2017 was a major year for the cannabis oil market as demand for smokeless products started to increase. This trend has become even more significant in 2018 and this is a trend that we expect to become even more pronounced in 2019 and beyond.

Demand for smokeless products continues to increase and has been a driving force behind the demand for cannabis oil. These products are created with cannabis oil and have been found to possess tremendous health benefits and this has also made such products attractive to consumers, especially the older consumers.

Demand for cannabis oils, especially high CBD oil, continues to increase and this is a trend we expect to continue as researchers learn more about the therapeutic value cannabinoids provide. Over the next few years, we expect this trend to become even more significant and consider this to be a very lucrative opportunity.

During the last decade, the amount of people smoking cigarettes has significantly decreased while the number of people using e-cigarettes has skyrocketed. The trend in the cannabis industry is very similar, albeit on a much smaller scale. The legal cannabis industry is in the middle of a major transformation where the joint will be replaced by a capsule, a drink, or a vape pen.

This transition will create significant opportunities for companies focused on producing cannabis oils. We are very bullish on the smokeless product market and have been focused on finding companies that are levered to this.

Halo Labs: A Leading US Cannabis Oil Opportunity

Last month, we issued an update on Halo Labs (HALO:NEO) after the shares commenced trading on the NEO Exchange (owned by Aequitas) and we have been closely monitoring this new opportunity.

Halo Labs has been nothing short of an execution story and has been generating strong revenues from its operations in Oregon since inception. The cannabis oil company is in the middle of a major growth cycle and recently expanded into California and Nevada. These three recreational cannabis markets are significant and we are favorable on Halo Labs’ growth prospects heading into 2019.

Halo Labs has been laser focused on the cannabis oil opportunity and has been executing flawlessly on its business plan. We have been favorable on Halo Labs due to the leverage to three major recreational cannabis markets, the strong fundamentals as well as the growth prospects heading into 2019, the management team which is focused on creating value for shareholders, and the risk-reward profile.

Focused on Increasing Market Share in Nevada

Earlier this month, Halo Labs provided an update on the Nevada opportunity and we have been closely monitoring this aspect of the business. The company has launched three of its leading brands, which are available at five dispensary chains across seven locations. Halo expects to increase the number of dispensary chains offering its products and we are monitoring how this adds value to the bottom-line.

Halo also developed and launched a Private Label brand for Cannacopia and we are impressed with the company’s success in this recreational market. In the first six weeks, Halo has generated more than $166,000 in revenue and expects these number to ramp significantly higher. The company has enough inventory and production capacity to be generating more than $1 million a month in revenue in Nevada and expects to hit these numbers before the end of the year.

The Nevada cannabis market represents a significant growth opportunity and Halo Labs has recognized this. The cannabis oil company is focused on increasing production capacity and currently oversees 2,000 square feet of a production facility that is adjacent to the Las Vegas Airport and is currently being used to assemble vaporizer cartridges. Over the next six months, Halo plans to expand this operation by an additional 6,000 square feet, which will be used to produce additional vaporizer cartridges and concentrates lines in DabTabs, a new technology enabling cannabis users to consume concentrates more easily.

We expect the Nevada market to prove to be a very successful opportunity for Halo Labs and are bullish on the recent developments. The company hit the ground running and we are favorable on the growth prospects in Nevada as we head into 2019.

In the Middle of a Major Expansion

Halo Labs has been capitalizing on the Oregon market since 2016 and is in the middle of a major expansion. The company and has sold more than 2.7 million grams of cannabis concentrates to the Oregon market and is currently shipping more than 100,000 grams a month (has more than 20% market share).

Since inception, Halo Labs has generated more than $20 million in revenue in Oregon and has reported strong growth on a year-over-year basis. The company operates out of a 12,000 sq. ft. manufacturing facility and cultivates cannabis on seven acres of outdoor canopy space.

The California cannabis market is the largest market in the world and Halo Labs is laser focused on this opportunity. Halo Labs expects to manufacturing and selling to this market soon and operates out of a 9,400 square foot licensed facility in Southern California with conditional use permits and licenses. The facility has been issued a temporary state license and we are monitoring how the team executes on this.

The California facility will be a major growth driver and it can produce 10,000 grams of cannabis concentrate per day. At full capacity, the facility will be able to generate $30 million in revenue on an annual basis.

Going forward, Halo Labs is positioned to record incredible growth and we expect to see the team replicate what it accomplished in Oregon. Once these facilities are producing at full capacity, the business should be generating close to $100 million of revenue per year which will make it one of the largest cannabis businesses in the United States.

Enters into US$2 Million Per Month Supply Agreement

Last week, Halo announced a significant agreement with Falcon International Corp. to supply at least 50,000, and up to 70,000, grams of bulk cannabis distillate per week at $7.50 per gram (approx. $1.6 million to $2.2 million in monthly revenue). With initial production to occur in November, the company believes it can produce and supply 70,000 grams per week in the coming months. The contract has an initial term of 6 months and extends indefinitely in rolling 6-month extensions. Halo is finalizing the build out of its California manufacturing facility this month and expects to deliver initial shipments in November.

In Southern California, Halo is currently working towards commencing manufacturing operations from two facilities and distribution from one facility in Cathedral City. The first facility is approx. 1,600 square feet with 500 square feet dedicated for volatile extraction. The second facility which Halo intends to operate is located very close to the first facility and is approx. 7,800 square feet. Halo’s manufacturing operations at this facility will include additional volatile extraction as well as non-volatile extraction and light assembly. Halo also intends to utilize the facility to house its distribution business for Southern California.

Halo Labs has very attractive growth prospects heading into 2019 and we expect this relationship to prove to be a significant value driver. The leverage to California is significant and this growth opportunity is a testament to this. Halo is well positioned to expand its reach in the state and we are favorable on this potential. We are monitoring how the team continues to execute and believe that this will be a major catalyst for the company.

A Company to Watch

Halo Labs has been trading mixed following the initial public offering and we have been closely monitoring this new opportunity. We were surprised by the mixed opening as the company has been executing flawlessly and is well positioned to capitalize on a burgeoning cannabis oil market.

We expect Halo Labs to record strong growth on account of its multi-faceted growth strategy. The company has a significant white label business that supplies raw materials and processing for the creation of ready-to-sell cannabis products. This currently represents 35% of revenue and Halo expects this to be more than 50% by 2019.

Halo Labs has been executing on the Nevada cannabis market and we expect the California opportunity to be a major growth driver going forward. The company has very attractive growth prospects and is in the early innings of a major growth cycle.

We are favorable on the continued execution and are closely monitoring Halo Labs. To stay up-to date with the company, please reach out to support@technical420.com and we will add you to our list.