MJBizMag July 2021 - 43

M
any marijuana executives share the goal of growing their businesses,
but how they achieve that can take many different avenues. Just ask
Adam Berk, the CEO of Driven by Stem, a vertically integrated business
operating in five states, and Josh Genderson, CEO of Holistic Industries, which
operates in six states plus Washington DC.
Berk, the founder of food-delivery service company Osmio, which became
Grubhub, focused on establishing brands, proving them in a tough market and then
taking them into other states through M&As. The arrival of COVID-19 compelled
Berk to update his strategy.
" For us, it's all about e-commerce and delivery and building brands, " he said.
Genderson, the CEO of a well-known family liquor store business in Washington
DC, didn't plan to take his medical marijuana business national, but his first
success highlighted the opportunities that awaited. Genderson scaled Holistic Industries
by winning licenses in limited markets and establishing regional presence
to build brand recognition. Success bred capital raises that have allowed Holistic to
add M&A to its scaling toolbox, but securing licenses remains central to its strategy.
" Our bailiwick has been limited-license states. Those give you a natural competitive
advantage, " Genderson said.
Some marijuana business
executives launch with the intention
to of scaling from Day One, while
others don′t consider expanding
until years later. There are many
different ways to scale successfully,
depending on the type of business
and the ambitions of its leadership.
Some key issues and factors
to keep in mind when scaling a
company include:
* To justify scaling a business,
there must be demand for the
companyʼs products and services.
Executing your growth strategy
will require access to capital.
* Acquisitions are an effective
strategy to scale fast, but they
typically require significant capital
expenditures.
COMPANY Driven by Stem
HEADQUARTERS Boca Raton, Florida
CEO Adam Berk
OPERATING IN California, Massachusetts, Michigan,
Nevada and Oregon
EYES ON EXPANSION
Stem launched in 2016 in Oregon, and
Berk says scaling and going national was
the plan from the get-go. Berk chose to
start the company in Oregon because it
was a mature market with some of the
best cannabis expertise in the country.
He figured his young company could
partner with or acquire and learn from
veteran businesses and then take that
expertise national.
" It gave us the ability to build a
successful brand in a competitive
landscape, which is where we think the
entire country will be at some point, "
Berk said. Oregon has " a robust market
and has been around for a long period
of time. "
Stem acquired two well-known
cultivators in the state, purchasing
TJ's Garden in 2017 and Yerba Buena
in 2018, " drastically " expanding the
business' footprint.
The company also partnered with
dispensary operators in Oklahoma to
launch a Stem-branded dispensary there,
and it launched the Travis X James (TJ's)
cultivation brand in Nevada. Stem also
built out an extraction division that
used solvent and solventless techniques,
allowing it to expand its edibles
company, Cannavore.
Finally, the company built three wellknown
dispensaries in Oregon operating
under the TJ's brand name. The company
also manages another grow operation
there, called Chunky.
Berk figured it was important to be in
California because of the market's size
* Many cannabis businesses have
scaled their companies by winning
licenses in different states, which
is often a slower process than
M&A but still capital intensive.
* Many cannabis businesses that
scale do it with a combination of
acquisitions, securing licenses and
contracting partners who can help
build their brand.
* Before you scale, it is important
to establish your brand, proof of
concept and standard operating
procedures-all of which will
facilitate scaling.
and the innovation happening there.
In 2019, he acquired Foothills Health
and Wellness, a well-known medical
marijuana dispensary near Sacramento.
That same year, Stem became an investor
in Rebelle, a dispensary in Great
Barrington, Massachusetts, that opened
in 2020.
SCALING WITH DELIVERY
During the COVID-19 pandemic, Berk
noticed boxes piling up on his doorstep
and his neighbors'.
" We realized that the future was going
to be delivery. Once you started to see
that trend, and curbside (pickup), we
realized that we needed to be in that lastJuly
2021 | mjbizdaily.com 43
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MJBizMag July 2021

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