Stem Holdings Acquires Driven Deliveries, Anticipates 2021 Revenues Of US$75 Million

Stem Holdings (CSE: STEM) has completed the acquisition of Driven Deliveries, whom is an e-commerce and delivery-as-a-service provider, creating the first such vertically integrated cannabis operator. The firm holds what is referred to as proprietary logistics and omnichannel user experience and customer experience technology. With the closing of the transaction, Stem Holdings is set to be renamed to Driven By Stem.

With the closing of the transaction, the new company currently projects revenues for the 2021 calendar year of US$75 million, along with a combined gross profit of US$30 million. The transaction as a result is immediately accretive to the company, with the equity said to be trading at just 1.25X the current sales run rate.

Driven Deliveries currently operates within the largest US cannabis market that is California. The state currently has roughly 700 dispensaries, with 40% of the population living within 60 miles of a dispensary, providing ample room for growth for the firms cannabis delivery service, while also enabling expanded distribution of Stem’s own products that are set to enter the market in 2021.

A number of key expansion strategies have been put in place for 2021 for the now combined operator, including:

• Expansion of delivery services to the Oregon market in the first quarter of calendar year 2021. A focus is reportedly being placed on Stem’s brands to expand its distribution footprint.
• Launch of the Yerba Buena brand in California, which will be distributed by Driven and Stem’s dispensary in Northern California.
• Expansion of additional Stem brands to California, including the Cannavore edibles that are currently available in Oregon and Nevada, and the TravisxJames vape products that are currently available in Nevada. Distribution is expected to see an increase in the speed to market as a result of Driven’s software.
• Launch of delivery services in Stem’s current and future markets. The company currently has operations or licenses in the states of Oregon, California, Nevada, Oklahoma, Maryland, Massachusetts, New York and Pennsylvania.

The acquisition of Driven Deliveries was facilitated under a definitive agreement whereby Driven shareholders received one common share of Stem for each share of Driven held. Stem will continue to trade under the current symbols, with it being listed as “STEM” on the Canadian Securities Exchange and “STMH” on the OTC Markets.

Stem Holdings last traded at $0.50 on the CSE.

---

FULL DISCLOSURE: Driven By Stem is a client of Canacom Group, the parent company of The Deep Dive. The company has been compensated to cover Driven By Stem on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.