recent trade show in Las Vegas saw companies on the hunt for
future acquisitions.
- Other companies are seeking outside investment or partnerships
to increase their presence.
Hydroponics supplier Sugarmade, Inc. (OTCQB: SGMD)
(SGMD
Profile) has leaned into the current trend for
mergers, with a big acquisition and open plans for future growth.
Tilray, Inc. (NASDAQ: TLRY) is focusing on
research and design, using public offerings to finance this work.
Canopy Growth Corp. (NYSE: CGC) (TSX: WEED) has
gained $4 billion in investment from a beverage company, an
investment some believe will lead to a takeover. Both
Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON) and
Aphria (NYSE: APHA) (TSX: APHA) are relying on
diverse strategies, including external partnerships, as they look
to grow and succeed in the cannabis sector.
To view an infographic of this editorial, click here.
The Industry Behind the Industry
The cannabis industry is experiencing a period of staggering
growth, with commentators predicting that it will reach a global
value of over $146 billion by
the end of 2025. With so much of the industry based on indoor
cultivation, hydroponics companies that provide the equipment and
nutrients needed to cultivate cannabis have also seen significant
growth. As cannabis cultivation increases, so does demand for
hydroponics products, so that the fates of the two industries are
increasingly tied together.
Given their close relationship, it’s not surprising to see
patterns in the broader cannabis sector reflected in the
hydroponics industry. A recent surge of
mergers and acquisitions among cannabis companies includes a
number of moves involving hydroponics companies as players within
the industry seek growth while outsiders look for a way in. With a
big cannabis trade show coming up in Las Vegas, executives from
hydroponics companies will be eyeing up the competition and
contemplating who they might buy next.
Mergers, Acquisitions and Hydroponics
Hydroponics companies such as Sugarmade, Inc.
(OTCQB: SGMD) are essential to the cannabis
industry.
While cannabis can be grown outdoors, almost everything about
the current industry drives producers away from this method. Indoor
facilities are more secure, an important factor when producing a
high-value, high-demand crop prized by criminals. Indoor
cultivation also provides far greater control over the conditions
in which the cannabis grows, as well as over the quality of the
plants grown. Lighting, water, nutrients and temperature all affect
the final outcome of the plants, including the quantity of active
ingredients in them. High-quality hydroponic equipment, like that
supplied by Sugarmade, gives growers control over the forces
affecting their cannabis crop.
This control is becoming increasingly important as the cannabis
market grows. Customers may be more forgiving of varying quality
when companies are small or their product is hard to obtain. But as
companies grow and supplies become more consistent, people expect
consistency and quality — things that are harder to provide without
hydroponics.
The growing number of companies in the sector also means that
competition for customers is growing. Companies are racing to
create crops with higher dosages of tetrahydrocannabinol (THC) and
cannabidiol (CBD), the most significant active ingredients in
cannabis. The more powerful the plant, the more customers will
return, creating a strong brand loyalty. Again, hydroponics can be
an essential piece of this success.
Demand for hydroponics has led to swift growth for Sugarmade,
which expects 500 percent growth
in revenue for the fiscal year ending in 2019. One of the ways
in which Sugarmade is meeting growing demand and achieving these
impressive results is through acquisitions.
Mergers and acquisitions are an obvious route to growth for
companies in a maturing sector, and in the past year, that’s what
many cannabis companies have chosen to do. The first half of 2018
saw 145 mergers and
acquisitions in the sector, compared with 79 for the same
period the previous year. Some of the pioneers who created cannabis
startups in the early days of the industry are cashing out, making
way for a field of larger, established companies.
Now caught up in the wider patterns of the cannabis market,
hydroponics is heading down the same path. With its latest acquisition of Sky Unlimited LLC, Sugarmade has
been one of the leaders in this trend. The cash and shares deal,
worth $40 million, will give Sugarmade control of AthenaUnited.com,
an online outlet providing a range of hydroponic equipment.
"This acquisition will further boost our already very rapid
growth rate and is expected to be high accretive to common
shareholder value," said Sugarmade CEO Jimmy Chan. "Sky Unlimited
and Athena are complementary to our existing business operations,
allowing us to not only increase our emphasis on brands but also to
diversify our revenue streams to now include the larger commercial
cultivation operations."
Cannabis Goes to Vegas
Sugarmade was on the hunt for more acquisitions as its team
headed to Las Vegas for MJBizCon.
One of the cannabis industry’s largest trade shows, MJBizCon
took place November 14–16 at the Las Vegas Convention Center.
Investors, entrepreneurs and professionals from across the sector
headed to Vegas for three days of talks, meetings and the sort of
networking that dominates any trade show.
This year’s show had a record number of attendees and
exhibitors, reflecting the huge growth that the industry has seen.
Some 25,000 attendees met up and discussed topics such as the
latest industry trends and how to navigate the difficult waters of
regulatory compliance.
One prominent item on the agenda was the move by bigger players
into the cannabis market. Beverage and tobacco companies are eyeing
cannabis as an alternative revenue stream, with some striking early
partnerships with cannabis businesses. To survive in the face of
these big money competitors, businesses will have to grow — one of
the motivations behind Sugarmade’s acquisition strategy. There’s
still space for small fish in the cannabis pond right now, but that
space is shrinking.
MJBizCon provides fertile territory to lay the groundwork for
acquisitions. There, companies can make contacts, seek investments
and demonstrate their value. It’s a perfect venue to attract
acquisition targets and start negotiations.
So it was a full-press court for Sugarmade at the event, as the
company set out to continue its successful growth strategy. Though
this year’s moves have already given it a competitive edge,
Sugarmade is always looking to strengthen its foothold and further
establish its position as an industry presence.
"Over the past year, we have significantly enhanced our
operational staff and our internal systems preparing for our rapid
growth,” Chan said in a recent statement. “With these changes, we
believe we are optimally sized, but we want to ensure we are able
to manage our aggressively planned growth rate.”
Big Moves for Big Profits
Other companies are also making bold moves to profit from the
growth of the cannabis sector.
While expansion is critical to surviving in this fast-changing
environment, mergers and acquisitions aren’t the only answer.
Tilray, Inc. (NASDAQ: TLRY) is instead focusing on
its well-developed research and design program to place it ahead of
competitors. A leading medical marijuana company, Tilray has
established a prominent position in the North American healthcare
market. But it’s also looking beyond the United States and Canada
as the cannabis industry goes increasingly global. With customers
on five continents, Tilray has become an international cannabis
business, and one still set on expansion. The company is using its
public offerings in the United States and
Canada to gain additional finance that will fund ongoing
growth.
Canopy Growth Corp. (NYSE: CGC) (TSX: WEED),
one of the biggest cannabis companies in Canada, is financing its
expansion through a connection outside the industry. The company
struck a deal with Constellation Brands, the major U.S. beverage
company behind brands such as Corona. The deal has seen
Constellation acquire more than a third of the shares in Canopy
Growth in return for $4 billion in investment. It’s the biggest
move so far by outside businesses into the cannabis sector and
likely an omen of things to come. Many are predicting that this
will lead to Canopy Growth’s eventual absorption under the
Constellation umbrella, once cannabis becomes a big enough market
to deserve more of the beverage giant’s attention.
Growth in the industry has been good for Cronos Group,
Inc. (NASDAQ: CRON) (TSX: CRON), whose revenues were up
186 percent in its third-quarter
reporting this year. Increased cultivation, a partnership with
Ginkgo Bioworks on cultured cannabinoids and a move into Latin
America are all part of the company’s announced plans to continue
its expansion. By following a diverse range of growth tactics,
Cronos is solidifying its position as a significant international
player.
Collaboration with other companies is also part of the strategy
for Aphria (NYSE: APHA) (TSX: APHA). The company
has formed a joint venture with Perennial, Inc., to develop products for the Canadian cannabis market,
currently one of the most significant cannabis markets in the
world. Such collaborations are allowing companies to achieve more
together than they could alone and perhaps survive in the face of
larger competitors.
With the cannabis industry growing at a dramatic rate, both
cultivators and the companies that supply them will have to find
ways to increase their impact if they want to beat the
competition.
For more information on Sugarmade, visit Sugarmade, Inc.
(OTCQB: SGMD)
About CannabisNewsWire
CannabisNewsWire (CNW) is an information service that provides
(1) access to our news aggregation and syndication servers, (2)
CannabisNewsBreaks that summarize
corporate news and information, (3) enhanced press release
services, (4) social media distribution and optimization services,
and (5) a full array of corporate communication solutions. As a
multifaceted financial news and content distribution company with
an extensive team of contributing journalists and writers, CNW is
uniquely positioned to best serve private and public companies that
desire to reach a wide audience of investors, consumers,
journalists and the general public. CNW has an ever-growing
distribution network of more than 5,000 key syndication outlets
across the country. By cutting through the overload of information
in today’s market, CNW brings its clients unparalleled visibility,
recognition and brand awareness. CNW is where news, content and
information converge.
Receive Text Alerts
from CannabisNewsWire: Text "Cannabis" to
21000
For more information please visit https://www.CannabisNewsWire.com and
or https://CannabisNewsWire.News
Please see full terms of use and disclaimers on the
CannabisNewsWire website applicable to all content provided by CNW,
wherever published or re-published: http://CNW.fm/Disclaimer
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com
303.498.7722 Office
Editor@CannabisNewsWire.net
DISCLAIMER: CannabisNewsWire (CNW) is the source of the Article
and content set forth above. References to any issuer other than
the profiled issuer are intended solely to identify industry
participants and do not constitute an endorsement of any issuer and
do not constitute a comparison to the profiled issuer. The
commentary, views and opinions expressed in this release by CNW are
solely those of CNW. Readers of this Article and content agree that
they cannot and will not seek to hold liable CNW for any investment
decisions by their readers or subscribers. CNW is a news
dissemination and financial marketing solutions provider and is NOT
registered broker-dealers/analysts/investment advisers, hold no
investment licenses and may NOT sell, offer to sell or offer to buy
any security.
The Article and content related to the profiled company
represent the personal and subjective views of the Author, and are
subject to change at any time without notice. The information
provided in the Article and the content has been obtained from
sources which the Author believes to be reliable. However, the
Author has not independently verified or otherwise investigated all
such information. None of the Author, CNW, or any of their
respective affiliates, guarantee the accuracy or completeness of
any such information. This Article and content are not, and should
not be regarded as investment advice or as a recommendation
regarding any particular security or course of action; readers are
strongly urged to speak with their own investment advisor and
review all of the profiled issuer’s filings made with the
Securities and Exchange Commission before making any investment
decisions and should understand the risks associated with an
investment in the profiled issuer’s securities, including, but not
limited to, the complete loss of your investment.
CNW HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E the Securities Exchange Act of 1934, as amended and
such forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. “Forward-looking statements” describe future expectations,
plans, results, or strategies and are generally preceded by words
such as “may”, “future”, “plan” or “planned”, “will” or “should”,
“expected,” “anticipates”, “draft”, “eventually” or “projected”.
You are cautioned that such statements are subject to a multitude
of risks and uncertainties that could cause future circumstances,
events, or results to differ materially from those projected in the
forward-looking statements, including the risks that actual results
may differ materially from those projected in the forward-looking
statements as a result of various factors, and other risks
identified in a company’s annual report on Form 10-K or 10-KSB and
other filings made by such company with the Securities and Exchange
Commission. You should consider these factors in evaluating the
forward-looking statements included herein, and not place undue
reliance on such statements. The forward-looking statements in this
release are made as of the date hereof and CNW undertakes no
obligation to update such statements.
Source:
CannabisNewsWire
Contact:
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com
303.498.7722 Office
Editor@CannabisNewsWire.net
Sugarmade (CE) (USOTC:SGMD)
Historical Stock Chart
From Feb 2025 to Mar 2025
Sugarmade (CE) (USOTC:SGMD)
Historical Stock Chart
From Mar 2024 to Mar 2025
