STMH - Driven By Stem (STMH)(STEM:CA) - Moving Into Michigan

Michigan Entry. Stem has teamed up with Organic Guyz, a Michigan cannabis company, for the opening of a dispensary in Kalamazoo, Michigan. The location is expected to open in June. In addition, Stem will introduce its Budee e-commerce and delivery platform to service the entire state. Although details of the relationship were not released, we view the expansion as a positive for the Company and in-line with Stem's stated growth plans.Attractive Market. Total cannabis sales are projected to top $1.2 billion this year in Michigan, a state that only legalized adult use recreational in 2018 and which saw roughly $500 million of adult recreational sales in 2020. At the end of 2020, the state had just 260 recreational dispensaries. And with just 100 of the state's 1,764 communities permitting recreational sales according to the Detroit Metro Times, we see a large opportunity for Stem's Budee e-commerce and delivery business.Oregon Continues to Impress. Oregon cannabis sales continue to impress with April sales of $110.4 million a new monthly high and up 23% over 2020. In the first four months of 2021, cannabis sales are up 31% to $409.4 million, with recreational accounting for $373.4 million of the sales. It certainly appears the worries about a post pandemic let down were unfounded, at least in Oregon.Debt Repayment. Stem also announced the repayment of the entire principal amount of its 10% unsecured convertible debentures in the amount of C$3,260,000 through the issuance of 5,258,053 shares of common stock to the holders of the debentures. The debentures were scheduled to mature at the end of this month.Maintaining Outperform. We are maintaining our Outperform rating and a $2.00 12-month price target. We believe the Company's recent merger with Driven Deliveries has established Stem as the first cannabis cultivator and technology omnichannel retailer with e-commerce ordering and express and next-day delivery. Read More >>