Cannabis Health speaks to Kiran Sidhu, CEO of Halo Labs, about the African cannabis sector, the impact of COVID-19 and his predictions for 2021.
According to BDS Analytics, the data partner for the US National Cannabis Industry Association, Halo is the top company in the state of Oregon for sales of cannabis flower, number three for concentrates and pre-rolls.
The growing company has expanded to the UK (with the acquisition of CanMart) and Lesotho, a small country located just south of Johannesburg. Lesotho is the first African country to legalise the cultivation and manufacturing of medical cannabis and one of the world’s most sought-after locations for cannabis production.
Halo’s cultivation site in Lesotho is operated by Bophelo Bioscience, a holder of one of a limited number of licences issued in the country.
Following a series of high-value acquisitions – including the UK’s CanMart and Oregon-based company, Winberry Farms – the company has experienced a rapid growth in sales in 2020. This week, the company reported a 32 percent year over year growth in the state of Oregon, with retail sales reaching $89.9 million in November 2020.
Sidhu tells us about the origins of Halo Labs, the company’s expansion to the UK and its growing operations in the African cannabis sector.
CH: Tell us about the origins of Halo Labs and your journey as a company.
KS: Halo labs started in 2017 in Andreas Met’s [co-founder of Halo] chicken coop. At the time, we were known in the industry as blasters, so effectively we took raw cannabis, put them in butane and then through that process we made vaporiser cartridges.
Now we span four countries, the UK, Lesotho, the United States and soon Canada. We make about 10 products in the state of Oregon and we’re growing in California – we’re working on building a very large cultivation site, which is the largest in Northern California.
In Lesotho, Louisa [Mojela], our chairperson, founded Bophelo Bioscience, which is arguably one of the largest grows in the world in terms of licensed space.
I view Halo, in a strange way, as two distinct businesses. It’s one that is North American, which is much more recreationally focused and it’s one that is outside North America, which is what we call a seed to sale distribution system, from Lesotho to Malta and then from Malta onward into the UK.
CH: What are some of the main challenges of working in the cannabis sector?
KS: A lot of people look at cannabis as this sexy business, like something technological. But really, at the end of the day, cannabis is a bricks and mortars, manufacturing, cultivation business.
It’s extremely working capital intensive without the ability, at least in the US, to access bank lines because banking isn’t available to us.
In a strange way, we work in the shadows, even though we have a legal business. There’s a lot of cash movement as you’re not allowed to use credit cards in the United States. Mainstream banking, like Santander or Barclays isn’t available to us so we tend to work with local credit unions. Even if we move money across state lines, that’s a violation of federal law.
CH: Why is Lesotho such a hotbed for cannabis manufacturing?
KS: Our roots as a company in the United States are in the Emerald triangle, an area north of Napa Valley, to the south of Grants Pass in Oregon and up and down the spine of what’s known as the 101 Highway.
This is where 90 percent of all cannabis in North America was supplied prior to legalisation. What the Carolinas are to tobacco and the Great Plains are to wheat, the Emerald Triangle is to cannabis
Lesotho, which is the Emerald triangle of Africa, has always been the place where cannabis has flourished. It has always been the breadbasket of cannabis in Africa.
A couple of years ago, the deputy prime minister [of Lesotho] said that when they were fighting apartheid, they said, ‘give us our land, our freedom and our cannabis’; that was their cry.
And they were one of the first states in Africa to INCB [International Narcotics Control Board] certification for exportation of cannabis. A lot of large companies piled in after that. I remember the valuations were preposterous and it became very hot.
CH: What drew you to Lesotho and working with Bophela Bioscience?
KS: We have a gorgeous site and arguably one of the largest sites in the country, but what really attracted us to Lesotho was our chairperson, Louisa Mojela, who’s such a force for social good.
10 percent of our profits are going to the local people, the land is owned by a trust for the benefit of the people, and Louisa is really big on the empowerment of the disadvantaged. She also operates her own private equity fund, which is for the empowerment of women in Africa.
Louisa and my partner Andreas Met are really driving the charge in Africa.
The concept is to uses good agricultural collection practices to produce cannabis and then take that cannabis and export it into Malta and inevitably the UK.
CH: Would you consider expanding into other regions in Africa?
KS: Our mantra is do one site, do it well, and don’t diversify. But that being said, given the geography of Lesotho [a mountainous region ideal for growing the Indica cannabis plant], you could see yourself looking towards Ghana or Gambia; somewhere more equatorial where you would put up a grow with a genetic bank dominated more by sativa.
I think that’s more of a longer-term view, because you can still grow a good genetic bank in Lesotho.
I’m hearing that Ghana now is legalising, the Congo is legalising, but they have a way to go to get INCB certification which takes a couple of years.
CH: Have you faced any barriers in Africa due to the pandemic?
KS: We are growing and storing cannabis in Africa and we are getting what’s known as Good Agricultural and Collection Practices (GACP) certification. We’re fairly close to it, but COVID has been a little bit of a setback as the whole South African region is under a very stringent lockdown given this new variant that’s floating around.
And the UK, where a lot of our people are based, is also locked down due to COVID. It’s become really difficult. Right now, what we’re dealing with is even though we’re growing, we’re dealing with practical problems.
For instance, there’s not enough steel in South Africa. South Africa typically would import steel but those imports are not as plentiful as usual. We are not able to complete our certifications because of practical issues like this.
CH: How about in the US and Europe?
KS: We’re starting to see tremendous growth in cannabis in the US as a result of COVID, whereas abroad, it’s disrupted supply chains.
Where COVID has been a boom in the United States, it’s been a curse in the UK and has now been derailed to some degree. But I think inevitably, as we all get our jabs, and everything settles down over the next nine months, I think we’re going to start seeing an incredible flourish of international trade in cannabis.
I could envision the Biden regime entering international cannabis trade, too. It’s conceivable within the next two years that you’ll start to see cannabis flowing from Africa into the United States.
CH: What is your view of the UK cannabis market?
KS: We’re one of five licensed medical distributors and the name of our company in the UK is Canmart, which started its journey about two years ago.
One thing that’s interesting about the UK market is that it has a very active black market with high per capita consumption rate of cannabis; one of the highest in the world.
It [the UK] is sort of like California before legalisation, during what we call the ‘medical days’. The UK is starting the medical days right now.
What’s happening is you’re starting to see liberalisation, even under this Conservative government, of medicinal cannabis. The tipping point will come when the NHS starts allowing certain groups to be reimbursed for cannabis. That to me is the point where it’ll become medically available for many different people.
CH: What are Halo Labs’ plans for the UK?
KS: Under the current regime, cannabis in the UK has to be imported, so the goal is to get the Lesotho operation qualified for imports into the UK.
The UK is allowing cannabis to come in from abroad, but that cannabis has to have a certification of cGMP (current good manufacturing practices) which is a medicinal certification. We have a partner in Malta – we import GACP cannabis into Malta and there they make it into Medicinal Products for EU certification, which is then imported into the UK.
It will be interesting to see what happens now with the UK’s separation from the EU.
CH: What trends can you see on the horizon?
KS: Outside North America is where it’s hot right now in terms of cannabis. Brazil is now liberalising, Colombia, Uruguay and Mexico has liberalised and on the African continent, multiple countries are starting to liberalise.
I think you’re going to start to see this flourish of international trade in cannabis.
I also think we’re going to start to seeing more countries develop recreational regimes, and I think it’s going to come faster than people anticipate.
Vice President-elect, Kamala Harris, in her debate with Pence said that one of their initiatives is going to be the descheduling of cannabis so it’s no longer considered a controlled substance.
I could even see the UK’s Conservative government following a US lead over the next year or two. I see the softening of his [Boris Johnson’s] position, so I can see this liberalisation really starting to snowball.
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