STMH - Headwaters To Absorb Stem Holdings in Reverse Takeover For New Brand Play

Cannabis and hemp branded products company Stem Holdings, Inc. (OTCQB: STMH) (CSE: STEM) has executed a term sheet outlining the conditions with Headwaters, LLC for a reverse takeover bid of Stem .

Following the closing of the deal, the former equity holders of HDWTR will own approximately 80% of the issued and outstanding shares of STEM.

“Over the past 12 months, Stem has worked tirelessly to find the right company to transact a business combination with. We could not be more excited about combining forces with Headwaters, LLC,” said Stem CEO Matthew Cohen. “Not only will this transaction bring world-renowned cultivation processes, but by combining with Stem and our existing footprint of brands and retail locations, we instantly become a pre-eminent vertically integrated and profitable cannabis company with a new platform and a vision to bolster on even more accretive transactions in the future.”

Headwaters

Headwaters is headquartered in Carpinteria, CA whose CEO and Founder is Tristan Strauss. Strauss co-founded two California medical cannabis companies previously: Canigou Inc. and Helios, both known as the brand, State Wellness. The company operates four greenhouses in the Carpinteria area totaling over 23 acres of production and nursery canopy. It sold 230,000 pounds of bulk cannabis and 1,700,000 clones in 2021.

It has four distinct sales channels:

• • Bulk Wholesale: Sourcing and selling of cannabis flower, smalls, trim, and derivative products in bulk format
  • Agricultural Services: Selling of clones propagated and rooted from proprietary genetics and partnerships
  • Branded Products: Development and sale of CPG products into licensed retail channels
  • Technology Services: Proprietary IP for cultivation and post-harvest processing

The closing is subject to the execution of a mutually agreeable definitive agreement and is subject to several conditions such as stockholder approval, delivery of acceptable financial statements, board of directors’ approval, and satisfaction of all regulatory and stock exchange approvals.

The deal is expected to be completed by way of an amalgamation, merger or another form of the business combination to be determined by the parties following receipt of securities, corporate, and tax law advice.

“Currently, Headwaters, located in California is a leading greenhouse cultivator, wholesale and distributor, with an emergent brand called Mr. Zips. We’re ready to grow our business to the next level, and the Stem team enables us to do just that,” said Headwaters founder and CEO Tristan Strauss.

“With access to capital markets and Stem’s valuable network, Headwaters is well positioned to continue disrupting the world’s largest cannabis market and to expand into new territories. We couldn’t think of a better partner to help us achieve our goal of maintaining and continue to be one of California’s largest and most profitable cultivation companies.”