News - Halo Collective reorganizing non-U.S. operations
Halo Collective reorganizing non-U.S. operations
2021-06-22 07:11 ET - News Release
Ms. Louisa Mojela reports
HALO COLLECTIVE ANNOUNCES REORGANIZATION OF INTERNATIONAL ASSETS TO CREATE AKANDA, A LEADING AFRICAN MEDICAL CANNABIS COMPANY
Halo Collective Inc.'s board of directors has unanimously approved the reorganization of its non-U.S. operations, Bophelo Bioscience & Wellness Pty. Ltd. and Canmart Ltd., into a newly formed Alberta corporation called Akanda Corp. 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 United Kingdom-based fully approved pharmaceutical importer and distributor, which supplies pharmacies and clinics within the U.K. 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, chief executive officer 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, U.K., 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."
Mr. Virk will join Akanda as CEO from Khiron Life Sciences, 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, Mr. Virk was managing director, Europe, for Canopy Growth Corp., where he was responsible for driving the multinational expansion of Canopy's European operations. Working with top research doctors in the U.K., Spain and Germany, he has overseen the launch of multiple medical cannabis products in Europe, including flower for inhalation and oils. Mr. Virk has extensive cannabis sector merger and acquisition experience and has transacted on numerous IPOs (initial public offerings) and follow-on capital raises for global cannabis companies, including Canopy and Tilray. At the beginning of his career, Mr. Virk spent 15 years in investment banking and capital markets at BMO Financial Group.
"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 honour to be joining Akanda as its first CEO and I do so with an equal sense of excitement and responsibility," said Mr. 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 multistate operator (MSO) focused on recreational cannabis;
- 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 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 labour 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 (tetrahydrocannbinol) levels of more than 20 per cent 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 U.K. and European Union.
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 buildout of 40,000 square feet of Cravo greenhouses by the end of October and the buildout of an additional 60,000 square feet of Cravo greenhouses by the end of the year. Additionally, Bophelo is working on completing the buildout of a small extraction facility to conduct training of local personnel in the handling of explosive gases (such as butane and propane) and flammable liquids (such as 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, U.K. 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 Mr. Virk
After conducting an extensive professionally-led executive search, Halo's board of directors selected Mr. Virk as the CEO to lead Akanda. Mr. Virk has a solid background and record in cannabis and the capital markets, which make him uniquely qualified to take the foundational assets of Bophelo and Canmart and transform them into a leading international medical cannabis company.
Joining Mr. 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. Ms. 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, Distell, Ixia Coal, South African Airways, Ericsson SA, Adcorp and Sun International, amongst others. In addition to her business dealings, Ms. Mojela is focused on various social development initiatives in Lesotho in line with the sustainable development goals of the government of Lesotho.
Ms. 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, Mr. 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. Mr. van den Berg will continue to serve as chief financial officer 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 Ms. 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 work forces and instilling self-reliance. Bophelo has already undertaken socio-economic initiatives such as the construction of a state-of-the-art learning centre 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 favourable ratio of local/foreigner employees and ensure that its employees earn a living wage and receive attractive benefits.
Additionally, Bophelo maintains a partnership with the Mophuthi Matsoso Development Trust (MMD Trust), an organization founded by Mojela to uplift women and vulnerable persons. Bophelo has pledged that 10 per cent 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 U.K. 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.
About Akanda Corp.
Akanda is a recently formed wholly owned subsidiary of Halo. Following completion of the international reorganization, it is anticipated that Akanda will be an international medical cannabis company, cultivating ethically sourced cannabis of the highest quality at scale, leveraging trusted brands, at a low cost. It is expected that Akanda's portfolio will include key assets such as Bophelo and Canmart, with the intention to expand the platform to include other complementary medical cannabis companies.
Bophelo operates a campus in the Kingdom of Lesotho focused on the cultivation and production of medical cannabis products for international export. Akanda believes Bophelo to be one of the largest licensed marijuana cultivation sites in the world with up to a maximum of 200 hectares of canopy. Through partnerships and licensing agreements with award-winning seed producers, including OG DNA Genetics, Bophelo will provide Akanda with a low-cost gateway to the broader African continent and access to international markets. Canmart is one of a limited number of fully approved importers and distributors of medical cannabis products in the U.K. market with supply and distribution to pharmacies and clinics throughout the U.K. Canmart is committed to providing a range of the best possible cannabis-based medicinal products sourced from around the world.
About Halo Collective Inc.
Halo is a leading, vertically integrated cannabis company that cultivates, extracts, manufactures and distributes quality cannabis flower, oils and concentrates, and has sold approximately nine million grams of oils and concentrates since inception. Halo continues to evolve its business and scale efficiently, partnering with trustworthy leaders in the industry, who value Halo's operational expertise in bringing top-tier products to market.
Halo is led by a strong, diverse and innovative management team with deep industry knowledge and blue-chip experience. The company is currently operating in the United States in California and Oregon. The company sells cannabis products principally to dispensaries under its brands, Hush, Mojave and Exhale, and under partnership or license with DNA Genetics, Terphogz and FlowerShop*, a cannabis lifestyle and conceptual wellness brand in which G-Eazy is a partner and key member of FlowerShop*. As part of continued expansion and vertical integration in the U.S., Halo boasts several grow operations throughout Oregon and two planned in California. In Oregon, the company has a combined nine acres of outdoor cultivation, including East Evans Creek, a six-acre grow site in Jackson county; Blue Sky Farms, a two-acre grow site located in Jackson county; and Winberry Farms, a one-acre grow site located 30 miles outside Eugene in Lane county. In California, the company is building out Ukiah Ventures, a planned 30,000-square-foot indoor grow and cannabis processing facility including up to an additional five acres of industrial land to expand this indoor grow site. Recently, Halo partnered with Green Matter Holding to purchase Bar X Farm in Lake county, developing up to 80 acres of cultivation which would comprise the largest single licensed grow in California.
Halo also has acquired a range of software development assets, including technology platforms CannPOS, Cannalift and, more recently, CannaFeels. Halo also owns the discrete sublingual dosing technology, Accudab. The company intends to spin off these assets along with its intellectual property and patent applications into its subsidiary Halo Tek Inc. and complete a distribution to shareholders on a record date to be determined by Halo.