During the last decade, the number of people that smoke cigarettes has dramatically decreased while number of people that are using e-cigarettes has skyrocketed. We are currently seeing a similar trend in the cannabis industry (albeit on a much smaller scale), where the joint is being replaced by a vape pen or cannabis infused product and believe that this is one of the most exciting trends in the industry.
We have been laser focused on the companies that are levered to the smokeless product opportunity and believe that this is an area where investors need to be focused. Demand for cannabis oil has been steadily increasing and this is a trend that we expect to continue for years to come.
One of the major catalysts for the cannabis oil market in 2019 will be the expected legalization of derivatives and edible products in Canada the fall. This would be a major catalyst for the companies that are levered to the Canadian cannabis oil market and this is an opportunity that we are excited about.
In the United States, the landscape of the legal cannabis industry is much different, and regulations differ on a state-by-state basis. Due to this structure, certain products might be legal in one state and illegal in another. Although this structure is less straightforward when compared to Canada, the business opportunities that are available for cannabis oil businesses in the United States are much more significant.
When looking at the United States cannabis market, you will see that it is comprised of several massive state markets that are already a multi-billion-dollar market. You will also find that there are several up and coming cannabis markets that are just getting started and represents very attractive growth opportunities. The remaining state markets are either just getting off the ground or still consider cannabis to be a Schedule I substance.
When we look at United States cannabis industry from an investment standpoint, we are focused on companies that are levered to some of the largest as well as some of the fastest growing markets. Specifically, we are most favorable on the markets like California, Colorado Florida, Michigan, Massachusetts, Nevada, New York, just to name a few.
Halo Labs: An Emerging Cannabis Oil Leader
Halo Labs (HALO: NEO) (AGEEF: OTC) is a United States cannabis oil company that we have been excited about and have been closely watching. The company has been executing flawlessly on a major expansion that has significantly improved the fundamental story and we are favorable on the recently reported revenue numbers.
2019 has been a banner year for Halo Labs and the recent developments have been significant. During this time, the company has benefited from its expansion into California and Nevada, and we are favorable on the growth prospects associated with these markets. Prior to this expansion, Halo Labs was only focused on the cannabis oil opportunity in Oregon and generated more than $20 million in revenue since inception.
Following this expansion, Halo Labs reported record revenues for the month of January and then surpassed these numbers in February, setting a new company record. Going forward, we expect these numbers to further improve and this is primarily due to the company’s contract with Cannus, which is expected to add an addition US$1 million (CDN$1.32 million) on monthly revenue with initial shipments starting in March.
During the last year, Halo Labs has significantly advanced its story and we are favorable on the leverage to California. This cannabis market is responsible for more than 60% of the revenue that is generated by the company and expect this number to increase on account of the Cannus contract.
Earlier this week, Halo Labs issued a progress update on its California business and we find the recent developments to be significant. In addition to providing bulk and white label cannabis oils and concentrates to various customers throughout California, the company is now also offering its own branded products to dispensaries through C4 Distro in Southern California.
Through C4 Distro, Halo Labs is executing a targeted launch strategy with key dispensary partners and expects to expand the distribution of its branded products into approximately 200 dispensaries by the end of the second quarter of 2019. In the first two days of launch, C4 Distro has sold Gilt and Hush branded products into 41 dispensaries in Southern California, totaling approx. US$105,000 in sales. The company expects to launch its Gilt branded DabTabs product line to Southern California dispensaries by the week of April 22nd and we are favorable on the initial results.
The California cannabis market represents a significant opportunity and we are favorable on Halo Labs’ leverage to this market. The initial results through C4 Distro are significant and we will monitor how this relationship continues to add value to the overall business.
Halo Labs Reports Record Revenue Numbers…Again
Although Halo Labs has not formally announced quarterly earnings, it has reported revenue numbers for the month of January, February, and March. These numbers have been impressive and each one was a new monthly record for the company. Halo Labs reported to have generated $3.7 million (CAD) in revenue during March. This comes after the company reported $3.4 million (CAD) and $3.1 million (CAD) for the month of February and January, respectively.
2019 has been a stellar year for Halo Labs and the recent developments have been significant. The company has benefited from its expansion into California and Nevada, and we are favorable on the growth prospects associated with these markets. Prior to this expansion, Halo Labs was only levered to the cannabis oil opportunity in Oregon and we are bullish on the expanded focus.
Over the next few months, we expect Halo Labs’ fundamental story to continue to improve and this is something that investors should be watching. When compared to its peers, the company’s valuation is attractive, and we are favorable on its catalysts for growth.
Nevada is an Emerging Opportunity for Halo Labs
Nevada also represents a significant growth opportunity for Halo Labs and we have been bullish on its leverage to this market. Las Vegas attracts more than 44 million tourists on an annual basis and cannabis has become a major attraction for these visitors.
In the fall of 2018, Halo Labs launched its first product offering in Nevada and this has proved to be a very competitive market. Following its initial product launch, the company expanded its distribution by 50% and added 7 additional dispensaries in the first two months of the year. Halo Labs’ products are currently available in 21 of the 64 dispensaries across the state and we are monitoring how the company continues to gain traction in this market.
This month, Halo Labs will be implementing a packaging restage to optimally position and merchandise its Black Hat and Mojave vaporizer cartridge line-up. The company also plans on expanding its vaporizer cartridge assortment and we are favorable on this. Halo Labs has been focused on expanding its product line in Nevada and recently launched the Gilt branded DabTabs. This new product has been generating traction and we will monitor how the Nevada market supports growth going forward.
A Leading US Cannabis Oil Company to be Watching
Halo Labs is led by a management team that has been laser focused on execution and the recent performance speaks for itself. The company has been capitalizing on the California cannabis market and this opportunity continues to exceed our expectations. Halo Labs has been able to secure significant relationships to help support growth in California and this is a trend that we expect to continue.
Over the next few months, we expect Halo Labs’ fundamental story to continue to improve and this is something that investors should be watching. The leverage to California and Nevada is significant and we are bullish on the growth prospects associated with these markets.
Although the market has responded favorably to the recent developments, we continue to be favorable on Halo Labs. When compared to its peers, the company’s valuation is attractive and we are favorable on its catalysts for growth.
The United States cannabis oil market represents a significant opportunity and this is a market we are bullish on. Halo Labs has attractive leverage to this market and if you want to learn more about this opportunity, please contact firstname.lastname@example.org.
Pursuant to an agreement between StoneBridge Partners LLC and Halo Labs we have been hired for a period of 180 days beginning December 4, 2018 and ending June 4, 2019 to publicly disseminate information about (HALO) including on the Website and other media including Facebook and Twitter. We are being paid $6,750 per month for a period of 6 months. We own zero shares of (HALO), which we purchased in the open market. We plan to sell the “ZERO” shares of (HALO) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (HALO) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.