The licensed cannabis sector has been going through a fairly difficult time for a while but even then there are some companies in the sector that have been making interesting moves. That has resulted in the stocks of those companies performing strongly as well.
On Thursday, the cannabis company Sugarmade Inc (OTCMKTS:SGMD) was in major focus among investors after it made a major new announcement with regards to a key acquisition. The company announced that it had been successful in signing a letter of intent which is related to the acquisition of as much as 40% of the properties and business of the company RMI Ventures.
Trading Data
On Thursday, SGMD stock moved up 68% to $0.0003 with more than 48.1 million shares, compared to its average volume of 44.77 million shares. The stock moved within a range of $0.0002 – 0.0004 after opening trade at $0.0003.
About The Company
RMI Ventures is based out of Lake County in California. The announcement came as a source of considerable excitement for the market participant as they piled on to the Sugarmade stock in a big way and sent it soaring by as much as 67%.
Sugarmade Announces Fully Executed LOI Toward Minority Stake Acquisition of Turnkey Cannabis Cultivation Property
In light of such massive gains, it is almost certain that the stock is going to be in focus today as well, and hence, it could be a good idea for investors to take a closer look at the proposed transaction. As per the provisions of the agreement between the two parties, the two entities have agreed to move forward and have a definitive acquisition agreement. Once that happens, Sugarmade will become a minority stakeholder in RMI Ventures by having control of 40% of the company’s equity.
However, in this regard, it is important to keep in mind that Sugarmade may not be a minority stakeholder in RMI Ventures for long. The management of the company has noted that Sugarmade will be aggressively looking to acquire more equity in RMI Ventures next year when the market is expected to improve considerably.
In this context, it is perhaps necessary to point out that the latest development comes close on the heels of the collaborative cultivation contract that Sugarmade signed with Cannabis Global Inc not too long ago. It now remains to be seen if the stock can hold on to its momentum this morning.
Key Quote
“We plan to leverage this turnkey operation to fulfill some of the 25,000 pounds of fresh frozen flower stipulated in our purchase agreement with Cannabis Global,” noted Jimmy Chan, CEO of Sugarmade. “At the same time, this deal will allow us to seek more buyers and build our sales channel to support the eventual activation of our large production site at our nearby 640-acre project.”
Technical Data
SGMD stock is trading above the 20-Day and 50-Day Moving averages of $0.0003 and $0.0252 respectively. Moreover, the stock is trading below the 200-Day moving average of $0.0162.
