Taking a Page from the Canopy Growth Playbook, Halo Invests in Lesotho Cannabis
July 11th, 2019
App, Exclusive, News, Top Story
Lesotho (pronounced “le-so-toe” or “le-sue-two”) is a landlocked kingdom surrounded by South Africa. Most people probably never heard of it until recently, as in 2017 it was the first African country to legalize medical marijuana. Owing to the pioneering regulations, over 300 days of sunshine annually, low humidity, pristine water, educated workforce and more, the tiny nation has burst onto the scene as an optimal location for growing and exporting cannabis and a gateway to European markets.
Market Leaders Come Calling
These conditions underscored Canopy Growth Corp. (TSX: WEED)(NYSE: CGC) spending CDN$28.8 million in stock to acquire Daddy Cann Lesotho PTY Ltd., or Highlands as it is known, in May 2018. The prize for Canopy Growth was Highlands’ license to cultivate, manufacture, supply, hold, import, export and transport cannabis and its resin in Lesotho.
While Canopy scooped up Highlands, Halo Labs (OTCQX: AGEEF) (NEO: HALO) (Germany: A9KN), a cannabis extraction company that develops and manufactures cannabis oils and concentrates, was working with Bophelo Bioscience, the operator of one of the largest cannabis cultivation sites in Lesotho. Halo was operating the 5-hectare (~540,000 square feet) cultivation and production property and purchasing all the harvested crop in exchange for Bophelo taking a 20% stake in Halo and earning a royalty on cannabis sales.
This month, Halo upped the ante on its commitment to Lesotho, inking a non-binding letter of intent to acquire 100% of Bophelo. The LOI lays out the terms for which Halo will pay CDN$24.7 million (US$18.4 million) for Bophelo through the issuance of about 40.8 million shares of its common stock.
Land…and A Lot of It
While Bophelo’s 5-hectare plot is essentially double the size of other licensed facilities in Lesotho, it could widen exponentially in the future. As explained by Halo CEO Kiran Sidhu, the state has already given Bophelo preliminary approval to expand up to 200 hectares (21.5 million square feet) and has indicated they would consider granting permission for outdoor growing from 2019 onwards, following consultation with the International Narcotics Control Board.
Bophelo has the property locked in under a 20-year lease agreement with an option to renew for an additional 30 years.
Halo believes that on the 5-hectare plot they will be able to produce approximately 4.6 million grams of E.U. Good Manufacturing Practices (GMP)-grade cannabis concentrate per annum. Management estimates all-in production costs of no more than US$2 per gram for its concentrates, which it then expects to be able to market in Europe for US$10 per gram.
An Emerging Leader
The acquisition puts Halo at the head of a transitory period for Lesotho where it evolves into a global cannabis hub. In fact, Halo has the distinction of being the first American company to make an investment into Lesotho.
At the same time, the company has been broadening its U.S. footprint, including commissioning a 15,520 square-foot licensed volatile & non-volatile processing facilities in Cathedral City, California in January. That’s in addition to its flagship 12,000 square-foot manufacturing facility in Medford, Oregon and 8,000 square-foot processing facility in Las Vegas, Nevada that was put into operation last year.
Halo further supports revenues derived from its own products by serving as a contract manufacturer providing white label products for leading brands, such as Caliva, Nektar, ikanik farms and Falcon.
With the entry into the lucrative California markets, Halo estimates its annual revenue will rise from about $11 million in 2018 to $48 million in 2019. In the latest quarter, revenue was $8.7 million, positioning Halo 11th in the top 15 quarterly revenue producers for U.S.-based public companies that touch the cannabis plant.
The 302% surge in revenue ranked Halo 3rdin growth, narrowly trailing Cresco Labs ($21.1 million, +313%) for second. Halo trades with a market capitalization of $85.2 million. Cresco’s currently is $479.2 million, according to data from OTC Markets Group.
The first-mover investment into Lesotho will help keep the momentum going for Halo by providing direct exposure to an African market estimated at US$37.3 billion (both illegal and legal markets). With South Africa approving private use and decriminalizing marijuana possession in 2018, the legal market in that country of 56.7 million people is already estimated to have reached $1.85 billion.
Furthermore, the implications for future sales overseas resonate loudly. “[The acquisition] will also give Halo Labs an international platform for our innovative products like the DabTabs™ Dablets, the first ASTM C373-18 certified doseable cannabis product,” said Sidhu in last Monday’s news release.
Halo Chairman G. Scott Paterson succinctly summarized the buyout of Bophelo, calling it “game changing” for the company while adding, “We are enthusiastic about the Lesotho opportunity and operating a scale cultivation and production facility for the international export of oil and concentrates. We expect a lift both to revenue and profit and are looking forward to delivering these financial results to our shareholders.”
304% increase in quarterly revenue. Acquisition of one of the large cannabis companies in Lesothos. A global hub. A lift to revenue and profit. Those are exactly the types of things that investors love to hear.
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
Follow Us on Social Media
About CFN Media Group
CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.