Stem Holdings (STEM.C) recent acquisition could be a launchpad deeper into the concentrates market

Stem Holdings (STEM.C) picked up Oregon-based concentrates company, Artifact Extracts, and two dispensaries today, according to a press release.

Even though all things weed have gone to ground in the past few years, the national market for concentrates jumped 40% last year as both the sparing new entrant and returning customers increasingly turned to concentrates over flower.

“Artifact is recognized for the potency and purity of its high-quality line of concentrates that have driven its growth in the Oregon market. 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,” said Adam Berk, CEO of Stem.

Stem Holdings is a vertically-integrated cannabis and technology company offering the usual spate of cannabis confections, ranging from cultivation, processing, extraction, retail, distribution, but also including delivery-as-a-service (DaaS) throughout the US. They also have a e-commerce platform to provide direct-to-consumer options.

Stem is banking on the acquisition of Artifact to be their gateway into capturing a greater share of the market while expanding its presence in the concentrates segment.

Strategic Highlights:

Increases footprint of fully-owned dispensaries on the West Coast to six locations.

Expand 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 were $73.5 million in 2020 growing 32.4%** as compared to the prior year.

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 accretive margins.

Integrate Artifact’s premier line of concentrates including budder, badder, shatter, crumble, rosin, THC A crystals, and other popular forms into Stem’s family Oreof 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 on September 17^th.