Stem Holdings, Inc., also known as Driven by Stem (OTCQX: STMH) (CSE: STEM), is buying an Oregon-based extraction company called Artifact Extracts and two dispensaries. The deal is valued at $2.9 million and closed last week on September 17th.
The acquisition increases the footprint of fully-owned dispensaries on the West Coast for Stem to six locations. It will expand its Oregon presence with a dispensary in Salem, to be re-named TJ’s on Broadway, and a dispensary in Eugene, to be re-named TJ’s on 7th, flanking its two existing dispensaries in the city.
“Artifact is recognized for the potency and purity of its high-quality line of concentrates that have driven its growth in the Oregon market,” stated Adam Berk, CEO of Stem. “As a result of this strategic acquisition, we will benefit from the expertise and broad capabilities that the Artifact team will provide to our existing extraction team that has specialized in tinctures and edibles, as well as in retail operations. We look forward to integrating Artifact’s operations, dispensaries, and leadership into the Stem family, and quickly expanding product distribution to our full retail customer base for rapid growth.”
The company supported its decision to buy the extractor by noting that the national market for concentrates grew 40% last year. The company said it will integrate Artifact’s premier line of concentrates including budder, badder, shatter, crumble, rosin, THC A crystals, and other popular forms into Stem’s family of brands and product lines.
Jesse Johnson, the lead extractor at Artifact, commented, “We have worked with Stem in the past and trust the quality of the cannabis grown in its facilities. The synergies of this acquisition will build value for the company as we combine our expertise to launch cutting-edge products meeting the needs of this evolving market, as well as increasing their market penetration with an expanded retail and delivery platform,” he concluded.
Last month, Stem reported third-quarter record gross sales of $12.4 million and net sales of $10.6 million, a 104% increase and 103% increase, respectively, over the prior year’s $6.1 million gross sales and $5.2 million net sales. Stem also reported a 19% increase in total dispensary sales, a significant outperform to market particularly in Oregon which grew at 7% in the same period. This effort dovetailed with the launch of the company’s Budee delivery platform in Oregon which occurred on August 9, 2021. A customized app was built from front to back for this official launch, and Budee is now anchored by Stem’s TJ’s on Powell dispensary servicing the Greater Metro Portland area. Stem said it expects that Budee will expand to cover the majority of Oregon beginning with the Eugene metro in October 2021.