Sugarmade Inc (OTCMKTS:SGMD) Just Answered One Of Our Concerns, Here's The Next One

Earlier on this month, we highlighted Sugarmade Inc (OTCMKTS:SGMD) as being one to keep an eye on. The company had just announced the unveiling of a new packaging system, designed to allow the safe and discreet transport of cannabis via traditional mail channels. We noted that there was the potential for growth based on this area of the company's operations alone, but that our concern was how quick the company could get the product moving and in the hands of the cannabis retailers that would make up the end users of the packaging system.Well, late last week, Sugarmade announced that it had started to receive orders for the product, and in doing so, went some way to answering our concerns. There still remains some uncertainty (the release wasn’t particularly specific, quite the opposite) but the door is now open for growth, and we're going to be watching this one closely as a result.Before we get in to what we know, and what it means, we'll recap for readers that missed our initial coverage.Sugarmade is a product business. That sounds pretty vague, but there's no way we can be any more specific at e broad level, since the products it develops and/or licenses and sells don’t fall into one specific category. Aside from the latest packing product, the company also retails a type of Sriracha seasoning stick, which the company is developing in conjunction with California-based Huy Fong Foods, Inc., the maker of Sriracha Hot Chili Sauce, and a type of slip cover designed to improve the game Beer Pong.These aren’t likely going to be million dollar products, but Sugarmade doesn’t do bad from its legacy portfolio, generating somewhere in the region of $1 million quarterly for the past couple of years for the company.The beauty of this sort of broad scope focus is, however, the ability of the company to shift into high growth industries fast. That's exactly what we've seen here, and that's why Sugarmade has $46 million market capitalization. It's not Sriracha seasoning that's given it this valuation. It's cannabis.So what's the new product all about, and is it enough to justify the valuation?It's a discrete packaging system, as mentioned above. The legal framework surrounding mail based delivery of cannabis and cannabis products is pretty dicey right now, even in legal states, but with the industry set to undergo exponential growth over the coming twelve months or so, frameworks on a state level are certain to be revised to accommodate the requirements of cannabis retail, bringing it in line with any other consumable commodity.Mail order, by way of online retail, is going to be a huge part of this, and as a result, companies are going to need something to package their products in. This packaging has to be secure and airtight, to deter theft along the transportation chain. Sugarmade's product, called Cannashroud, is just that.Last time we covered the company, we tried to access the website for the product, and it wasn’t available. Now it is, here, and it seems to do a pretty good job of getting the message across.Our concern, as it was last time, is how quick the company can get this thing into the space, and perhaps more importantly, how quick demand for this type of product ramps up. Cannabis delivery on a mainstream scale is on its way, but it's not here just yet, and we think Sugarmade is going to have to spend cash getting Cannashroud in front of potential users near term.It doesn’t have any cash – at least not as of its last report – and so dilution near term is pretty much a certainty.That's the risk, but there's plenty of reward on offer if the company can execute on a solid marketing strategy with this, what looks to be, a much needed product.We will be updating our subscribers as soon as we know more. For the latest updates on SGMD, sign up below!Disclosure: We have no position in SGMD and have not been compensated for this article.