Cannabis concentrates have been one of the hottest opportunities for cannabis businesses as demand for these products continues to increase. This is a trend that we have been closely following as it was been creating massive value for the companies that are capitalizing on the cannabis concentrate opportunity.
Halo Labs (HALO: NEO) (AGEEF) is the perfect example of a company that has been benefiting from the increasing demand for cannabis concentrates and we have been monitoring its United States expansion. After initially setting up a successful operation in Oregon that has generated more than $20 million in revenue since inception, Halo Labs has expanded into California and Nevada which represents two of the most attractive cannabis markets in the United States.
Halo Labs Shows Massive Growth
Earlier this month, Halo Labs released first quarter financial and operational results that showed massive growth and these numbers were very impressive. During the quarter, the company generated more than $8.7 million in revenue which represents a more than 300% increase over the same period last year. Halo Labs has significant growth prospects and we expect to see the company report strong growth on a quarter-over-quarter basis.
Halo Labs’ recent entrance into the California cannabis market has been a significant value driver for the overall business. The company is focused on expanding its position in this market and we are bullish on the growth prospects associated with the current expansion. One of the biggest upcoming catalysts for Halo Labs will be the completion of its 2nd Cathedral City location, which will significantly increase overall capacity and add the ability to deliver directly to dispensaries.
One of the reasons why we are favorable on Halo Labs is due to the focus on selling higher margin products like Dab Tabs Dablets and edibles in burgeoning cannabis markets like California and Nevada. The company has been laser focused on one of the fastest growing and most attractive verticals of the cannabis industry and we believe that it has plenty of upside from here.
Halo Labs is in the middle of a major expansion targeting high growth markets and we believe that the management team has positioned the company for growth well into the future. Over the coming months, Halo expects to release updates on new distributor agreements to increase distribution of bulk and branded products further fueling its success in the California market. The company has already signed bulk supply agreements with Falcon and Ikanik Farms, and we are excited about this opportunity.
CBD Could be a Significant Growth Driver
One of the primary reasons for Halo Labs’ massive month-over-month growth is due to it benefiting from having several revenue streams. These streams are associated with different state markets and we expect the company to report even more significant growth over the coming months. Halo Labs has significant potential catalysts for growth, and we are favorable on the focus on the cannabidiol (CBD) opportunity.
CBD is one of the most exciting trends in the cannabis industry and we believe that this market is reaching an inflection point. Last month, Halo Labs announced a binding letter of intent to secure a purpose-built hemp processing facility in Southern Oregon to expand its production capabilities into manufacturing CBD isolate and distillate. The company expects to commence production in the third quarter of 2019 and we are bullish on this opportunity.
Once the new facility is operating at full capacity, Halo Labs expects to be able to process approx. 10,000 kilograms and yield between 700 and 900 kilograms of high-grade distillate or isolate per month. This represents a multi-million-dollar opportunity and Halo Labs could generate more than $3.5 million in revenue per month if it sold the end product at current wholesale prices. This could be a significant revenue stream for the company, and we will monitor this opportunity.
The Brightfield Group expects the size of the CBD market to grow from $594 million in 2018 to $22 billion by 2022. Halo is well positioned to benefit from the increasing demand for CBD and this is something that we are excited about. We believe that the market is not taking this potential revenue driver into account and are of the opinion that this aspect of the business is significant and further enhances the company’s growth profile.
A Proven Cannabis Concentrate Multi-State-Operator
During the last year, the US multi-state-operator (MSO) has been one of the most popular investing themes. Although Halo Labs has leverage to several burgeoning markets in the United States, the market does not value the company like an MSO and believe that this opportunity has been flying under the radar. Over the next year, we expect to see the company enter new markets and improve its position in California, Nevada, and Oregon.
Halo Labs is a proven operator when it comes to cannabis extraction and the company provides its cannabis concentrates on a white label basis and on a business-to-business basis. We are bullish on the entry into the CBD market due to the company’s existing position in California, Nevada and Oregon, and expect it to leverage its manufacturing and distribution capabilities to expand and pursue additional opportunities.
So far this year, Halo Labs has been a strong performer and we believe that the market is starting to wake up to this opportunity. The company is led by a management team with a proven track record and we find this to be one of the most important parts of the story. To learn more about the burgeoning United States cannabis concentrate company, please reach out to firstname.lastname@example.org.
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