California Cannabis Market Offers Growth for Cultivation Suppliers as Authorities Tackle Licensing Backlog

CannabisNewsWire Editorial Coverage


Denver CO – December 18, 2018 –  Growth in the Californian cannabis industry, currently restricted by licensing delays, is expected to accelerate over the coming months, bringing profits for suppliers of cultivation equipment.


  • California is one of the largest recreational cannabis markets in the world.
  • Recent delays in issuing cannabis licenses in California seem to be approaching an end.
  • Outside California, the growing global reach of the cannabis industry is drawing interest from significant international investors.


Sugarmade, Inc. (OTC:SGMD) (SGMD Profile) is one of the companies set to profit from this acceleration, thanks to its sales of hydroponic equipment to cannabis cultivators. Tilray, Inc. (NASDAQ:TLRY) is looking forward to a presence in Latin America after recently establishing a subsidiary in Chile. Canopy Growth Corp. (NYSE:CGC) (TSX:WEED) has drawn billions of dollars in investment from a beverage giant, while Cronos Group, Inc. (NASDAQ:CRON) (TSX:CRON) has benefited from a similar move from big tobacco as those industries’ big names look to get involved in cannabis. Meanwhile, Aphria (NYSE:APHA) (TSX:APHA) is expanding its reach beyond North America through an acquisition in Germany.


To view an infographic of this editorial, click here.


California’s Pot Power


When California passed the Adult Use of Marijuana Act in November 2016, the legislation sent waves through the American cannabis industry. The legalization of recreational cannabis in the most populous U.S. state offered the potential for a huge and lucrative market. The first U.S. state to legalize medical cannabis, California had been near the forefront of the cannabis industry for more than 20 years.


With an estimated population of nearly 40 million people and an electorate that had voted by a 57 percent majority in favor of legalization, California clearly has huge potential for the industry. Not only cannabis growers and retailers but also the companies supporting and supplying them are set to benefit from the change. Recreational cannabis sales became legal in January 2018, and businesses have moved to make the most of the new market. Licensing has caused delays for many companies, but if authorities can tackle the backlog, there’s potential for an enormously influential industry to spring up.


Cultivation Operations


The cannabis industry doesn’t operate in isolation. Companies such as Sugarmade, Inc. (OTC:SGMD), which has become established in other industries, are now moving into this field.


Sugarmade is a product and brand marketing company that invests in products and brands with disruptive potential. Building upon experience in food, restaurant supplies and packaging, it has recently made two big moves in the cannabis sector. These are natural moves for companies aiming to expand their customer base in consumable products, applying existing skills and experience to a relatively new market, and the approach appears to be working well for the company.


Sugarmade’s most recent move in hemp is the investment of $1 million in Hempistry Inc., a Nevada corporation catering to the growing demand for the pharmacologically active CBD component of hemp. The investment is a bold move that comes just as hemp cultivation is on the verge of federal legalization


Hydroponic equipment is vital to the cannabis industry. It allows producers to cultivate plants in secure, tightly controlled indoor facilities where they can ensure the product is healthy and its potency is appropriate to their market. Without the hydroponics industry, there is no cannabis industry; thus, the rise of cannabis has been hydroponics’ gain.


As a large hydroponics company whose reach includes its ZenHydro brand, Sugarmade could become a leading supplier to California’s cannabis industry. As companies expand to serve the growing market and new companies emerge alongside them, they will depend on cultivation supplies, and Sugarmade is forecasting accelerating revenue growth as a result.


Licensing Issues


Currently, the biggest obstacle to this growth is the ability of California authorities to license cannabis cultivation applicants.


As with any drug requiring a doctor’s prescription, cannabis should be properly regulated. California’s laws include provisions for this, requiring commercial growers to apply for cultivation licenses to operate within the state. However, because federal law still prohibits the cannabis industry, it is difficult for cannabis companies to operate across state lines. Therefore, those aiming to sell cannabis in California will need to grow the crop within the geographic bounds of the market.


Companies applying to grow cannabis in California have encountered a fluid response over the past few months. Recreational legalization encouraged a rush of license applications as approved medical cannabis companies sought the ability to supply the new market and entrepreneurs sought to seize their own piece of the pie. This inevitably put a strain on the system, as happens after any big change. Applications started piling up. According to state licensing agency CalCannabis, an estimated 2,547 cultivation licenses were under review by the beginning of November, with little sign that the backlog was moving.


This slow movement has delayed expansion for the whole industry, including hydroponics suppliers such as Sugarmade. Without a license, the equipment to grow cannabis is of no use to a dedicated cultivator. A lack of licenses deters investment in the associated hardware and supplies. Until the industry is fully up and running, the consumer market won’t have time to fully expand.


Light at the End of the Tunnel


Fortunately, the problems appear to be nearing an end, spurred on by a crisis point.


Around 6,000 licenses have been issued on a temporary basis, with 1,054 of them about to expire. Given the further disruption to the industry that problem could cause, authorities seem to be speeding up their efforts to tackle the backlog. The licensing agency has started issuing annual permits, and industry insiders expect this process to accelerate over the next few weeks. More licenses will mean more companies cultivating cannabis, which will mean more purchases from cultivation suppliers such as Sugarmade.


Jimmy Chan, the CEO of Sugarmade, said: “Our customers, especially those in Santa Barbara, Monterey and Humbolt counties, the three most prolific cultivation areas in California, are indicating to us they too are expecting the permitting process to break free shortly, and they are thus informing us of their plans to accelerate purchasing. We believe this will add to our already strong expected growth rate. We are seeing the cultivation market increasingly shift to the larger commercial growers and we view these operators as our prime markets. We believe, especially considering the recently announced acquisition of Sky Unlimited, LLC, which focuses primarily on these large cultivation operators, we are optimally positioned to meet this expected wave of purchasing of cultivation supplies.”


The Bigger Cannabis Picture


California’s huge potential and brief licensing crisis are only small details in the much bigger picture of the global cannabis industry.


Tilray, Inc. (NASDAQ:TLRY) is a pioneer in the cultivation, production and distribution of cannabis and cannabis-derived chemicals, as well as in research to improve understanding of them. Through affiliates in Canada, Australia, New Zealand, Germany and Portugal, Tilray operates across multiple continents, engaging with researchers, doctors and consumers. It recently made a move into Latin America through its new subsidiary Tilray Latin America SpA. Licensed by the Chilean government to produce medical cannabis, Tilray is using Chile as a base to prepare for sales into other Latin American markets, as local laws allow.


One of the most important trends in the cannabis industry is the increasing interest outside companies exhibit in getting involved. Alcohol and tobacco companies have been sniffing around the big players of cannabis, which are relative small fry by comparison and therefore can easily be given a proportionately significant boost. The best-known example is Constellation Brands’ investment of $4 billion in Canopy Growth Corp. (NYSE:CGC) (TSX:WEED), showing Constellation’s interest in the future of the cannabis market. The involvement of big alcohol and tobacco companies, with their experience in lobbying and public relations for recreational drugs, will put more momentum behind the global move towards legalization.


Like Tilray, Cronos Group, Inc. (NASDAQ:CRON) (TSX:CRON) is making the most of the growing global market for cannabis, doing business in North America, Latin America, Europe, Australia and Israel. The company has recently secured C$2.4 billion in investment from Altria Group, the owners of Phillip Morris USA. A move in line with Constellation’s investment in Canopy Growth, this will see a strengthening of ties between big tobacco and cannabis. As tobacco companies see their profits hit by anti-smoking campaigns, cannabis offers a promising alternative, and their presence provides a promising source of finance for cannabis.


Aphria (NYSE:APHA) (TSX:APHA), another North American company with investments in Latin America, has recently announced a move to strengthen its presence in Europe through the acquisition of CC Pharma. CC Pharma is a leading distributor of pharmaceuticals to Germany pharmacies that will provide Aphria with a useful channel to get its products onto German shelves.


The cannabis market is becoming a truly global one, with sales on nearly every continent and investment from huge multinationals. Even so, some regions remain particularly crucial, and an accelerated pace of licensing in California will bring huge benefits to the industry.


For more information about Sugarmade, please visit Sugarmade, Inc. (OTC: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 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:


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. FN Media Group (FNM) is a third-party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated with CNW or any company mentioned herein. The commentary, views and opinions expressed in this release by CNW are solely those of CNW and are not shared by and do not reflect in any manner the views or opinions of FNM. Readers of this Article and content agree that they cannot and will not seek to hold liable CNW and FNM for any investment decisions by their readers or subscribers. CNW and FNM and their respective affiliated companies are a news dissemination and financial marketing solutions provider and are 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, FNM, 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.




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 and FNM undertake no obligation to update such statements.


CannabisNewsWire (CNW) & NetworkNewsWire (NNW) are proud to be affiliated partners of the Investor Brand Network (IBN)

About IBN

Over the past 10+ years we have consistently introduced new network brands, each specifically designed to fulfil the unique needs of our growing client base and services. Today, we continue to expand our branded network of highly influential properties, leveraging the knowledge and energy of specialized teams of experts to serve our increasingly diversified list of clients.

Please feel free to visit the Investor Brand Network (IBN)

Corporate Communications Contact:

CannabisNewsWire (CNW)

Denver, Colorado

303.498.7722 Office


Media Contact:

FN Media Group, LLC



Source:  CannabisNewsWire