Earlier this year, we issued an update on Halo Labs (HALO: NEO) (AGEEF: OTC) and hopefully you took notice of this. Last week, the United States cannabis oil company issued a strong update for the month of January and we are bullish on the growth prospects going forward.
For our readers who are not aware of Halo Labs, the company has been nothing short of an execution story and has been capitalizing on the cannabis oil opportunity. Halo Labs was initially focused on the Oregon cannabis market and has since expanded into California and Nevada. We are favorable on the company’s leverage to these burgeoning cannabis markets and have been closely monitoring this opportunity.
Announces Record Monthly Revenues
Earlier this month, Halo Labs announced a major milestone and reported to have generated approx. US$2.6MM (CDN $3.4MM) in revenue during the month of February. This is significant and represents a new monthly record for the company. The primary reason for the improvement in monthly revenue was the launch of commercial operations at the company’s new state-of-the-art cannabis extraction facility in Cathedral City, California.
When Halo Labs first announced that it would be expanding into California, we viewed this as a major potential growth driver. We are bullish on the growth prospects associated with this asset and the initial success that the company has had. Going forward, Halo Labs expects to generate significantly more revenue from this facility and believes that it utilized approximately 50% of its capacity at the facility during January.
Halo Labs expects this facility to be operating at full capacity by quarter end and we are favorable on the growth prospects going forward. The company said that it is ramping up production capacity on a weekly basis and we will monitor how the numbers continue to increase.
Secures Strategic Relationship with MedMen
Last month, Halo Labs entered into a strategic relationship with MedMen Enterprises (MMEN.CN) and we are favorable on the growth prospects associated with this. Through this relationship, MedMen will merchandise and sell DabTabs at all of its dispensaries in Nevada and California.
DabTabs are proprietary ceramic discs that store a pre-measured dose of cannabis oil and they will initially launch under Halo’s Gilt brand. This unique brand is being introduced by Halo to appeal to premium recreational consumers and we are favorable on this focus. There is a big market for premium cannabis products and we expect this relationship with MedMen to help the product gain traction.
MedMen has tried to established itself as the “Apple store of the cannabis industry” and we think this is the perfect relationship for a company that is selling a premium product. In late January, the DabTabs launched in Oregon and we are favorable on the continued execution by the company. This is an exciting growth opportunity and we will monitor how it supports revenue growth going forward.
Continues to Execute on the Nevada Cannabis Market
Last year, Halo Labs expanded its reach and entered into the Nevada cannabis market. The company has been executing flawlessly on this burgeoning cannabis market and has been generating strong revenues. We expect this market to become a bigger value driver as the products continue to be picked up by retailers.
We are favorable on the relationship with MedMen when it comes to the Nevada market. Halo Labs’ Nevada manufacturing and sales operations have steadily ramped higher and the company has enough inventory and production capacity to generate up to $1 million in revenue per month. Halo Labs products are currently sold in 21 of the states 64 dispensaries in the Nevada market.
We have been impressed with the initial results in Nevada and will monitor how the team continues to execute. With more than 44 million tourists visiting Las Vegas every year, this is an attractive cannabis market to be levered to and we think the company has done a great job at picking strategic partners.
A High-Growth Opportunity that is Flying Under the Radar
Although Halo Labs has been generating significant revenues and has been executing, the shares are trading at a significant discount to its peers. We think the market under-appreciates the growth prospects and believe that the company is flying under the radar.
When it comes to being focused on high-growth cannabis markets, Halo Labs has done a great job and we expect revenue numbers to continue to improve. The company is in the early innings of a major growth cycle and this is an opportunity to be watching.
To learn more about Halo Labs or to be added tour email list, please contact us at email@example.com
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