Sugarmade, Inc. announced the signing of a Definitive Agreement to obtain three non-storefront California Cannabis licenses from the Los Angeles Department of Cannabis Regulation (the “DCR”), along with corresponding licenses from the California Bureau of Cannabis Control (the “BCC”), which collectively provide for the licensing of three new vertically integrated Nug Avenue cannabis delivery hubs. Each of the three licenses can be used for up to three of the five categories of licensed cannabis-related business activities allowed under the terms of these licenses: retail delivery, manufacturing, distribution, transport-only, and cultivation. By using each license for a combination of 1) retail delivery of cannabis products, 2) supply chain distribution of cannabis products, and 3) manufacturing/packaging of cannabis products, the Company now possesses the licensing credentials to open three new Nug Avenue locations in the Los Angeles metropolitan area. As announced in its release dated August 17, the Company has already acquired a property in Los Angeles that will serve as the first of these new Nug Avenue cannabis delivery hubs. Via a definitive agreement closed on Feb. 8, 2021, the company acquired a 70% stake in the Lynwood, California, operations of Nug Avenue, allowing the Company to recognize 100% of revenue and 70% profits generated from Nug Avenue’s Lynwood delivery service operations. These terms will carry over to each new Nug Avenue location as the company expands. In addition, the entity possessing the new licenses is SugarRush 5058 LLC (“SugarRush”), a subsidiary of Sugarmade. Due to Los Angeles social equity statutes governing the transferability of cannabis licenses, the seller of the licenses retains a 33.33% ownership stake in SugarRush. Sugarmade has an option to take full ownership over SugarRush via a $25k payment to the seller any time after January 1, 2025, or when allowed by the City of Los Angeles.