Halo Labs (NEO:HALO) Takes a Key Step Toward Becoming a Global Cannabis Player with Acquisition of Bophelo Bioscience
Halo Labs Inc (NEO:HALO) (OTCMKTS:AGEEF) (FRA:A9KN) has acquired Bophelo Bioscience in Lesotho, which will play an important role in the company’s strategy to increase revenue. Halo and Bophelo are still shuffling the papers, but a final agreement validating the acquisition will be signed by the first week of October. Lesotho is a small State, entirely landlocked within South Africa. But, Lesotho, is about to become one of the top producers of medicinal cannabis oil in the southern hemisphere, making it a key base for companies wanting to take advantage of the opportunities in the space as legalization of marijuana progresses.
[stock_chart symbol=”HALO” align=”left” range=“1Y”]
The Kingdom of Lesotho legalized medicinal cannabis in 2016, but it has awarded few production licenses. Bophelo is one of the few to have secured such a document, which will now allow Halo Labs (through the acquisition of Bophelo) to operate a five-hectare cultivation and manufacturing site, while possessing the license to sell medical cannabis. At this size of cultivation, Bophelo operates the largest single cannabis facility in Lesotho, given most of the other licenses issued so far have been granted to ventures between two and three hectares. Halo Labs, moreover, expects to grow its medicinal cannabis according to Good Agricultural and Collecting Practice (GACP) and EU Good Manufacturing Practices (EU GMP), facilitating the export and distribution of its Lesotho based products to international markets (Europe in particular).
Low Costs Are a Mere Sideline, Considering Other Advantages of Lesotho
The low cost of cannabis production in Lesotho is just one aspect of its appeal for investors. It’s the experience of cultivators, who have honed their craft over many years. Indeed, Lesotho, has long been home to a cannabis industry. Illicit or ‘unregulated’ though it may have been, the Basotho(that is the people of Lesotho) have long praised the qualities of CBD extract, which they have craved, in crystal or oil form, to cure just about anything that ailed them, including menstrual cramps (through CBD infused tampons) epilepsy. To this effect, UK Home Secretary (April 2018-July 2019) Sajid Javid amended the cannabis legislation in the country to allow medical practitioners in England, Scotland and Wales to prescribe cannabis-based medicines for those suffering from epilepsy (Source: The Telegraph).
It would not be exaggerated to describe CBD extract as a significant, perhaps even distinguishing, element of Basotho culture. And it would also not be exaggerated to describe the entire African continent as an emerging power in the global cannabis market. Accordingly, given Halo’s growth ambitions, securing a base in one of the most experienced cannabis markets in Africa was not an option – it was an obligatory step. A dedicated Report on the potential of the African cannabis market suggests the latter, alone, could reach a value of USD 7.1 billion by 2023 (Source: Prohibition Partners). And Lesotho is the diamond tip of that market: the King of Lesotho, Letsie III, formally opened a new cannabis processing facility last August.
The King’s presence was clearly intended to send the signal that Government of Lesotho considers the cannabis industry as a significant driver of the country’s overall economic development. Lesotho is eager to grant licenses to producers interested in establishing a base in the country and to support exports of processed higher-margin products worldwide. Still, to discuss Lesotho’s potential exclusively in terms of intercontinental exports would be a gross misrepresentation. The African cannabis market potential alone is a more than sufficient reason for Halo to invest in in Lesotho. According to the aforementioned report, there are more than 83 million annual cannabis users on the African continent and the estimated value of legal and illegal sales is about $37 billion US dollars.
It’s not just the regulatory environment, which has attracted Halo Labs to Lesotho. The geography also presents advantages. Neighboring South Africa and Zimbabwe have also embraced the cannabis industry – though they lag behind Lesotho, which boasts fertile soil, high-altitude mountainous terrain and abundant water sources, needed for successful cultivation of cannabis plants. The fiscal benefits (low taxes) and relatively cheaper labor costs help bring down costs without having to compromise quality.
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.