Licensed Los Angeles-based manufacturer as well as distributor in the cannabis sector, Cannabis Global (OTCMKTS:CBGL), Inc on May 3, 2022, announced a vital supply agreement for strengthening the firm’s position in the solventless cannabis product sector.
Market Reaction
On Tuesday, CBGL stock moved up 3% to $0.0035 with 3.86 million shares, compared to its average volume of 4.89 million shares. The stock moved within a range of $0.0034 – 0.0037 after opening trade at $0.0037.
Cannabis Global Commences “Fresh Frozen” Supply Contract with Sugarmade Inc.
Under the agreement, Sugarmade, Inc will be cultivating cannabis especially for Cannabis Global. The initial contract entails supply of 25,000 pounds of “Fresh Frozen” cannabis.
Fresh Frozen cannabis is instantly flash frozen upon harvest – instead of traditional treatment of drying and curing post-harvest. This type of cannabis is harnessed for creating of ultra-premium cannabis concentrates, like live rosin, hash, and live resin.
CEO Arman Tabatabaei said that the agreement serves important purposes. The CEO added that through contract with Sugarmade, the firm has been able to precisely specify the strains as well as cultivation parameters. He added that this would help in producing finest hash and rosin products.
The CEO opined that locking in $28 per pound future price vis-à-vis current spot price more than $100 per pound can help the company enhance margins.
The companies have agreed on a fixed-price contract for an initial 25,000 pounds for $700,000. This will include cash payments from Cannabis Global to Sugarmade of $300,000, and the balance with notes $400,000.
Key Quote
“This Agreement serves several very important purposes,” commented CEO Arman Tabatabaei. “By contracting with Sugarmade we will be able to specify exactly the strains and cultivation parameters that will enable us to produce the finest hash and rosin products for our customers. By locking in a $28 per pound future price, compared to the current spot price well in excess of $100 per pound, we expect our margins to be meaningfully enhanced. Perhaps even more importantly, having a steady supply of premium Fresh Frozen cannabis will allow us to provide consistency in our products and to ensure an adequate supply of products will be available to our very fast growing base of retail customers. As we have recently announced, our retail base and our revenues are ramping quickly. This Agreement helps us to meet the substantial demand we are experiencing.”
Traders Review
CBGL stock is trading below the 20-Day and 50-Day Moving averages of $0.0041 and $0.0043 respectively. Moreover, the stock is trading below the 200-Day moving average of $0.0164.
