Halo Collective Inc. (“Halo” or the “Company”) (NEO: HALO) (OTCQB: HCAND) (Germany: A9K0) today announced a significant expected increase in yield and number of strains across its 11 acres of owned or contracted outdoor cultivation in the state of Oregon, which is almost four times the flower harvested at the Company’s owned or managed Oregon farms during the 2020 season. Sungrown flower harvested at Company’s farm during the 2020 season which started in October 2020 and ended in April 2021 was approximately 6,396 pounds compared to an expected yield of 25,000 pounds this season, a 391% increase year over year. The Company is estimating, beginning November 2021 through May 2022 (the “7-Month Period”), that the Company’s newly formed Oregon flower sales force is expected to sell 25,000 pounds (11,400 kilos) of sungrown high quality flower cultivated at the Company’s own and managed farms which is expected to result in up to $7.3 million of incremental net revenue and up to $5.1 million of incremental pre-tax cash flow1 over the 7-Month Period (the “Sungrown Flower Projections”). The Company’s Sungrown Flower Projections do not include sales of the Company’s greenhouse or indoor flower cultivated in Oregon, as well as flower sales from over 100 independent cannabis farmers that Halo wholesales for within Oregon. Halo’s total Oregon flower sales from all sources has averaged approximately $1 million of monthly net revenue over the past six months and has been the Company’s fastest growing sales category in Oregon this year.2 With the addition of the Company’s sungrown flower, Halo is targeting $1.9 million of monthly net revenue in all Oregon flower sales from November 2021 onward; an approximately $900,000 planned increase in monthly net revenue ($10.8 million annualized increase). This potential $10.8 million annual increase is initially projected to come primarily from the sungrown high quality flower cultivated at the Company’s own and managed farms. In order to fuel supply past April 2022, the Company plans to increase its greenhouse and indoor cultivation footprint and leverage the Company’s network of independent cannabis partners.
“With Halo’s new Oregon flower sales force led by Jessie Garner, the Company’s top performing salesperson, we are targeting approximately $1.9 million of monthly net revenue in Oregon flower sales from November 2021 onward which is nearly a four times increase from the equivalent 2020 harvest,” commented Halo’s CEO, Kiran Sidhu. “We have been steadily increasing our genetic library with unique strains to meet the sophisticated consumer demands in the Oregon market. We currently offer 70 strains, including select strains from Williams Wonder, DNA Genetics, and TerpHogz. Flower is the largest cannabis category in the Oregon market representing over 45% of dispensary sales in 20213. According to BDSA, retail flower sales in August in Oregon totaled $42.1 million. Starting this outdoor season, we aim to be the largest wholesaler of flower in Oregon with close to 9.5% share4 of the market in the state.”
Expected highlights from Company’s sungrown harvest include:
- A Record Harvest Expected over this season of an estimated 31,000 pounds (14,100 kilos) of dried cannabis, including A buds, smalls, and trim with a wholesale value expected of $ 7.5 million5. In addition, the Company expects to harvest 1,600 pounds of fresh frozen cannabis with an expected wholesale value of $1.3 million6. This estimates the expected total wholesale value of this year’s sungrown harvest including flower, trim and fresh frozen to be approximately $8.8 million.
- Significant Cultivation Expansion through 2022. The Company’s Oregon operations include East Evans Creek, Winberry Farms, William’s Wonder Farms, and the recently acquired Food Concepts located at the Pistil Point facility in Portland. This gives Halo over 12 acres of outdoor, greenhouse, and indoor canopy in 2021 compared to six acres of only outdoor in 2020. Over the next six months, Halo plans to add 40,000 square feet of greenhouses and 10,000 square feet of indoor within Oregon to keep the sales pipeline continually supplied.
- More and Better Genetics. Halo built a large and more modern nursery at East Evans Creek, allowing the Company to increase its genetic library to 70 different strains that management has selected based on Oregon’s test results and market demand, including those under license from DNA Genetics and TerpHogz and the Williams Wonder.
- Expected Incremental Net Revenue and Pre-Tax Cash Flow (not previously guided). The fall harvest, the largest of three expected each year, should cover the raw material needs for Halo in Oregon for up to nine months. Also, the harvest should add up to $7.3 million of incremental net revenue and up to $5.1 million of incremental pre-tax cash flow during the 7-Month Period, which has not previously been included in the Company’s financial outlook.
- A New Dedicated Sale Force for Oregon Flower Sales. Under the stewardship of Dustin Jessup, the Company’s Chief Revenue Officer, Jesse Garner, Halo’s top-performing salesperson, is leading a new sales division focused exclusively on flower sales given the substantial increase in supply both from Halo’s farms and the Company’s over one hundred farm partners.