CEO Interview Questions: Adam Berk, Stem Holdings

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Stem Holdings Inc. Basic Write-up

“Expanding our Recognizable and Established Brand”

At its core, Stem believes in harnessing the brilliance of Mother Nature to benefit everyday life, local communities, and bottom lines. Stem began as an early stage investment company to purchase, lease and improve cannabis properties.

Stem entered into a multiparty agreement to acquire recognizable and historic brand: TJ’s Gardens and other TJ’s assets. From here, Stem Holdings’ team has been working to expand product lines, cultivation plans, retail-facing dispensaries, and more across the states of Oregon, Nevada, and Oklahoma with plans to include Massachusetts, Florida, and New Jersey.

Stem provides great value in their current place in the industry. Pursuant to a multiparty agreement, Stem will be vertically integrated, merging the best growers, extractors, contractors, construction team, R&D operators and designers across the industry. Stem Holdings presents a successful  integrated model with a focus not only on high quality THC products but also on CBD-only products.

Adam Berk Bio:

Chief Executive Officer, Stem Holdings

Adam earned a degree in finance and hospitality management from Cornell University and an MBA from the University of Miami School of Business. He was formally Chief Executive Officer of Osmio (currently GrubHub), the first patented web-online food ordering system. Adam is a founder of HYD For Men, an artisanal men’s grooming company that patented the first solution to extend the life of a razor blade by 400%. Adam is also the principal founder of PPI, a company that patented the first paper water bottle that is fully biodegradable, recyclable and compostable.

Interview Q&A

1) How did you get your start in the cannabis industry?

Five years ago, I saw that the cannabis industry held tremendous potential that was being overlooked by traditional investors due to the stigma that personified the industry at the time. Earlier in my career, I founded the first patented online food ordering company, originally called OSMIO and is now known as GrubHub. My previous experience with GrubHub has taught me that while building markets from the ground up can be challenging and risky; there is a considerable reward to establishing yourself as an innovator in an industry’s infancy.

2) How did you get involved with Stem Holdings Inc.?

Stem Holdings Inc. (Stem) grew out of a mutual interest in cannabis opportunities and I help put together an investment group that was willing to take a risk in the cannabis industry at a very early stage. Initially, the group was considering operating near our headquarters in Florida. We ultimately decided that Oregon would be the most strategic state to launch our operations and deploy investment capital. We chose to partner with well-known Pacific Northwest cultivators, TJ’s Gardens to launch our cannabis platform. TJ's Gardens’ founders, Travis and James impressed our group with their vast experience and expertise, unmatched in the cannabis industry.

3) Congratulations on being listed on the CSE: STEM, what is your growth and development strategy over the next quarter or year?

In the next year, Stem plans on continuing to grow its operations throughout the United States and internationally; specifically, acquiring additional retail assets, expansion of cultivation and manufacturing operations and with the passing of the 2018 Farm Bill, wholesale distribution of our high-quality industrial hemp products as well as branded CBD products, including a CBD tincture.  Our CBD is unique in that it consistently tests out at a 30:1 CBD to THC ratio – which is significantly more potent than most other CBD products you will find on the market. Stem will focus on its strategic expansion decisions and timely executions for its cannabis and hemp products and facilities.

In addition, Stem has a strategic focus on building out its properties in states where we've recently become licensed. Along with our partners, Stem is currently building state-of-the-art cultivation properties in both Nevada and Oklahoma as well as creating advanced processing facilities in both states that will include extraction labs and commercial kitchens. Retail operations are rapidly growing with our Portland flagship dispensary opening Q1 of 2019 and three Stem Oklahoma dispensaries opening later in the year.

In both Nevada and Oklahoma, Stem will roll-out its iconic consumer-facing brands including TJ’s Gardens, Yerba Buena, Cannavore, and Dose-ology.

4) What sets Stem apart from the competition?

As a vertically integrated company, Stem has control over every segment of the supply chain.  We manage the construction of the properties that house our operations. The Stem team monitors every cannabis plant and analyzes our sustainable cultivation techniques (including our proprietary living-soil blend). We are also able to create warm and welcoming experiences for cannabis consumers in our retail environments. With our business model, Stem can provide oversight at every step, from seed to sale.

Stem has always implemented the philosophy based upon what I like to call the 4 P’s: People, Planet and Practices, will equal Prosperity. With the first pillar, Stem invests heavily in our people, paying them a proper wage, offering incentive programs, health benefits, and giving them the tools they need to succeed. Our goal is to help build a family-type work culture environment. When you see your work family more than your home family, you want to make sure there is a strong foundation by creating a culture that is positive, efficient and fun. Our second pillar is Planet. TJ’s Gardens is a sustainable company focused on being environmentally conscious and responsible. We grow our plants using no-till, living soil, that is composed of all organic amendments. This value differentiates Stem’s growing techniques from others in the market. Our third pillar is Practices. Stem along with TJ’s Gardens and Yerba Buena focuses on integrity, innovation, accountability, and hard work. Everyone is held accountable in our organization, which means everyone shares our successes. Together, these three pillars (people, planet, practices) combine and amount to the fourth pillar-- which is prosperity. To me, prosperity means profitability. Having an impact on the bottom line allows us to provide exceptional results for our shareholders. It also gives Stem the ability to reinvest in our communities, employees, and customers.

5) With all the recent news around Stem, can you elaborate on your hiring of Eugene Purtell as Director of Sales? How does Purtell fit into your strategic plan?

Stem is building a team of leaders that are experts in their particular fields. Our board of directors and advisors comes from senior leadership positions in a variety of sectors including startups, organic food, finance, real estate and sports. Our executive team is made up of authorities in every facet of the cannabis industry from cultivation to branding to legal advocacy. Our goal is to apply our team's knowledge and expertise to the cannabis industry. Eugene has vast experience creating sales partnerships for Nike and its Jordan brand. As we acquire and partner with an increasing number of cannabis operators and represent their products to wholesale buyers, it is critical for us to build a comprehensive sales strategy, starting in Oregon, that we can easily implement across the nation. Stem sees Eugene as an invaluable piece of growing the wholesale sector of our business and expanding our footprint nationwide.

6) Congratulations on receiving your license for your newly constructed cultivation facility in Oregon. Can you give us a quick update on how things are progressing in Oregon?

Things are progressing rapidly in Oregon. Stem’s newly constructed facility in Oregon will house cultivars from TJ’s Gardens and our recent acquisition, Yerba Buena. The 28,000 square foot property will provide 10,000 square feet of space dedicated to sustainable, indoor cannabis cultivation. The building features eight, 1,100 square feet of clean grow rooms that will utilize cutting-edge lighting and ventilation systems. The grow rooms will collectively produce over 2,500 pounds of cannabis flower annually. I'm most excited about the on-premise, plant tissue culture laboratory. The lab will allow Stem’s to utilize advanced propagation technology and produce a continuous supply of plant strains derived from award-winning genetics.  

Stem will also be reaching another critical milestone for its Oregon operations very soon. We are close to opening our third retail location, which will be our flagship Portland location.  Having dispensaries in both Eugene and Portland is significant because we will then have retail operations in both major metropolitan areas in the state.

7) What is the next trend that you see happening in the cannabis space?

Cannabis consumers are becoming more educated about how they consume cannabis. No longer will it be sufficient to claim that a product is THC or CBD based. All of the cannabis cultivators that we work with create award-winning cannabis flower, known for its flavor and effect. At Stem, we value education. We want to teach all cannabis consumers how terpenes might affect their endocannabinoid system and what type of strain will lead to a more beneficial experience. As more and more people consume cannabis on a semi-regular basis, Stem believes that a large segment of cannabis consumers will move away from just looking at the potency of a product and analyze what effects they can receive from different types of cannabis.

Another trend will be a search for producers of cannabis and cannabis-derived products created with a sustainable and natural methodology. Increasingly, people are becoming educated on the benefits of purchasing and consuming organic and sustainably cultivated products. The organic food and beverage markets are expected to grow at a rate of 14 percent from 2017 until 2021. At Stem, we feel that cannabis will follow suit as people are more conscious about what they consume. For this reason, we have decided to partner with cultivators like TJ’s Gardens and Yerba Buena who are dedicated to producing products solvent free and with living soil.

8) What inspires you as a leader?

Our team at Stem continually inspires me. Since founding the business, my goal has been to assemble a diverse group at all levels of our company. While studies have shown that companies with greater gender and racial diversity financially outperform their peers, I didn’t make our decision to invest in a diverse executive team purely based on financial returns. Employing a diverse group of individuals who come from different backgrounds means being constantly exposed to new ideas and different perspectives. Our ability to approach challenges from multiple perspectives allows us to develop creative and innovative solutions.   

9) What is your favorite aspect of working in the cannabis industry?
As cannabis business leaders, Stem has the opportunity to shape an industry that is in its infancy. While there have been so many great pioneers that have taken cannabis to its current state, it is exciting to know that collectively, we are still in the early stages of this industry. As a Company, we pride ourselves on having employment diversification, from the board of directors all the way through our entire organization, as well as focusing on organic cultivation practices that is safe and results in high-quality, lab-tested products.  Cultivation and manufacturing marijuana products can have a significant environmental impact and knowing that our sustainability efforts work towards minimizing our environmental footprint will be of critical importance as we expand across the U.S.

10) How is your business innovating?
Stem is an innovative vertically integrated cannabis company. Because traditional U.S. institutional lenders do not directly participate in the financing of marijuana-related assets, there has been a shortage of available improvement capital. Stem takes existing commercial properties and adapts the facilities to meet the unique requirements of our standard operating procedures and protocols. We are building technologically advanced facilities that support safe, efficient, productive and sustainable indoor and outdoor cultivation practices.

Jessica Hoy