E Stem Holdings: Getting In On Marijuana's Ground Floor

Berk put together a group to explore investment, initially with the backing of now-board member Garrett Bender, and identified Oregon as its best initial market. A major factor in that decision was identifying the potential in TJ's Gardens, founded by two men who were established in the cultivation of marijuana for medical uses. The co-presidents of TJ's, Travis MacKenzie and James Orpeza, are among the most decorated cannabis growers in the country, and continue to research and develop strains that have a wide range of applications. Their nonprofit Forrest Initiative's mission is to help families source CBD oil at no cost for their children in dire need of this life changing, non-psychoactive oil, as well as for needy adults in Oregon with diseases such as epilepsy that can be alleviated by cannabidiol.

"Oregon has some of the most sophisticated operators in the company, also a consumer who is a real connoisseur, we wanted to start with the best product. We invested in TJs, we are in the process or rolling the rest of the company into Stem Holdings, that transaction should be completed hopefully by end of first quarter," Berk told me.

In addition to cultivation acreage and greenhouses, TJ's also operates retail shops in the state and sells its branded merchandise, including edibles and topicals. 

Their penetration of the local market and the quality of their medical applications, says Berk, is what motivated the initial investment in Oregon and the establishment of Stem Holdings. Today, Berk says, under the TJ's umbrella there is a 40 acre farm in southern for industrial growing; a farm and greenhouse for plants in northern Oregon; in Eugene, an indoor grow facility and across the street on the same campus Division 1 extraction labs. There are also two dispensaries in Eugene: TJ's Provisions and TJ's on Willamette, with TJ's on Powell due to open in Portland the third week in February. 

There are three edible brands - Incredibles, Cannavore, and Supernatural Honey. Another of Stem's brands is Reefer Distribution, which has temperature-controlled vehicles for delivering product. "In Springfield, Oregon we have 30,000 square-foot indoor grow facillities, just licensed, with clean room, coming on line the third week of January," Berk told me. Among the other aspects of the "land and brand" business include genetics and breeding labs and a tissue culture facility.

Most recently, Stem Holdings also acquired what had been a major competitor for TJ's, Yerba Buena. As the announcement explains, "the acquisition of Yerba Buena directly supports Stem’s plans for nationwide expansion. While Stem’s operational affiliates have developed partnerships with a number of widely recognized cannabis brands and licensees across the country, the acquisition of Yerba Buena solidifies Stem’s commitment to providing shareholder value through strategic mergers and acquisitions within the cannabis space."

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Disclosure: This article is part of a new “UnderCovered” series of exclusive articles featuring companies with limited coverage. Authors are compensated by TalkMarkets for their time, and ...

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Leslie Miriam 4 months ago Member's comment

$STMH sounds very promising...

Craig Richards 5 months ago Member's comment

This is smart. It's always the solutions providers that always prosper the most. Even when times are tough for the industry, they do even better.

Cannabis Stock Buyer 5 months ago Member's comment

Kate Hayden, $STMH has lost a lot of value since mid 2018. Yet the current #Stem expansion efforts and growth opportunities sound rather promising. Would you say this is a buying opportunity? Or should I wait to see if it goes a bit lower first?

Barry Hochhauser 5 months ago Member's comment

Impressive.

Weed Investor 5 months ago Member's comment

#StemHoldings sounds like a promising opportunity in this burgeoning industry. Definitely going to take a closer look at $STMH

Bill Johnson 5 months ago Member's comment

Sounds promising.

Adam Reynolds 5 months ago Member's comment

Sounds like a promising way to start off the new year!

Wendell Brown 5 months ago Member's comment

It would be great if you could give this treatment to some more companies. I'm interested in microcaps that aren't penny stocks.

Donald Kaplan 5 months ago Member's comment

Good article. The lack of regulation has turned me off from #cryptocurrencies as well. I too think #cannabis investing will be the next hot trend. But unlike the uncertainty surrounding cryptos, it is far more likely to pay off. I will take a closer look at $STMH.

Michele Grant 5 months ago Member's comment

I agree. The future of #crypto is still very uncertain in my book. It's too difficult to know which if any coin will dominate in the future, especially with the lack of regulation. But the general trend seems to be that #cannabis will continue to grow and become legal in more and more locations.