Item 1.01 Entry into a Material Definitive Agreement
On
September 17, 2021, Stem Holdings, Inc. d/b/a Driven by Stem (the “Company” or “Stem”) announced that it had acquired
Artifact Extracts (“Artifact”), a premier cannabis extraction company based in Oregon known for its award-winning concentrates,
as well as two dispensaries.
Strategic
Highlights:
With
the acquisition of Artifact, the Company will be positioned to capture additional market share, expand its presence in the fast-growing
concentrates segment, and maximize value for all its shareholders.
●
Increases footprint of fully-owned dispensaries on the West Coast to six locations.
●
Expands 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. Cannabis sales in Salem/Marion County
have shown consistent growth over the past few years.
●
Immediately launch the Budee™ proprietary delivery platform in Salem, extending its consumer reach with expedited service,
with service expansion to Eugene in October.
●
Supply consistent, high-quality biomass for Artifact from its cultivation operations for Stem’s TJ’s Gardens™ and
Yerba Buena™ brands in Oregon, with a view toward achieving accretive margins.
●
Integrate Artifact’s 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.
●
Expands the Company’s distribution footprint by cross-selling into dispensaries not yet supplied with the full portfolio of
Stem’s brands, as well as including Artifact’s presence in all TJ’s dispensaries.
●
Strengthen Stem’s experienced management team with the integration of Artifact’s skilled R&D leadership.
The
transaction closed September 17, 2021, with all Oregon Liquor Control Commission approvals having been granted. In connection with the
transaction, Stem issued 8,209,178 shares of common stock of Stem at a deemed aggregate value of US$2,925,000 (a 24% premium to Stem’s
closing share price of common stock on September 17, 2021. The share consideration will be held in escrow for a period of six months
with a “leak out” provision applicable for the following six months.
