Adam JacksonFebruary 1, 2023
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Stem Holdings Archives - Green Market Report
Adam JacksonFebruary 1, 2023
Debra BorchardtJanuary 14, 2022
After the market closed on Thursday, Stem Holdings, Inc. (OTCQX: STMH) (CSE: STEM) reported its financial results for the 2021 fiscal year ending in September with revenue totaling $41.8 million. This was an increase of 155% versus the 2020 fiscal year revenue of $16.4 million. Stem said that the revenue net of Driven Delivery’s portion totaled $24.4 million, which is an increase of 49% from the prior year. The company also reported a net loss for the fiscal year 2021 of $64.6 million and said this was predominately attributable to a $52.5 million impairment charge related to Driven Deliveries.
Stem went on to note that net revenue after discounts and returns totaled $35.8 million, an increase of 156% as compared to $14.0 million for the same period the year prior. The company’s net revenue after discounts and returns net of Driven portion totaled $20.9 million, an increase of 49% for the same period the year prior. During fiscal year-end 2021, the Company reported impairment expenses totaling $52.5 million, predominately related to the intangible assets and a related party receivable of Driven Deliveries, Inc., which the Company recently divested of. The adjusted EBITDA loss for the fiscal year 2021 totaled $5.8 million as compared to $5.4 million in the prior year period.
“In December 2021, we announced the divestiture of Driven Deliveries, its assets and liabilities,” said Interim CEO Steve Hubbard. “This divesture allows us to ‘Get back to our roots’. Currently, our initiative is focused on our operations in Oregon and California. Oregon, where we are vertically integrated with five retail locations, we see a considerable growth opportunity as two of our stores are under-performing and the other three locations can incrementally increase sales. In our multiple cultivation facilities, we have significant upside to improve yields, while at the same time, bring the quality of our flower back to the level of top shelf that our customers expect. As we increase productivity and harvest new high-quality, high demand, strains, we expect to increase distribution through both our retail and wholesale channels. TJ’s Gardens and Yerba Buena will continue to be our leading consumer product flower brands, while Cannavore, Doseology and Artifact Extracts are our primary edibles and extracts brands.”
In December Stem spun off Driven Deliveries to its founders in return for 12.5 million shares of Stem. At the time, the company has also announced the appointment of Steve Hubbard, co-founder and current CFO, as interim CEO, replacing Adam Berk who had resigned. Stem said the divestiture would immediately improve its balance sheet and cost structure. Driven Deliveries currently accounted for 32.3% of the total liabilities reported on the consolidated balance sheet as of 12/15/2021. Divesting this asset would return 12.5 million shares of Stem to treasury, reduce total liabilities by $7.1 million and increase working capital by $4.1 million. Monthly expenses related to Driven Deliveries would reduce total expenses by $9.6 million annually, positioning Stem to achieve a positive Adjusted EBITDA in 2022.
Stem has ownership interests in 29 state-issued cannabis licenses including nine licenses for cannabis cultivation, three licenses for cannabis processing, two licenses for cannabis wholesale distribution, three licenses for hemp production and five adult-use medical retailers (non-storefront) which were subsequently divested and seven cannabis dispensary licenses.
StaffOctober 26, 2021
Stem Holdings, Inc. d/b/a Driven by Stem (OTCQX: STMH) (CSE: STEM) is buying High Country Supply also known as Colorado Harvest Company, one of Denver’s oldest and most respected vertically-integrated operators with two delivery permits, three retail dispensaries, and two cultivation facilities. The purchase price of the acquisition was not disclosed, however, CHC is expected to generate over $13 million in revenues in 2021, with a projected gross margin of $5,070,000, upon completing over 180,000 retail transactions.
“The Colorado cannabis market has been an area of strategic focus for Stem. It is the second largest market in the nation, and continues to grow at double digits after a record year in 2020, when it grew by 25% to reach annual sales of US$2.2 billion,” stated Adam Berk, CEO of Stem. He continued, “We have long been looking for the right partners and assets to enter the Colorado market. CHC has long been recognized as a cannabis industry pioneer and a consumer favorite, known for its exciting line up of proprietary in-house strains, and an extensive selection of quality concentrates and edibles.” Berk further stated, “CHC’s assets fit perfectly with Stem’s core competencies and infrastructure for cultivation, wholesale, dispensary and e-commerce retail, extraction, delivery and edibles. CHC is not only vertically integrated with great retail locations, high-quality products, and cultivation capacity, but is also the first company to be awarded a delivery license in the state of Colorado which conforms with our proprietary Budee delivery platform.”
In addition to the brick-and-mortar locations found in Denver and Aurora, CHC also offers carry out windows to promote social distancing as well as delivery to customers in certain areas. Colorado Harvest Company has long been recognized as a local favorite for its Exotic lineup of in-house strains as well as collaborations with many well-recognized brands in the space.
Tim Cullen, CEO of Colorado Harvest Company, stated, “Colorado Harvest Company, an industry leader and pioneer in Colorado, is excited to enter into an agreement with Driven By Stem. This new relationship will provide our customers with a new array of products and services, as well as allow us to build on the success Stem has enjoyed in other states. Colorado Harvest Company was recognized by Governor Polis with the first recreational cannabis delivery license in the State of Colorado and last week was awarded the distribution license for delivery in Denver. These new licenses combined with the experience and know-how of Stem will bring the company to the next level. This is a tremendous opportunity for Colorado Harvest Company to join forces with Stem, anticipating a very bright future together.”
StaffSeptember 20, 2021
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.
Debra BorchardtOctober 6, 2020
Stem Holdings, Inc. (OTCQX: STMH) is buying e-commerce and cannabis delivery company Driven Deliveries, Inc. (OTCQB: DRVD) in an all stock deal valued at $46 million. The combined company will be known as Driven By Stem and the new company will continue to trade under the symbol STMH on the OTC. It will maintain its headquarters at Stem’s current location in Boca Raton, FL. The deal is expected to be immediately accretive to earnings of Stem and should close in late 2020.
The company said that the acquisition is expected to increase scale to drive sales growth and bring cost savings estimated at $1.5 million in the first year through productivity initiatives, vertical supply chain efficiencies, and reduction and consolidation of overhead and administrative costs. The deal is not expected to increase debt levels.
“No other cannabis company has the breadth of top-shelf brands and convenience sought by cannabis consumers which Driven By Stem will offer,” stated Adam Berk, CEO of Stem. “We will apply Driven Deliveries’ technology, footprint, and distribution capability to all markets, and leverage our own licenses and retail dispensaries to service more consumers in every state in which we operate,” he continued. “We are excited about the unique opportunities that this combination creates as we build a better model to adapt to the changes in the cannabis marketplace and deliver shareholder value year over year,” he concluded.
Driven Deliveries is an e-commerce and DaaS (delivery-as-a-service) provider with proprietary logistics and omnichannel UX/CX technology which will make Driven By Stem a vertically-integrated cannabis company with a DaaS platform to meet the needs of all cannabis consumers in the markets it serves.
Christian Schenk, current Chairman and CEO of Driven Deliveries, has tendered his resignation effective October 4, 2020 to pursue other interests. Brian Hayek stated, “Merging with Stem completes our transition from an online cannabis technology company and delivery service to a vertically-integrated cannabis operator, and fast-tracks our expansion strategy into new states.” He concluded, “This is a defining moment in our history and is expected to expand our total addressable market and growth opportunities.”
Driven By Stem
The executive team will be as follows:
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Adam Berk, Chief Executive Officer, and Chairman: Adam Berk is the current CEO of Stem and a member of Driven Deliveries’ Board of Directors. Adam Berk is the former CEO of Osmio (currently GrubHub), which was the first patented web-online food ordering system.
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Steve Hubbard, Chief Financial Officer: Steve Hubbard is the current CFO of Stem.
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Ellen Deutsch, EVP/Chief Operating Officer: Ellen Deutsch is the current Executive Vice President and COO of Stem. Ellen Deutsch was an executive of Hain Celestial for over 20 years prior to joining Stem.
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Sal Villanueva, President: Sal Villanueva is the current President of Driven Deliveries.
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Brian Hayek, Chief Compliance Officer & Special Projects: Brian Hayek is a co-founder and current Chief Financial Officer of Driven Deliveries.
Driven By Stem will integrate Driven Deliveries’ delivery capability and its robust technology in every state in which Stem currently operates, and add Stem’s iconic cannabis brands to Driven Deliveries’ platform of over 400 cannabis products. Stem’s brand offerings cover multiple cannabis product categories, particularly flower, extracts, edibles, and topicals with award-winning brands including TJ’s Gardens and Yerba Buena; Cannavore an edible brand; and Doseology, a CBD mass market brand launching in 2021. As a cannabis technology company, Driven Deliveries’ Budee and Ganjarunner e-commerce platforms will also partner with leading cannabis companies in new geographies to meet the demand for quick and accurate product deliveries. Initial operations will span nine states.
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