Halo Collective Announces Westwood Dispensary Completion, Local Inspections Passed, and Planned Opening for Second Budega™ in California
All Figures in U.S. Dollars Unless Otherwise Stated
Toronto, Ontario – April 12, 2021 – Halo Collective Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: HCANF, Germany: A9KN) today announced that its Budega Westwood Dispensary passed its Los Angeles inspection and is expected to open within 30 days.
The Budega Westwood location is perfectly located nestled in between Westwood to the west and Beverly Hills to the east, right off of one of LA’s most traveled and famous thoroughfares for locals and visitors, the Santa Monica Boulevard (10461 Santa Monica Blvd) and within two miles of the University of Los Angeles California campus. The facility is leased and near complete with renovations of its approximately 1,500 square foot prime retail space with the potential to expand the site to up to 3,000 square feet.
On Friday, March 31, 2022, Budega Westwood successfully passed the local Department of Cannabis Regulation (“DCR”) final site inspection and has been approved to proceed with the final state license review citing no violations. Budega Westwood is now into final state licensing administrative review and once opened will mark the second of three planned Los Angeles dispensaries following the opening of the Company’s first dispensary in the Arts District of North Hollywood in March 2022.
Budega Westwood will follow the retail cadence of NOHO by continuing to offer our vast product assortment exceeding 1,000 SKUs, including many top-tier California brands such as Jungle Boys, Jeeter, Cookies, and Kiva as well highlight Budega’s vertically integrated line of branded products, which remain amongst the top selling SKU’s at Budega NOHO. In addition, the store will also stock Halo’s Hush™ branded cartridges, gummies, and pre-rolls. The store plans to operate Monday through Sunday from 7 a.m. to 10 p.m. Visit www.budega.com for more information or to place your order online.
It is with great pride that we announce our introduction into southern California’s retail cannabis market is proving to be successful. By means of analyzing internal reports, guest feedback and participation in our various proprietary programs and through measurement of both the customer frequency and sales trajectory, our NoHo location is exceeding the initial internal estimates for financial performance. Our emphasis on creative market share capture, development of trend setting customer loyalty programs and our front line execution, combined with a strong product assortment and service standards validates that cannabis consumers are receptive to the different experience that we are delivering and making Budega the place to shop, work and transact for locals and visitors.
“The expansion of our Budega concept furthers our presence in the fast-growing, under-served California market,” commented Kiran Sidhu, Halo’s Chief Executive Officer. “We have put significant effort into building a differentiated retail concept, creating a superior experience for our customers with a wide variety of high-quality products to serve discerning consumers and meet any need. We expect the Budega brand to achieve a leadership position amongst cannabis dispensaries,” stated Kiran Sidhu, CEO of Halo.
California is the highest-grossing state for cannabis retail sales in the United States, with legal retail sales of $5.2 billion in 2021, up 17% from 2020. California is projected to gross $7 billion by 2025. California is the largest legal cannabis market in the United States and is less saturated than other mature retail markets. In Los Angeles County, there are approximately 250 licenses for a population of 3.9 million across 500 square miles, compared to Oregon, which has 4.3 million people and approximately 800 stores across 98,466 square miles. There are roughly two licenses per 100,000 people in California, one of the lowest rates in the nation among states that support legal recreational sales. By comparison, Oregon has 18 retail shops for every 100,000 residents. Colorado boasts a similar ratio, and Washington state’s rate is more than triple California’s.
As Halo continues to implement its seed-to-sale verticalization strategy, owning and operating retail businesses, particularly in California, is key to increasing value by controlling distribution and adding operating margin. As such, the closing and acquisition of 66 ⅔% of the Westwood Los Angeles dispensary businesses and previously 100% of its respective management company marks another milestone.
Westwood Transaction Details
Further to its press release dated February 6, 2021, the Company has completed the acquisition of all of the issued and outstanding membership interests of ZXC11 Company Majority Member (as defined below) (approved social equity applicant which owns 66 ⅔% of ZXC11 LLC (“ZXC11”)), in a strategic move to further the Company’s presence in California’s growing cannabis market.
A subsidiary of PSG Coastal LLC merged with the limited liability company that owns 66 ⅔% of ZXC11 (the “ZXC11 Company Majority Member”). ZXC11 Company Majority Member survived, and PSG, as a result, owns 100% of ZXC11 Company Majority Member. The other 33 1/3% of ZXC11 continues to be owned by the social equity applicant (which is required under the DCR regulations).
The consideration payable by Halo in connection with this merger is an aggregate of 390,769 Halo shares, issuable as follows:
- 236,903 Halo shares were issued on March 2, 2021 as a non-refundable pre-closing deposit upon acceptance of the transaction by NEO Exchange, of which 168,519 will be subject to the Pooling Agreement; and
- 153,865 Halo shares were issued at the closing of the merger.
The merger agreement includes customary representations and warranties, closing conditions, and indemnification provisions. In addition, upon closing, Halo issued an aggregate of 11,539 Halo shares to an arm’s length party as a finder’s fee, and such shares will be subject to a statutory hold period of four months and one day.
 Downloaded from DCC license database https://search.cannabis.ca.gov/.
 Downloaded from https://www.oregon.gov/olcc/marijuana/Pages/Marijuana-Market-Data.aspx
 Population figure sources include US Census Bureau. Square miles are sourced from https://worldpopulationreview.com/us-cities/los-angeles-ca-population.
About Halo Collective Inc.
Halo is a leading, vertically integrated cannabis company focused on the West Coast of the United States and operates other emerging businesses in CBD and non-psychotropic mushroom functional beverages. In its cannabis operations, the Company cultivates, extracts, manufactures, and distributes quality cannabis flower, oils, and concentrates and has sold hundreds of millions of grams of cannabis in the form of flower, pre-rolls, vape carts, edibles, and concentrates since inception. The Company sells a portfolio of branded cannabis products including its proprietary Hush™, Winberry Farms™, Williams Wonder Farms, and Budega™ brands, and under license agreements with Papa’s Herb®, DNA Genetics, Terphogz, and FlowerShop*.
In Oregon, Halo has a combined 14 acres of owned and contracted outdoor and greenhouse cultivation. The Company also operates Food Concepts LLC, a master tenant of a 55,000 square foot indoor cannabis cultivation, processing, and wholesaling facility in Portland.
In California, Halo maintains licenses for extraction, manufacturing, and distribution. The Company has partnered with Green Matter to purchase the Bar X Farm in Lake County and plans to develop up to 63 acres of cultivation, comprising one of the largest licensed single-site grows in California. Halo has opened its first dispensary in Los Angeles under the Budega™ brand in the Arts District of North Hollywood and plans to open two more in Hollywood, and Westwood by the 2nd quarter of 2022.
Halo is also expanding into other consumer health and wellness categories expected to experience rapid growth in consumer demand, including functional supplements such as nootropic nutraceuticals. The Company has recently acquired H2C Beverages, a company focused on cannabinoids and non-psychotropic mushroom functional beverages, and entered into a distribution and manufacturing agreement with SWAY Energy Corporation (formerly Elegance Brands Inc.), to propel the national distribution of beverages, capsules, and topical supplements under H2C and Halo’s functional mushroom brand, Hushrooms.
Halo has acquired a range of software development assets, including CannPOS, Cannalift, CannaFeels, and a discrete sublingual dosing technology, Accudab. The Company intends to reorganize these entities (including their intellectual property and patent applications) into a subsidiary called Halo Tek Inc., and to complete a distribution of the shares of Halo Tek Inc. to shareholders on record, at a date to be determined.
Halo also operates three Kushbar retail cannabis stores located in Alberta, Canada.
Outside of North America, Halo is the largest shareholder of Akanda Corp. (NASDAQ: AKAN) currently owning 44% of the common shares. Akanda is an international medical cannabis and wellness platform company seeking to help people lead better lives through improved access to high quality and affordable products. Akanda is building a seed-to-patient supply chain, connecting patients in the U.K. and Europe with diverse products, including cannabis products cultivated at its competitively advantaged grow operation in the Kingdom of Lesotho and with other trusted third-party brands. Akanda’s initial portfolio includes Bophelo Bioscience & Wellness, a GACP qualified cultivation campus in the Kingdom of Lesotho in Southern Africa, and CanMart, a UK-based fully licensed pharmaceutical importer and distributor which supplies pharmacies and clinics within the U.K. Halo’s stake in Akanda is valued atapproximately $116.4 million USD, based on the April 12th, 2022 NASDAQ closing price.
For further information regarding Halo, see Halo’s disclosure documents on SEDAR at www.sedar.com.
Halo Collective Inc.
Cautionary Note Regarding Forward-Looking Information and Statements
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Halo’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Halo’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. Forward-looking information may relate to anticipated events or results including, but not limited to the opening of Budega Westwood and the prospects thereof, management’s plans regarding its portfolio of cannabis businesses, the expected contribution from the Company’s California dispensaries and the expected opening date thereof, the time and place for the Company’s earnings call, the expected size and capabilities of the final facility planned at Ukiah Ventures, the size of Halo’s planned cultivation facility in Northern California and the proposed spin-off by Halo Tek Inc.
By identifying such information and statements in this manner, Halo is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, Halo has made certain assumptions. Although Halo believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Among others, the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: inability of management to successfully integrate the operations of acquired businesses, changes in the consumer market for cannabis products, changes in the expected outcomes of the proposed changes to Halo’s operations, delays in obtaining required licenses or approvals necessary for the build-out of the Company’s cannabis operations, dispensaries or Canadian operations, the proposed spin-out with Halo Tek Inc., delays or unforeseen costs incurred in connection with construction, the ability of competitors to scale operations in Northern California, delays or unforeseen difficulties in connection with the cultivation and harvest of Halo’s raw material, changes in general economic, business and political conditions, including changes in the financial markets; and the other risks disclosed in the Company’s annual information form dated March 31, 2022 and other disclosure documents available on the Company’s profile at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Halo does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to Halo or persons acting on its behalf is expressly qualified in its entirety by this notice.
Third Party Information
This press release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.