STMH - Stem Holdings (STMH)(STEM:CA) - Adding Two Dispensaries Concentrates Line

Acquisition. Yesterday, Stem announced it had acquired Artifact Extracts, an Oregon-based premier cannabis extraction company known for its award-winning concentrates, as well as two dispensaries. Stem issued 8.2 million shares of stock valued at $2.9 million for the acquisition. The acquisition will enable Stem to capture additional market share and expand its presence into the fast growing concentrates segment. Stem did not release any financials for Artifact Extracts.Artifact Extracts. Founded in 2017, Artifact Extracts is a craft cannabis company based out of Eugene, Oregon focused on pushing industry standards through the creation of high-end extracts and premium, affordable shatter. The Company's product line includes budder, badder, shatter, crumble, rosin and THC A crystals, among others.Concentrates. Cannabis concentrates contain extra-high amounts of cannbinoids, with many products exceeding 60% THC levels and some over 90%. The market in the U.S. grew over 40% in 2020 to $800 million according to Headset. Forecasters expect the market to continue to be one of the fastest growing segments through 2026.Dispensaries. The acquired dispensaries are located in Salem and Eugene and will be re-branded to TJs. The Budee service will be launched immediately in Salem and to Eugene in October. Artifact Extracts product are already in 74 dispensaries across Oregon and we expect cross selling opportunities into dispensaries not yet supplied with the expanded Stem product line. Stem now has six wholly-owned dispensaries in the state.Maintaining Outperform. In spite of a slower than anticipated revenue ramp, we are maintaining our Outperform rating and a $2.00 12-month price target. We believe the Company's 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 providing Stem with not only a first mover advantage but a defensible moat. Read More >>