Elegance Brands Enters Strategic Partnership and Licensing Arrangement with Halo Collective to Launch THC Beverage Portfolio
June 7th, 2021
TORONTO, June 7, 2021 /CNW/ – Halo Collective Inc. (“Halo“) (NEO: HALO) (OTCQX: HCANF) (Germany: A9KN), a vertically integrated cannabis company, announced today that it has entered into a strategic partnership and licensing arrangement with Elegance Brands, Inc. (“Elegance”), an innovative global beverage company, to expand its product-offering dispensaries to include THC-infused beverage products (the “Transaction”).
As part of the Transaction, Elegance will exclusively license the intellectual property rights for its THC brands and provide support to Halo on operations and manufacturing technology for the manufacture and sale of certain THC-infused beverage products in exchange for a % royalty on all sales generated from these brands (the “Licensing Agreement”). In addition to the Licensing Agreement, Halo will acquire manufacturing equipment custom-built for THC beverage production and acquire a minority interest in Elegance.
The Licensing Agreement allows Halo to exclusively license Elegance’s THC-infused beverage product portfolio, including Arvo, Zen, Life Brew, High Life THC Cocktails, Island THC & Coconut Water, Stoney Island THC Cold Brew Coffee, 420 Friendly THC Lemonades, and California THC Bitters.
The first product expected to launch under the partnership is Zen THC Social Tonics in a range of four innovative flavors: Raspberry Hibiscus, Ginger Lime, Mango Habanero, and Citrus Lavender. They are expected to enter distribution by Q4, 2021 in California and Q1, 2022 in Oregon.
THC-infused beverages saw significant growth during 2020. This upward trajectory is expected to continue throughout 2021. With more than 1,000 dispensaries in California licensed to sell THC-infused beverages, sales have steadily increased, and year-over-year growth reached 110% during Q1 of 2021.1 Total California retail sales for THC-infused beverages in Q1 were $7.09 MM, with carbonated beverages making up 73% of those sales. Oregon, a smaller but not insignificant market with more than 700 dispensaries licensed to sell THC-infused beverages, reported $4.1 MM in beverages sales last year, with carbonated beverages making up 78%.
1 Statistics referenced have been cited from BDSA data reporting, the leading provider of market research solutions for the global cannabinoid industry from forecastts to trends, from the USA to Europe.
Kirin Sidhu, the CEO of Halo, said, “The Transaction will facilitate a long-term and mutually beneficial partnership between both companies. Elegance is well versed in developing and marketing premium beverages and will utilize its experience to support Halo’s efforts to bring THC beverages to market, aid in production, and enhance distribution. Elegance Brands has created a unique and exciting portfolio of THC products, and with this Transaction, we step into one of the fastest-growing segments of the functional beverage market.” Mr. Sidhu added, “Beverages are a strategic addition to Halo’s existing product offering, and through this innovative partnership, we will leverage Elegance’s experience to bring THC beverages to retailers and consumers across the U.S. market. We believe that consumers are actively seeking innovative options for THC beverages, and this partnership aims to meet that demand. We look forward to being a shareholder of Elegance and participating in the value creation from its growing portfolio of premium brands.
“We are proud to be working with Halo and supporting their efforts to innovate the THC beverage market,” said Raj Beri, Founder, CEO, and Chairman of Elegance Brands. “Halo is a recognized and respected cannabis company with a global footprint. The growing interest in THC beverages represents opportunities for bringing new, creative products to consumers in an ever-growing space. The ability to partner with Halo is a tremendous opportunity for us, and we look forward to our combined success.”
Pursuant to the Transaction, Halo, through a wholly owned subsidiary, will acquire 100% of an Elegance subsidiary by way of a three cornered amalgamation, in exchange for that number of Halo common shares (“Halo Shares”) equal to the quotient of (a) Seven Million Three Hundred Thousand US Dollars (US$7,300,000), divided by (b) the greater of (i) the volume weighted average closing price of the Halo Shares for the twenty (20) trading days ending on the trading day immediately prior to the completion of the Transaction, as traded on the NEO Exchange, or (ii) the minimum price permitted on the NEO Exchange.
In addition to the rights under the Licensing Agreement and custom manufacturing equipment, Halo will receive ((i) 9,333,333 Class A Shares in the capital of Elegance (the “Elegance Shares”), resulting in Halo owning approximately 6% of the Elegance Shares on a fully-diluted share basis (assuming all of Elegance’s 91,400,000 Class B Shares convert into Class A Shares of Elegance), and (ii) warrants to acquire 5,000,000 Elegance Shares, with each warrant exercisable at a price of $0.75 per Elegance Share for a period of 18 months from closing of the Transaction.
Completion of the Transaction is subject to the satisfaction or waiver of customary closing conditions, including receipt of approval from the NEO Exchange. The Halo Shares to be issued upon closing of the Transaction will be subject to certain sale restrictions.
About Elegance Brands, Inc.
Elegance Brands, Inc. is a global beverage company that develops, markets, and distributes products with a focus on innovation. In addition to its flagship brand, SWAY Energy + Immunity Drink, Elegance Brands offers a range of functional beverages, plus super-premium spirits and alcohol brands, including Elegance Vodka across a network of best-in-class distributors in the U.S. as well as direct to consumer via its various brands’ websites. For more information about the Elegance story, visit http://www.elegance-brands.com.
About Halo Collective Inc.
Halo is a leading, vertically integrated cannabis company that cultivates, extracts, manufactures, and distributes quality cannabis flower, oils, and concentrates and has sold approximately nine million grams of oils and concentrates since inception. Halo continues to evolve its business and scale efficiently, partnering with trustworthy leaders in the industry, who value the Company’s operational expertise in bringing top-tier products to market. Current growth includes expansion in key U.S. markets, the United Kingdom and Africa, with planned expansion into the Canadian retail market.
Halo is led by a strong, diverse, and innovative management team with deep industry knowledge and blue-chip experience. The Company is currently operating in the United States in California and Oregon. The Company sells cannabis products principally to dispensaries under its brands, Hush, Mojave, and Exhale, and under partnership or license with OG DNA Genetics, Terphogz and FlowerShop*, a cannabis lifestyle and conceptual wellness brand in which G-Eazy is a partner and key member of FlowerShop*.
As part of continued expansion and vertical integration in the U.S., Halo boasts several grow operations throughout Oregon and California. In Oregon, the Company has a combined 9 acres of outdoor cultivation, including East Evans Creek, a six-acre grow site in Jackson County, Blue Sky Farms, a two acre grow site located in Jackson County and Winberry Farms, a one-acre grow site located 30 miles outside Eugene in Lane County. In California, the Company is building out Ukiah Ventures; a planned 30,000-square-foot indoor grow and cannabis processing facility including up to an additional five acres of industrial land to expand this indoor grow site. Recently, Halo partnered with Green Matter Holding to purchase Bar X Farm in Lake County, developing up to 80 acres of cultivation which would comprise the largest grow in California.
Internationally, the Company’s subsidiary Bophelo Bioscience & Wellness Pty. Ltd. (“Bophelo”) is currently cultivating medicinal cannabis in Lesotho. Once fully built out, Halo believes Bophelo to be one of the largest licensed marijuana cultivation sites in the world with a future capacity of up to 495 acres. To further Halo’s global presence, the Company has recently acquired CBPM importation and distribution licensing in the United Kingdom via medical cannabis suppliers Canmart. Halo expects the cultivation and manufacturing operations of Bophelo, combined with the importation and distribution capabilities of Canmart, to drive a well-positioned business to serve the U.K. market.
The Company also has acquired a range of software development assets, including technology platforms CannPOS, Cannalift, and, more recently, CannaFeels. Halo also owns the discrete sublingual dosing technology, Accudab. The Company intends to spin-off these assets along with its intellectual property and patent applications into its subsidiary Halo Tek Inc. and complete a distribution to shareholders on a record date to be determined by Halo.
Cautionary Note Regarding Forward-Looking Information and Statements
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Halo’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Halo’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. Forward-looking information may relate to anticipated events or results including, but not limited to the completion of the Transaction and the impact thereof on the prospects of Halo, the manufacturing and distribution of THC beverages by Halo, development and expansion of Bophelo’s operations and the granting of certifications, Halo’s planned expansion into the Canadian retail market, the expected size and capabilities of the final facility planned at Ukiah Ventures, the size of Halo’s planned cultivation facility in Northern California and the ability of Bophelo and Canmart to serve the U.K. market.
By identifying such information and statements in this manner, Halo is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, Halo has made certain assumptions. Although Halo believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Among others, the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: unforeseen delays or circumstances that prevent the applicable stock exchanges from commencing trading in the Company’s shares or warrants; delays in obtaining required licenses or approvals, delays or unforeseen costs incurred in connection with construction, the ability of competitors to scale operations in Northern California, delays or unforeseen difficulties in connection with the cultivation and harvest of Halo’s raw material, changes in general economic, business and political conditions, including changes in the financial markets; and the other risks disclosed in the Company’s annual information form dated March 31, 2021 and other disclosure documents available on the Company’s profile at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Halo does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to Halo or persons acting on its behalf is expressly qualified in its entirety by this notice.
Third Party Information
This press release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources
SOURCE Halo Collective Inc.
For further information: Contact Information, Halo Collective, Investor Relations, email@example.com, www.haloco.com/investors
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