Halo Labs: Building a Cannabis Concentrates Empire

Cannabis concentrates are projected to reach $8 billion by 2022, according to BDS Analytics and Arcview Market Research, making it the fastest growing of the three major segments of the legal cannabis market (flower, concentrates, and edibles). In particular, vaporizers sales soared from less than $100 million in 2014 to more than half of total concentrate sales last year—and they’re expected to hit $6.5 billion in sales by 2022.

Halo Labs Inc. (NEO: HALO, OTC: AGEEF, Germany: A9KN) has emerged as a leader in the concentrates sub-sector with revenue that tripled to $8.7 million last quarter with more than $25 million in total assets. In addition to its growing footprint in concentrates, the company recently acquired a hemp processing facility in mid-April that will power their entry into the cannabidiol (CBD) market and began operations in Lesotho via a strategic partnership.

CFN Media interviewed Halo Labs CEO Kiran Sidhu to discuss the company’s humble origins and its ambitions to become the world’s leading extraction provider.

The Extraction Experts

Halo Labs was founded by an experienced team with blue-chip pedigrees. After its humble beginnings on a farm back in 2015, the company moved into a 16,000 sq. ft. facility the following year and captured one-fifth of Oregon’s concentrates market by 2018. The company is now growing its presence beyond Oregon and into other states where recreational cannabis has been legalized—including Nevada and California.

The company’s founding team included:

• CEO Kiran Sidhu founded a leading EU electronic money institution that was sold to Bancorp (NYSE: TBBK) in 2011, serves as the audit committee chair and director for Namaste (TSX-V: N), and led the IPO of On Stage Entertainment (NASDAQ: ONST).
• COO Andreas Met was a Senior Merchant at Walmart that managed the company’s $5 billion Household Chemicals Desk, as well as the former Head of Sales & Marketing at Golden Leaf (CSE: GLH).
• CFO Philip van den Berg was a director covering European Equities at Goldman Sachs, founded a series of hedge funds, and served as the CFO of Namaste (TSX-V: N) and Golden Leaf (CSE: GLH).

The team began by using volatile extraction methods, but quickly realized that there was no panacea. Rather than focusing on a single volatile or CO2 extraction method, they began using different processes for different products to achieve the best results, always trying to deploy the latest technology and equipment. This exploration helped the company build unparalleled expertise in all major manufacturing processes for cannabis concentrates.

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In addition to extraction, the team developed proprietary chemical processes that could convert THC and CBD into powders for edibles or vaporizing applications. The DabTab™ was born as a no-mess solution for dabbing distillate, shatter, or live resin with precise filling and dosing for medical and recreational applications. The company is also gearing up to launch microencapsulation technology that could pave the way for beverage products.

Innovative Growth Strategy

Many cannabis concentrate companies are focused on building brands. After all, it stands to reason that branding is the best way to build barriers to entry in a market that could become commoditized over time. But, that’s not always the case.

Halo Labs founders’—some of whom have MBAs from prestigious schools like Wharton and Anderson—recognized that nascent markets behave differently than one would expect.

Brands don’t matter as much as the opening price point—or the least costly item in a given category. The company’s approach has therefore been to control the opening price point at each product level on dispensary shelves, which helps maintain its shelf space and encourages trial and repeat business over time.

The best way to control opening price points is through white-labeling products. Many concentrate providers are hesitant to develop white label products for dispensaries, but Halo Labs has embraced the opportunity as a way to capture market share. About 35 percent of its revenues come from white labeled products today, but the team plans to grow that figure to upwards of 50 percent of its business in 2019.

The strategy has also helped it springboard into new markets. The company entered into Nevada’s market where it has already started to experience early successes. Nevada differs from Oregon in that it’s a much more closed market, modeled after the state’s casino industry, which creates valuable barriers to entry.

The company also launched in California where it has already secured multiple long term contracts with a leading distributor. Since its initial entry, California has already become the single largest contributor to its total revenue and profitability.

While it’s focus is on white label products, the company has developed its own set of in-house brands, which provides a valuable proof-of-concept for its white label partners and establishes its own higher-margin opportunities. The company’s DabTabs™ have already proven highly successful, while its new edibles line launched in November 2018 could further enhance average selling prices and boost revenue and profitability.

Click Here to receive a HALO Investor Presentation & additional Company Updates

Looking Ahead

Concentrates represent the fastest growing segment of the cannabis industry, which means that all brands will require cannabis oil at the end of the day.

Halo Labs Inc. (NEO: HALO, OTC: AGEEF, Germany: A9KN) has taken a unique approach to the market by tailoring their methods to match products and seeking to control the opening price point rather than building in-house brands. Investors may want to take a closer look at the stock as its experienced team continues to execute.

Click Here to receive a HALO Investor Presentation & additional Company Updates

For more information, visit the company’s website or download their investor presentation.

Disclaimer

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: http://www.cannabisfn.com/legal-disclaimer/

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.