CORRECTION: Hydroponic Supplies Play Key Role in Hemp Market Growth

DENVER, Colorado, March 26, 2019 /PRNewswire/ -- Surging hemp market growth has created huge demand for hydroponic supplies.

• Demand for CBD is driving a rise in hemp cultivation, much of which is done indoors using hydroponic equipment.
• This hydroponic approach allows greater quality control over the cultivation process and the hemp.
• Acquisitions and expansion are needed for hydroponic companies to keep up with demand.

Hydroponic supplier Sugarmade Inc. (SGMD) (SGMD Profile) has been making swift moves to deal with this demand, acquiring other supply companies and outlets. Canadian company Tilray Inc. (TLRY) has acquired the world's largest hemp foods company, giving it a strong position in a customer-facing part of the sector. Canopy Growth Corporation (NYSE:CGC) (TSX:WEED) although does not use hydroponics to grow hemp in any of their facilities, has set up a new hemp extraction and product manufacturing facility in New York state.    Cronos Group Inc. (CRON) has received a large boost in investment thanks to interest in the surrounding sector, providing fuel for future growth. Aphria (APHA) is looking beyond North America, with the acquisition of a European distributor.

To view an infographic of this editorial, click here.

A Better Way to Grow Hemp
With the passing of the Farm Bill in December, the production of hemp for CBD, which was already on the rise, looks set to soar in the United States and beyond. Demand for CBD for health and wellness products keeps rising as more research focuses on its potential for relaxation, pain management and other benefits for living a healthy life. Farmers are grabbing the opportunity to invest in a new cash crop, one which has provided remarkable returns for some.

But all this attention on hemp and CBD brings challenges with it. This is a tightly regulated sector with demanding customers. High-quality crops are essential for success, and managing both quality and consistency can prove incredibly challenging. To do this, many growers are turning to hydroponics.

Hydroponics and Hemp
Hydroponic equipment offers an alternative approach from growing plants in soil. Instead, the hemp harvest is grown in solutions rich with sustaining minerals, with roots either suspended directly in the liquid or supported by a medium like gravel that the liquid can move through. Provided by specialist companies such as Sugarmade Inc. (OTC:SGMD), hydroponic systems give growers more control over how their plants grow.

This approach can help hemp growers in a number of ways. The most obvious benefits revolve around the fact that the plants are grown in clean, indoor environments. While this results in higher costs compared with growing in fields, it also results in a number of benefits. Plants are safe from changes in the weather that can be harmful to many crops, such as sudden frosts or unseasonal heat. They're also protected from contaminants, both living and inanimate, and from infections that could kill the plants to chemicals carried in the atmosphere that could taint the eventual crop.

While any indoor growing situation can help with this, hydroponics brings greater advantages. By feeding plants with carefully balanced nutrient baths instead of soil and fertilizer, farmers gain more control over the crops they produce. This means higher CBD content, making their plants more valuable. Hydroponics also means that the hemp often more easily passes the stringent quality tests that are applied to plants in this sector, tests that are likely to become even firmer now that the federal government is officially allowing and regulating hemp production in the United States.

As a result, companies such as Sugarmade are on the brink of a potential new gold rush. With some companies moving into the CBD market and others rushing to expand their existing hemp production, demand for hydroponic supplies is on the rise.

Acquiring Influence
This has created a great opportunity for hydroponic suppliers, and some are moving to further strengthen their position. Those with an eye to the future, such as Sugarmade, were making preparations long before the Farm Bill passed into law. Now they're reaping the benefits of that forward thinking.

As with hemp production, consistency is key to the supply of hydroponic equipment. Customers are reliant on these companies not only for setting up their growing spaces but for expanding them, maintaining and replacing equipment, and ensuring a steady supply of the minerals needed to feed the plants. A company that can't provide consistent supplies will struggle to maintain relationships with its customers, whose crops rely on that supply line. With demand growing, it's harder to ensure supplies, and for many, the answer is expansion.

This is the approach that Sugarmade is taking. The company has made an agreement to acquire Sky Unlimited LLC, a California-based distributor of cultivation supplies. This will allow Sugarmade to meet more demand than it has previously faced, and so cope with the increased needs of customers.

"This year, Sky Unlimited and its associated operations are expected to produce in excess of $40 million in revenues with profitability and positive cash flow," Jimmy Chan, CEO of Sugarmade,said in late 2018. "This new revenue stream combined with our recently upwardly guided revenue forecast of $30 million for next year will make Sugarmade one of the largest publicly traded suppliers to the booming cannabis cultivation marketplace, with a combined revenue forecast for next year in excess of $70 million."

There's also an opportunity for expansion, given the huge market growth. Sugarmade has leapt upon  this chance through its possible acquisition of a retail location from Washington State-based company Hydro4Less and options to purchase two more. The first location alone is expected to provide $5 million in revenue, as Sugarmade increases its foothold in the hydroponic market.

Hydroponics Beyond North America
While the current focus for hemp and CBD, as well as the associated part of the hydroponics market, is currently on the North America, there is also important potential for growth further afield. European countries are showing an increasing interest in CBD products, with customers keen to buy in, and some governments re-examining the legislation around these crops. For fast-moving companies, there's a chance to get in on the ground floor of the next wave of hemp hydroponics.

Sugarmade is ahead of the game in this area. Last summer, the company made its first sales into Europe, establishing a place in the continent's supply chain. European customers have been taking an increasing interest in the quality products and attractive prices provided by American hydroponic companies, and Sugarmade is making the most of it.

"The lack of available products within the European markets provides Sugarmade additional revenue growth opportunities," Chan said. "We view this as a potential growth market for Sugarmade especially considering there are more than 740 million people in Europe compared to only about 360 million in the U.S. We believe even a few points of market share of this huge market will have a very positive effect on our growth rate."

Companies Race for Hemp Dominance
Like Sugarmade, Canadian company Tilray Inc. (TLRY) has been using acquisitions to strengthen its place in the hemp and adjacent markets. One of the most significant is the recent  acquisition of Manitoba Harvest, the world's largest hemp foods company. Food and drink are increasingly important parts of the hemp market, as customers look for hemp-based whole foods and tasty ways to consume CBD. With a range of products including oils, granola, and protein powder that are sold in more than 16,000 major retailers, Manitoba Harvest gives Tilray a powerful place in this sector.

Canopy Growth Corporation (NYSE:CGC) (TSX:WEED) is one of  the largest companies working in hemp, thanks to its steady growth paired with billions of dollars in outside investment. The company is in the process of expanding from Canada into the United States, with the establishment of a hemp production facility in New York state. Growth into the States will allow Canopy Growth to benefit from this year's CBD surge. The company is also working to raise the public profile and usefulness of CBD throughresearch with the National Hockey League Alumni Association on using CBD to treat concussions.  It is important to note that Canopy Growth Corporation does not use hydroponics to grow hemp in New York or at any of their facilities.

Cronos Group Inc. (CRON), one of the big companies making use of hydroponic equipment, has benefited hugely from outside interest in the market. Less than a month ago, it closed a C$2.4 billion investment from Altria, the American company behind brands such as Marlboro and Benson & Hedges. It's a sign of the big money currently swirling around this part of the economy, a large part of which is invested in crops and the equipment to grow them.

Some of this big money was recently directed into an attempted hostile takeover of Aphria (APHA) by Green Growth Brands. It was a move that showed the high value placed on companies such as Aphria, even as the company's board shot down the bid. Like Sugarmade, Aphria has been making moves beyond North America and into Europe, with the acquisition of a German distributor.

The hemp and CBD market keeps growing, more money keeps flooding in, and a large part of it will inevitably be funneled into hydroponics to create plants that meet the standards demanded by customers and regulators. For both CBD companies and hydroponic suppliers, that's great news.

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 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

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.

CNW & FNM 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 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) http://www.InvestorBrandNetwork.com

Corporate Communications Contact:
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com 
+1-303-498-722 Office
Editor@CannabisNewsWire.com

Media Contact:
FN Media Group, LLC
NNW@FinancialNewsMedia.com 
+1-(954)345-0611

Related Links

https://www.CannabisNewsWire.com