Halo Collective Inc. (“Halo” or the “Company“) (NEO: HALO) (OTCQX: HCANF) (Germany: A9KN) has announced the signing of a definitive agreement with Nature’s Best Resources LLC (“Nature’s Best“). This agreement will support the Company’s strategic focus of being the leading, vertically integrated cannabis company that cultivates, extracts, manufactures and distributes high-quality products in the cannabis marketplace.
Nature’s Best’s is a rosin technology and manufacturing company – a solventless cannabis concentrate that has gained significant popularity in Oregon and California over the last few years. Nature’s Best also produces variants of rosin such as ice water hash, taffy, and caviar. Rosin’s honey-like texture is unlike other concentrates due to its extraction processes, allowing the product to possess the same effects and flavor as traditional flower. As trends in the cannabis industry continue to evolve, live rosin has been reported to be one of the fastest-growing sub-sectors of concentrates on the market.1 Nature’s Best also produces premium hash byproducts that can be packaged as hash or sold to infuse edibles, beverages, and pre-rolls.
According to BDS Analytics (BDSA) data, total rosin concentrate sales in California reached $12.47M in 2019, while sales in Oregon reached $7.36M in the same year. In 2020 the market caught fire and rose to $24.81M in California and $17.78M in Oregon, making rosin one of the fastest-growing product segments in cannabis. Between 2019 and 2020, year-over-year growth in California reached 99 percent, while Oregon reached a notable 150 percent. In 2021, rosin sales appear to be growing even faster in California. Between January 2020 and January 2021, data reports show rosin sales were up 127% in California. In the same period, Oregon sales continued to grow by 66% in January 2021 from January 2020.2 Extrapolating these growth rates3 implies that the 2021 rosin market is anticipated to be $62.5M (up from approximately $25M in 2020) in California and $30.6M in Oregon (up from approximately $18M in 2020). At current average retail prices, approximately 86,000 grams and 50,000 grams are anticipated to be sold in California and Oregon, respectively, per month in 2021.4 After acquiring Nature’s Best, management expects Halo’s daily rosin production capacity to be 3,000 grams and running shifts five days per week. The Company anticipates it can satisfy 70% of California’s demand and all of Oregon’s in 2021 at current market sales rates.
The agreement states that the Company will acquire 100 percent of Nature’s Best Resources LLC membership interests in exchange for the issuance of up to 44,047,619 common shares in the capital of the Company (“Common Shares“).
The closing of the agreement is subject to certain closing conditions, including the contribution by the selling member to Nature’s Best of $250,000 and standard operating procedures detailing the manufacturing of rosin products by Nature’s Best. A total of 8,928,571 Common Shares will be issued to Nature’s Best, and 35,119,048 Common Shares will be placed into escrow to be released to the selling member upon the satisfaction of certain predetermined milestones by Nature’s Best.
“The purity and concentration of our rosin products are unparalleled in the marketplace,” said the Chief Strategy Officer of Nature’s Best. “Our mission is to provide premium live rosin to our clients with purity at top of mind. Partnering together with Halo Collective — a powerhouse in the industry — we will be able to further promote our products to individuals so they can experience the most balanced and beneficial way to consume cannabis.”
A total of 8,928,570 Common Shares will be released on or before June 1, 2021, provided the selling member has repaid an outstanding $250,000 owed to Nature’s Best. A total of 14,285,715 additional Common Shares will be released on or before October 1, 2021, provided that specific equipment has been delivered to Nature’s Best. The remaining 11,904,762 Common Shares will be released on or before March 1, 2022, provided that Nature’s Best has produced and sold a batch of hash or hash rosin in each of Oregon and California, measuring 100 grams total.
If any milestone is not satisfied by the date specified for its completion, the corresponding number of Common Shares will be returned to the Company. The Common Shares are subject to volume transfer restrictions that prohibit the sale of any number of Common Shares through any stock exchange that would exceed ten percent of the prior trading day’s total volume of the Common Shares.