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.
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.
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Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such forward-looking information includes that HALO Labs Inc will be a big, successful company in the cannabis sector; that cannabis use and sales will grow and HALO’s sales along with it; HALO’s intended acquisition of various foreign companies and expansion into the US market; that extraction is and will continue to be a fast growing and profitable sector of the cannabis industry; that HALO will reach $48M in revenues in 2019; HALO’s plans to produce concentrates and sell them in various locations throughout the world; that HALO could be granted licenses to expand; and that it will be able to carry out its business plans.
Readers are cautioned to not place undue reliance on forward-looking information. Forward looking information is subject to a number of risks and uncertainties that may cause actual results or events to differ materially from those contemplated in the forward-looking information, and even if such actual results or events are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on HALO. Such risks and uncertainties include, among other things: that a regulatory approval that may be required for the intended acquisitions and subsequent sales are not obtained or are obtained subject to conditions that are not anticipated; growing competition for intended acquisitions in the cannabis industry; potential future competition in the markets HALO operates for sales; competitors may quickly enter the industry; general economic conditions in the US, Canada and globally; the inability to secure financing necessary to carry out its business plans; competition for, among other things, capital and skilled personnel; the possibility that government policies or laws may not permit legal cannabis sales or growth or that favorable laws in place may change; HALO not adequately protecting its intellectual property; interruption or failure of information technology systems; the cannabis market may not grow as expected; HALO’s technology may not achieve the expected results and its accomplishments may be limited; even if it is granted patents, it may not have success at licensing its technologies or sell its products at the rate expected; planned acquisitions and partnerships may not materialize because of inability to agree on terms with prospective partners or targets; HALO’s business plan also carries risk, including its ability to comply with all applicable governmental regulations in a highly regulated business; incubator risk investing in target companies or projects which have limited or no operating history and are engaged in activities currently considered illegal under US federal and foreign laws; and other regulatory risks relating to HALO’s business, financings and strategic acquisitions, including securities laws, trade rules, and foreign country regulation that is not the same as Canadian or US regulations.
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