Halo Collective Inc. (“Halo”) (NEO: HALO) (OTCQX: HCANF) (Germany: A9KN), a vertically integrated multinational cannabis company, today announced that its board of directors has unanimously approved the reorganization (the “International Reorganization”) of its non-U.S. operations, Bophelo Bioscience & Wellness Pty. Ltd. (“Bophelo”) and Canmart Ltd. (“Canmart”), into a newly formed Alberta corporation called Akanda Corp. (“Akanda”). Akanda will be led by accomplished cannabis and corporate finance and banking industry executive Tej Virk.
Akanda will combine the scaled production capabilities of Bophelo, Halo’s Lesotho-based cultivation and processing campus, located in the world’s first Special Economic Zone (SEZ) containing a cannabis growth operation, with distribution and route-to-market through Canmart, Halo’s UK-based fully approved pharmaceutical importer and distributor which supplies pharmacies and clinics within the UK. With a potential maximum licensed canopy area of 200 hectares, Bophelo has scalability that is arguably unmatched in the world today.
“The separation of Halo’s U.S. and international businesses through the formation of Akanda is the right initial step to capitalize on the significant growth opportunities in global cannabis markets and to unlock significant unrealized value for all of Halo’s stakeholders,” said Kiran Sidhu, CEO and Co-Founder of Halo. “Akanda, with a unique strategy and scaled assets, will be positioned to be the low cost supplier of high quality and ethically sourced medical cannabis products to the fast-growing African, UK, European, and other international markets. I am excited to support Tej and Louisa as they build Akanda into a world-class company, leveraging Halo’s trusted cannabis brands, technology, and know-how.”
Tej Virk will join Akanda as CEO from Khiron Life Sciences (TSX-V: KHRN) (OTC: KHRNF) (“Khiron”), where he was President and Managing Director, Europe, establishing Khiron’s medical and consumer packaged goods business in the region. Prior to his time at Khiron, Virk was Managing Director, Europe, for Canopy Growth Corporation (NASDAQ: CGC) (TSE: WEED) (“Canopy”), where he was responsible for driving the multinational expansion of Canopy’s European operations. Working with top research doctors in the UK, Spain, and Germany, he has overseen the launch of multiple medical cannabis products in Europe, including flower for inhalation and oils. Virk has extensive cannabis sector M&A experience and has transacted on numerous IPOs and follow-on capital raises for global cannabis companies, including Canopy and Tilray (NASDAQ: TLRY). At the beginning of his career, Virk spent 15 years in investment banking and capital markets at BMO Financial Group (NYSE: BMO).
“Akanda has the potential to be a truly great international medical cannabis company, cultivating high quality and ethically sourced cannabis at scale, leveraging trusted brands, at the industry’s lowest cost. It is a special honor to be joining Akanda as its first CEO and I do so with an equal sense of excitement and responsibility,” said Tej Virk, CEO and Director of Akanda.
Compelling Strategic Rationale for Reorganization
The Halo board of directors believes that the International Reorganization will result in two distinct businesses with clearly delineated offerings; each well-equipped to capitalize on the significant opportunities in the global cannabis market:
- Halo, a west coast multi-state operator (“MSO”) focused on recreational cannabis, and
- Akanda, focused on supplying high quality and ethically sourced medical cannabis products to fast-growing international markets.
Halo’s management believes that allowing Halo and Akanda to concentrate on their respective end markets should result in better execution and unlocking of value. Akanda’s expected commitment to best practice environmental, social, and governance (“ESG”) operations and disclosures will broaden its potential investor base. Furthermore, as Lesotho is one of the least developed countries in Africa, Akanda is committed to advancing Lesotho’s Sustainable Development Goals “SDGs” as defined by the United Nations in empowering the disadvantaged women and youth in the areas where it operates through supporting programs and projects in education, subsistence farming for food security and self-help programs through its Social Corporate Investment.
Akanda: A Leading Integrated Medical Cannabis Company for International Markets
Akanda’s mission is to provide high quality and ethically sourced medical cannabis products for patients worldwide by combining award-winning genetic strains from Halo, DNA Genetics (“DNA”), and their partners, with the natural purity and pristine climate of its cultivation operations in Lesotho.
The Kingdom of Lesotho is located in Southern Africa and was the first country on the African continent to legalize the cultivation of medicinal cannabis in 2017. With a population of approximately 2.1 million people, Lesotho is a small country with a rich and vibrant culture. The country has a strong and stable political environment, underpinned by a world-class Southern African fiscal and banking system. The abundant supply of water and 300 days of annual sunshine of Lesotho’s Lowlands provide ideal environmental conditions for the outdoor and greenhouse-based cultivation of cannabis of the highest quality. Additionally, the country’s low energy cost and competitive labor market result in low production costs, enabling Bophelo to produce medical cannabis at a materially lower cost than most international producers. Furthermore, Bophelo’s campus is in Lesotho’s Mafeteng region within an emerging Special Economic Zone dedicated by the Kingdom of Lesotho to the cannabis industry.
Bophelo has already begun cultivating cannabis, which will soon be processed into various medical cannabis products (dried flower, oils, and other concentrates) with superior genetics, at a fraction of the cost of many other international cannabis cultivators. Bophelo has consistently generated high THC levels of more than 20% across multiple strains, many under license from DNA in California.
Bophelo is on course to obtain Good Agricultural and Collection Practice compliant status in the coming weeks to facilitate exports to the African continent and international markets including the UK and EU.
Through Bophelo, Akanda will have a vast production capacity with access to up to 200 hectares in Lesotho. Bophelo is currently operating a 14-hectare site with plans to continue to scale capacity aggressively. Bophelo is focused on the build-out of 40,000 square feet of Cravo Green Houses by the end of October and the build-out of an additional 60,000 square feet of Cravo Green Houses by the end of the year. Additionally, Bophelo is working on completing the build-out of a small extraction facility to conduct training of local personnel in the handling of explosive gases (i.e., butane and propane) and flammable liquids (i.e., alcohol and ethanol).
Canmart is positioned to wholesale products derived from trusted North American brands, including DNA. Through Canmart’s vertically integrated global supply chain, UK and European patients will have access to these high-quality, proprietary, branded flower and oil products – manufactured to EU GMP specification.
Accomplished Leadership Team Led by Tej Virk
After conducting an extensive professionally-led executive search, Halo’s board of directors selected Tej Virk as the CEO to lead Akanda. Virk has a solid background and track record in cannabis and the capital markets which makes him uniquely qualified to take the foundational assets of Bophelo and Canmart and transform them into a leading international medical cannabis company.
Joining Virk as Executive Chairman of Akanda is Louisa Mojela, one of Southern Africa’s most influential and successful business leaders, and who hails from the Mafeteng district of Lesotho where Bophelo’s operations are situated. Mojela’s new duties at Akanda will be in addition to her role as the Executive Chairman of Halo and the Group CEO of Wiphold (Women Investment Portfolio Holdings), one of the largest African-based ESG funds to empower black African women, which she co-founded in 1994. She has led capital raises and held directorships at companies such as Sasol Mining (NYSE: SSL), Distell, Ixia Coal, South African Airways, Ericsson SA, Adcorp (SJ: ADR), and Sun International (SJ: SUI), amongst others. In addition to her business dealings, Mojela is focused on various social development initiatives in Lesotho in line with the Sustainable Development Goals of the Government of Lesotho.
Mojela has received numerous accolades for her leadership. Among these, in 2000 she was selected as one of 40 women for the “Leading Women Entrepreneur of the World”; in 2015 she was named one of three “Business Women of the Year – Southern Africa” at the All Africa Business Leaders Awards in partnership with CNBC Africa; and in 2016, she won the European Business Assembly’s “Best Manager of the Year” award at an event held in Switzerland.
Akanda will also appoint Charles Kie as Lead Independent Director and Philip van den Berg as Director. As the Co-Founder and CEO of New African Capital Partners and former Managing Director and CEO of Ecobank Nigeria, Kie brings a wealth of financial and operational expertise to the company. Mr. Kie also currently serves as a non-executive board member at Empower Families for Innovative Philanthropy (ERFIP) – Edmond de Rothschild Foundations – Switzerland. Van den Berg will continue to serve as CFO and Director of Halo while assuming additional board responsibilities at Akanda, given his extensive 30-year career in finance, principally at Goldman Sachs in London.
Commitment to Sustainability and Social Good
A cornerstone of Akanda’s value system is its fundamental commitment to using its operations as a force for sustainability and social good. Akanda will seek to deliver on this promise by driving positive change in wellness, empowering individuals in Lesotho, and by uplifting the quality of the lives of employees and the local communities where it operates – while limiting its carbon footprint. Adhering to best practice ESG operating and disclosure standards is among Akanda’s highest priorities.
“It is my wish and that of the company that the cultivation of cannabis in the Kingdom of Lesotho bring meaningful and positive change to our surrounding communities and the economy of our country, and I believe that Akanda can and will play a leading role,” said Louisa Mojela, Executive Chairman of Halo. “While our first goal must be to become a growing and profitable company, ultimately the success of Akanda will be measured by the development of the community around us. I look forward to devoting my attention to the newly formed Akanda.”
Akanda is dedicated to empowering and uplifting the lives of women, youth, and vulnerable persons, including through job creation, upskilling of workforces, and instilling self-reliance. Bophelo has already undertaken socio-economic initiatives such as the construction of a state-of-the-art learning center and supply of computer equipment at a local school, the construction of a place of worship for the local community, and a small farmer development program. Understanding that Akanda’s stakeholders will include both shareholders and employees, Akanda will maintain a favorable ratio of local/foreigner employees and ensures that its employees earn a living wage and receive attractive benefits.
Additionally, Bophelo maintains a partnership with the Mophuthi Matsoso Development Trust (“MMD Trust”), and organization founded by Mojela to uplift women and vulnerable persons. Bophelo has pledged that 10% of its profits before distribution will go to the MMD Trust, in addition to paying rent for the lands.
Additionally, Akanda is committed to implementing the best practices in corporate governance in accordance with the UK Corporate Governance Code and the King Code of Corporate Governance. The six pillars of corporate governance that Akanda will adhere to include accountability, transparency, leadership, fairness, independent assurance, and stakeholder engagement and sustainability reporting.