25,000 pounds of sungrown flower expected for sale
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TORONTO, Oct. 13, 2021 /CNW/ - Halo Collective Inc. ("Halo" or the "Company") (NEO: HALO) (OTCQB: HCAND) (Germany: A9K0) today announced a significant expected increase in yield and number of strains across its 11 acres of owned or contracted outdoor cultivation in the state of Oregon, which is almost four times the flower harvested at the Company's owned or managed Oregon farms during the 2020 season. Sungrown flower harvested at Company's farm during the 2020 season which started in October 2020 and ended in April 2021 was approximately 6,396 pounds compared to an expected yield of 25,000 pounds this season, a 391% increase year over year. The Company is estimating, beginning November 2021 through May 2022 (the "7-Month Period"), that the Company's newly formed Oregon flower sales force is expected to sell 25,000 pounds (11,400 kilos) of sungrown high quality flower cultivated at the Company's own and managed farms which is expected to result in up to $7.3 million of incremental net revenue and up to $5.1 million of incremental pre-tax cash flow1 over the 7-Month Period (the "Sungrown Flower Projections"). The Company's Sungrown Flower Projections do not include sales of the Company's greenhouse or indoor flower cultivated in Oregon, as well as flower sales from over 100 independent cannabis farmers that Halo wholesales for within Oregon. Halo's total Oregon flower sales from all sources has averaged approximately $1 million of monthly net revenue over the past six months and has been the Company's fastest growing sales category in Oregon this year.2 With the addition of the Company's sungrown flower, Halo is targeting $1.9 million of monthly net revenue in all Oregon flower sales from November 2021 onward; an approximately $900,000 planned increase in monthly net revenue ($10.8 million annualized increase). This potential $10.8 million annual increase is initially projected to come primarily from the sungrown high quality flower cultivated at the Company's own and managed farms. In order to fuel supply past April 2022, the Company plans to increase its greenhouse and indoor cultivation footprint and leverage the Company's network of independent cannabis partners.
Halo Collective today announced a significant expected increase in yield and number of strains across its 11 acres of owned or contracted outdoor cultivation in the state of Oregon, which is almost four times the flower harvested at the Company’s owned or managed Oregon farms during the 2020 season.
Halo Collective today announced a significant expected increase in yield and number of strains across its 11 acres of owned or contracted outdoor cultivation in the state of Oregon, which is almost four times the flower harvested at the Company’s owned or managed Oregon farms during the 2020 season. (CNW Group/Halo Collective Inc.)
Halo Collective today announced a significant expected increase in yield and number of strains across its 11 acres of owned or contracted outdoor cultivation in the state of Oregon, which is almost four times the flower harvested at the Company’s owned or managed Oregon farms during the 2020 season. (CNW Group/Halo Collective Inc.)
Halo Collective today announced a significant expected increase in yield and number of strains across its 11 acres of owned or contracted outdoor cultivation in the state of Oregon, which is almost four times the flower harvested at the Company’s owned or managed Oregon farms during the 2020 season. (CNW Group/Halo Collective Inc.)
"With Halo's new Oregon flower sales force led by Jessie Garner, the Company's top performing salesperson, we are targeting approximately $1.9 million of monthly net revenue in Oregon flower sales from November 2021 onward which is nearly a four times increase from the equivalent 2020 harvest," commented Halo's CEO, Kiran Sidhu. "We have been steadily increasing our genetic library with unique strains to meet the sophisticated consumer demands in the Oregon market. We currently offer 70 strains, including select strains from Williams Wonder, DNA Genetics, and TerpHogz. Flower is the largest cannabis category in the Oregon market representing over 45% of dispensary sales in 20213. According to BDSA, retail flower sales in August in Oregon totaled $42.1 million. Starting this outdoor season, we aim to be the largest wholesaler of flower in Oregon with close to 9.5% share4 of the market in the state."
Expected highlights from Company's sungrown harvest include:
A Record Harvest Expected over this season of an estimated 31,000 pounds (14,100 kilos) of dried cannabis, including A buds, smalls, and trim with a wholesale value expected of $ 7.5 million5. In addition, the Company expects to harvest 1,600 pounds of fresh frozen cannabis with an expected wholesale value of $1.3 million6. This estimates the expected total wholesale value of this year's sungrown harvest including flower, trim and fresh frozen to be approximately $8.8 million.
Significant Cultivation Expansion through 2022. The Company's Oregon operations include East Evans Creek, Winberry Farms, William's Wonder Farms, and the recently acquired Food Concepts located at the Pistil Point facility in Portland. This gives Halo over 12 acres of outdoor, greenhouse, and indoor canopy in 2021 compared to six acres of only outdoor in 2020. Over the next six months, Halo plans to add 40,000 square feet of greenhouses and 10,000 square feet of indoor within Oregon to keep the sales pipeline continually supplied.
More and Better Genetics. Halo built a large and more modern nursery at East Evans Creek, allowing the Company to increase its genetic library to 70 different strains that management has selected based on Oregon's test results and market demand, including those under license from DNA Genetics and TerpHogz and the Williams Wonder.
Expected Incremental Net Revenue and Pre-Tax Cash Flow (not previously guided). The fall harvest, the largest of three expected each year, should cover the raw material needs for Halo in Oregon for up to nine months. Also, the harvest should add up to $7.3 million of incremental net revenue and up to $5.1 million of incremental pre-tax cash flow during the 7-Month Period, which has not previously been included in the Company's financial outlook.
A New Dedicated Sale Force for Oregon Flower Sales. Under the stewardship of Dustin Jessup, the Company's Chief Revenue Officer, Jesse Garner, Halo's top-performing salesperson, is leading a new sales division focused exclusively on flower sales given the substantial increase in supply both from Halo's farms and the Company's over one hundred farm partners.
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1 Harvest on all Oregon farms has started, the 25,000 pound yield is based on a plant by plant analysis for each canopy owned or managed by the Company. The price per pound assumes a 35% reduction in average sale price compared to last haverst season to be conservative. Net incremental cash flow deducts trimming, bagging, tagging, testing, sales commissions and delivery costs is based on contracted rates and actual current costs.
2 These preliminary and unaudited financial results are subject to customary financial statement procedures by the Company and its auditors. Actual results could be affected by subsequent events or determinations. While the Company believes there is a reasonable basis for these preliminary financial results, the results involve known and unknown risks and uncertainties that may cause actual results to differ materially. These preliminary results represent forward-looking information. See "Cautionary Note Regarding Forward-Looking Information and Statements" and "Financial Outlook".
3 Based on August BDSA Green Edge Data
4 Company estiamtes that wholesale is 50% of retail hence $20.05 million in August using BDSA data.
5 $7.3 million of flower sales and $250,000 of trim for shatter and distillate, 6,000 pounds at a $40 per pound average market rate.
6 $1.3 million of fresh frozen material is based on 1,600 lbs across 40 strains at a $81.25 per pound average market rate.
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 eleven million grams of oils and concentrates since inception. The Company continues to expand its business and scale efficiently, partnering with trustworthy leaders in the industry who value Halo's operational expertise in bringing top-tier products to market.
Halo currently operates in the United States in Oregon and California, Canada, Southern Africa in the Kingdom of Lesotho, and the United Kingdom. The Company sells cannabis products principally to dispensaries in the U.S. under its brands Hush, Mojave, and Exhale, and under license agreements with Papa's Herb®, DNA Genetics, Terphogz, and FlowerShop*, a cannabis lifestyle and conceptual wellness brand that includes G-Eazy as a partner and key member.
As part of continued expansion and vertical integration in the U.S., Halo boasts several grow operations throughout Oregon and two planned in California. In Oregon, the Company has a combined 12 acres of owned or contracted outdoor, green house and indoor cultivation, including East Evans Creek, a six-acre grow site in Jackson County with four licenses owned and operated by Halo and two third-party licenses under contract to sell all of their product to Halo; Winberry Farms, a one-acre grow site located 30 miles outside of Eugene in Lane County with a license owned and operated by Halo; and William's Wonder Farms, a three-acre grow site in Applegate Valley, under contract to sell all of its product to Halo pending the closing of Halo's acquisition of its licenses and business assets. Halo has recently acquired Food Concepts LLC, a master tenant of a 55,000 sq.ft. indoor cannabis cultivation, processing, and wholesaling facility in Portland, Oregon operated by the Pistil Point entities (the "Pistil Point Acquistion").
In California, the Company is building out Ukiah Ventures, a planned 30,000 sq. ft. indoor cannabis grow and processing facility, which will include up to an additional five acres of industrial land to expand the site. Recently, Halo partnered with Green Matter Holding in California to purchase a property in Lake County, developing up to 63 acres of cultivation, comprising one of the largest licensed single site grows in California. Halo also plans to expand its operations in California by opening three dispensaries in North Hollywood, Hollywood, and Westwood.
In Canada, Halo acquired three KushBar retail cannabis stores located in Alberta as a first in its planned entry into the Canadian market, leveraging its Oregon and California brands. With the KushBar retail stores as a foundation, the Company plans to expand its foothold in Canada.
Halo has also acquired a range of software development assets, including CannPOS, Cannalift, and, more recently, CannaFeels. In addition, Halo owns the discrete sublingual dosing technology, Accudab. The Company intends to spin-off these assets and its intellectual property and patent applications into its subsidiary Halo Tek Inc. and expects to complete a distribution to shareholders on a record date to be determined by Halo.
Halo has recently announced its intention to reorganize its non-U.S. operations into a newly formed entity called Akanda Corp., whose mission is to provide high-quality and ethically sourced medical cannabis products to patients worldwide. Akanda will seek to deliver on this promise while driving positive change in wellness, empowering individuals in Lesotho, and uplifting the quality of the lives of employees and the local communities where it operates, all while limiting its carbon footprint. Akanda will combine the scaled production capabilities of Bophelo Bioscience & Wellness Pty. Ltd., Halo's Lesotho-based cultivation and processing campus located in the world's first Special Economic Zone (SEZ) containing a cannabis cultivation operation, with distribution and route-to-market efficiency of Canmart Ltd., Halo's UK-based fully approved pharmaceutical importer, and distributor that supplies pharmacies and clinics within the U.K. With a potential maximum licensed canopy area of 200 hectares (495 acres), Bophelo has scalability that is arguably unmatched in the world today.
For further information regarding Halo, see Halo's disclosure documents on SEDAR at www.sedar.com
Pre-tax cash flow is a non-IFRS measure defined as earnings before interest, tax, depreciation and amortization ("EBITDA") after working capital. Non-IFRS pre-tax cash flow is EBITDA adjusted for gains or losses on the value of biological assets and after working capital not including the change in the value of biological assets. This data is furnished to provide additional information and is a non-IFRS measure and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measure to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, may use this non-IFRS measure in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies calculate this non-IFRS measure differently than the Company, this metrics may not be comparable to similarly titled measures reported by other companies.
Financial Outlook
This press release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the sales of the Company's sungrown flower in the state of Oregon during the 7-Month Period and sales of the Company's flower in the state of Oregon during the period from November, 2021 to May, 2022 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed in this press release and under the heading "Cautionary Note Regarding Forward-Looking Information and Statements" below and assumptions with respect to market conditions, pricing, and demand. The actual results of the Company's operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading "Cautionary Note Regarding Forward-Looking Information and Statements" below, it should not be relied on as necessarily indicative of future results.
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 Company's Sungrown Flower Projections, the Company's plans to expand in Canada and California, the expected size and capabilities of the final facility planned at Ukiah Ventures, the size of Halo's planned cultivation facility in Northern California, the ability of Bophelo and Canmart to serve the U.K. market, the proposed spin-off with Halo Tek Inc. and Halo's proposed plans to reorganize its non-U.S. operations via Akanda Corp.
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: delays in obtaining any required regulatory approvals in connection with the Transaction, the inability of Akanda to raise capital on the terms currently expected by management of Akanda, changes in the consumer market for cannabis products, changes in the expected outcomes of the proposed changes to Halo's operations, delays in obtaining required licenses or approvals necessary for the build-out of Oregon operations, the proposed spin-out with Halo Tek Inc. or the proposed reorganization with Akanda Corp., 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
Non-Solicitation
This press release shall not constitute an offer to sell nor the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Halo Collective Inc. Halo is a multi-national, incubation company with assets and operations centered in both THC and non-THC sectors. For the THC sector, Halo is focused on the West Coast of the United States where it has vertically integrated operations covering the...
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