Stem Holdings Inc. Signs Deal to Enter California Cannabis Market With Cultivation, Processing and Distribution

Stem Holdings Inc. Signs Deal to Enter California Cannabis Market With Cultivation, Processing and Distribution

BOCA RATON, April 02, 2019 (GLOBE NEWSWIRE) — Stem Holdings Inc. is pleased to announce it has executed a definitive agreement dated March 29, 2019 to acquire Western Coast Ventures Inc. WCV has a working capital surplus of approximately $2,000,000 and has negotiated a joint venture with ILCA Holdings, Inc. ILCA has been issued a limited Conditional Use Permit for a Marijuana Production Facility by the City of San Diego, California, which will only be granting a total of 40 MPFs. The consideration for the acquisition is expected to be 2,000,000 shares of Stem’s common stock, having a value of approximately $3,500,000 based on Stem’s closing trading price on March 29, 2019. After giving effect to the closing of the acquisition of WCV and the previously announced acquisition of South African Ventures, Inc., the former shareholders of WCV will own approximately 7.3% of the issued and outstanding shares of Stem. The acquisition of WCV is expected to be completed on or around April 12, 2019.

The JV will consist of its own management team and with the personnel, expertise, and other resources necessary to construct the MPF. It is agreed that WCV will have a 51% interest in the JV, for an aggregate purchase price of $1,500,000. ILCA will hold the remaining 49% interest in the JV. ILCA previously invested $500,000 in the build-out and initial MPF permitting process. Stem anticipates the JV will finance the cost of construction of the MPF, estimated at $3.5 million, with its cash on hand and other non-dilutive sources of financing. The construction of the facility has begun and is estimated to be completed during the fourth quarter of 2019.

Upon issuance of the final MPF permit and the completed construction, the JV will: (1) operate an advanced cannabis facility to grow and cultivate cannabis; (2) manufacture cannabis-derived products; and (3) distribute cannabis and cannabis-derived products state-wide throughout California.

“With a population of 39 million and the fifth largest GDP in the world, California’s cannabis market is an unparalleled state market which makes it a critical location for Stem’s expansion,” states Adam Berk, CEO of Stem. “The agricultural, production and distribution expertise that both Stem and ILCA bring to this project are expected to result in a successful California cannabis operation based in the City of San Diego.”

The MPF encompasses 10,700 square feet and will feature state-of-the-art technology for cultivation, production and distribution. A complex, sophisticated, portable racking system will create a 10,000 square foot canopy that has the potential to produce over 6,000 pounds of product per year with the help of high efficiency LED lights. The production sector of the MPF will deliver a large variety of cannabis-derived offerings such as flowers, pre-rolls, infused edibles, and topicals. Stem expects production from the MPF to begin during the fourth quarter of 2019.

Published at Thu, 04 Apr 2019 14:07:00 +0000

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