TORONTO–(BUSINESS WIRE)–Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) today announced that the binding letter of intent (the “LOI”) to acquire all of the common shares of Canmart Limited (“Canmart”) in the United Kingdom has been extended to April 22, 2020. Additionally, Halo is pleased to comment on the recent positive developments on medical cannabis policy and the growth of the UK cannabis market.
Halo to acquire 100% of Canmart a fully licensed operator
- Canmart is now one of the UK’s few fully licensed companies with a Controlled Drugs License to import and distribute licensed Cannabis-Based Products for Medicinal use (“CBPMs”)
- Canmart also holds a wholesale distribution and special license, issued by the Medicines and Health Regulatory Agency (“MHRA”)
- This intended acquisition of Canmart will position Halo as a seed to sale importer and distributor of medical cannabis in the United Kingdom
- Canmart operates a licensed 25,000 square foot third party logistics warehouse in the southeast of England
Halo intends to acquire Canmart for the same number of shares (hence a reduced price) as previously announced
- Aggregate Acquisition price reduced from C$6.0M to C$2.3M1
- Acquisition to be completed through milestone payments as operations develop so as to minimize any cash outlay from Halo during the startup phase
Recent regulatory developments should speed up the UK medial cannabis market growth
- The Home Office recently changed import restrictions to improve import times of cannabis-based products for medicinal use to avoid treatment delays2
- Licensed wholesalers will now be able to import larger quantities of CBPM’s as well as hold supplies for future use by patients with prescriptions
- New push by independent scientific body Drug Science’s Project Twenty21, to enroll 20,000 medical cannabis over a two year period3
Project Twenty21 will subsidize prescriptions to promote prescription and use in the UK with the end goal of getting NHS reimbursement
- Will study cannabis’s effects on patients who have either chronic pain, epilepsy, multiple sclerosis, post-traumatic stress disorder, Tourette’s syndrome, anxiety disorder or who have had a history of substance misuse.
Kiran Sidhu, CEO and Co-Founder of Halo comments, “We are extremely pleased with the recent improvements in the UK medical cannabis market and are excited to move forward with the Canmart acquisition. The United Kingdom is projected to be the second largest legal cannabis market in Europe. Now that import restrictions are lessened we expect to see near term growth in the number of medical cannabis prescriptions in the UK.” He continued, “Canmart will provide Halo the groundwork to build out the infrastructure in Europe through a cash neutral deal paid in shares as milestones are reached. We aim to sign a definitive agreement with Canmart by the end of March.”
Canmart Will Be A Launch Pad For Halo in Europe
Halo intends to use Canmart as a launchpad to acquire, partner and apply for further national licenses within Europe. Canmart additionally gives the Company direct market access for its products made from medical cannabis grown at the Bophelo Bioscience and Wellness Private Limited’s 205-hectare cannabis cultivation zone (“Bophelo”) in Mafeteng, Lesotho. Via Canmart, which is approved for import into the UK, Halo anticipates commencing exports from Bophelo and seed to sale distribution in the UK towards the second half of 2020, subject to regulatory approvals.
Canmart already holds 5 licenses in the UK for the important and distribution of Cannabis Based Medicinal Products:
- Wholesale Distribution
- Manufacturer’s “Special License”
- Wholesale Distribution Authorization for medicinal products in humans
- Misuse of Drugs Regulations 2001 (Regulations 5) for a controlled substance containing Cannabis
- Home Office Controlled Drugs License
Improving UK Market
The UK Home Office and the Department of Health and Social Care announced changes to the restrictions surrounding the import and distribution of cannabis and CBMP’s in the UK. Restrictions have been reduced considerably to help patients obtain their medicinal cannabis in a timely manner. Licensed wholesalers will now be able to import larger quantities of CBMP’s as well as be able to hold supplies for future use by patients. By allowing greater quantities to be imported combined with the ability to hold more than current prescriptions on hand, licensed wholesalers will be able to meet the demand of patients with ease. Patients will now receive their prescriptions within days instead of months.
Prohibition Partners expects the UK market to increase and by 2024, the UK medicinal cannabis market is predicted to be worth nearly US$1.3 billion, servicing nearly 340,000 active patients. Data from the British Medical Journal on patient numbers for 52 conditions deemed potentially treatable with medical cannabis indicates a potential patient base of over 4 million people. Prohibition Partners estimates that up to 1% of the UK population could be medical cannabis patients by 2028, as British clinical trials advance and UK clinicians become more informed on medicinal cannabis.
Darran Quinn, Managing Director of Canmart, states “We are proud to be one of the few facilities in the UK that is fully licensed to import and distribute CBPMs. We are commencing operations this month with an aim to fulfill hundreds of prescriptions over the next six months. With Halo’s acquisition of Bophelo days away, high quality CBPMs could be imported from Bophelo into the UK by year end.” He continues, “ The owners of Canmart believe in Halo’s vision and as such we moving forward with our originally structured deal. As Halo acquires Bophelo that is partnering with OG DNA Genetics, Canmart should have a strategic advantage over our competitors both in quality and cost to serve patients in the United Kingdom.”
Halo is a leading cannabis cultivation, manufacturing, and distribution company that grows and extracts and processes quality cannabis flower, oils, and concentrates and has sold over 5 million grams of oils and concentrates since inception. Additionally, Halo has continued to evolve its business through delivering value with its products and now via verticalization in key markets in the United States and Africa with planned expansion into European and Canadian markets. With a consumer-centric focus, Halo markets innovative, branded, and private label products across multiple product categories.
Recently, the Company entered into binding agreements to acquire a dispensary in Los Angeles, 3 KushBar branded dispensaries, 5 development permits in Alberta Canada, and Canmart Limited which holds wholesale distribution and special licenses allowing the import and distribution of cannabis based products for medicinal use (CBPM’s) in the United Kingdom. Halo is led by a strong, diverse management team with deep industry knowledge and blue-chip experience. The Company is currently operating in the United States in California, Oregon, and Nevada while having an international presence in Lesotho within a planned 205-hectare cultivation zone via Bophelo as well as planned importation and distribution in the United Kingdom via Canmart.
For further information regarding Halo, see Halo’s disclosure documents on SEDAR at www.sedar.com.
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”. The forward-looking information and forward-looking statements contained herein may include, but is not limited to, statements regarding the acquisition of Canmart and Bophelo, as well as the development of the UK cannabis market.
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. 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.
1 Based on Halo’s NEO closing price on March 2 of C$0.135