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

Among Stem's other expansions in progress, Berk told me, are two cultivation sites in Nevada, with an extraction lab and commercial kitchen there coming in the first quarter of 2019. In Oklahoma, the company was awarded 17 licenses recently, "7 retail, 5 processing, 5 cultivation," according to Berk. "We begin construction there in about early January." 

I was wondering if the company's expansion was dependent upon recreational-marijuana legislation, and Berk explained that Oklahoma is an example of a state where they are content to work within the medical-marijuana focus. "Most patients are there to purchase medically: sleep disorders, anxiety, pain relief. We're okay with it being 'only' medical."

What's next, what's the growth plan? I couldn't help asking. Berk obliged: "We're looking at opportunities and we will see how market wants to proceed. Every state is different. In some states we might just process, in some cultivate. We like the vertical model [that we have in Oregon] because we like controlling the supply chain. One of the issues [the medical community has with marijuana] is lack of consistency, and when you're treating people, sometimes very sick people, we like starting really from seed, up through and including great finish packaging. We're building a scalable business with real infrastructure."

"What's our expansion strategy? That's twofold: apply for licenses in new states, and make acquisitions of really good local operators."

With Stem's Canadian listing, and recent issuing of Canadian-dollar warrants, as well as of course the national "open season on weed" that went into effect this year, I had to ask if Stem was looking at all longingly at the Canadian market; at least in the foreseeable future, Berk says no. "We are traded up there because for liquidity purposes investors are very interested, and Canaccord is our investment bank. We were traded first OTC here, then dual listed. They have sophisticated operators up there, but that product will never come down." 

We talked longer, but to sum up, I suggest that if this sounds interesting to you, everything you would ever want to know is available via Stem's website - all its filings, plans, listings, etc. I'm not a world champion number-cruncher, but I like that it's not a penny stock, and that I can understand the charts (eg, the price dropped when the number of available shares was tripled, for no other nefarious reason), and that there are debts but also considerable real assets. 

 

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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.