Halo Labs Announces Launch of Pilot Distillate Remediation Program

TORONTO–(BUSINESS WIRE)–Halo Labs Inc. announced plans to launch a pilot distillate manufacturing remediation program in California for distillate, live resin, fats and waxes, tails and terpenes.

Additionally, the Company is re-opening bulk distillate manufacturing operations in Cathedral City.

Halo has specialized expertise in cannabis extraction and follows internal guidelines that are more stringent than the state guidelines for levels of pesticides in cannabis products. Due to these policies in California alone, the Company has segregated approximately one million three hundred and fifty thousand grams of product as of February 29, 2020 that historically has been written off.

In January 2020, the Company started a stream of research and development projects to explore the remediation of distillate, live resin, fats and waxes, tails and terpenes that potentially could contain pesticides. Halo believes that it has developed an affordable proprietary process to reduce pesticide levels in cannabis products to levels below California state guidelines1.

Internal controlled studies show certain reduction in pesticide levels to non-detectable levels2 while retaining up to 95% of original weight. Halo estimates the total cost, including lost material, to be under $0.75 per gram based on initial input weight into the process. Currently, the control studies have proven successful.

However, the Company cannot that this remediation process will be as successful at a production scale. There are other more costly processes to remediate pesticides principally using mass spectrometry but machinery costs for this process can cost millions of dollars and typically requires scientists or highly skilled technicians to operate3. Halo believes the Company’s proprietary remediation process is a more cost effective processes than mass spectrometry based on internal analysis.

In the coming weeks Halo plans to move the Company’s proprietary remediation process from research and development to production in Cathedral City, California as a pilot program. In addition to re-processing the Company’s material, Halo plans to provide remediation as a service to other manufacturers or purchase materials outright from them.

The Company believes that there are significant amounts oils and concentrates in California within the Marijuana Enforcement Tracking Reporting Compliance (“METRC”) system in need of remediation and which could represent a potentially large incremental income stream for the Company.

If the pilot program proves to be successful, this remediation process will enable other manufactures to monetize worthless product subject to California state guidelines on remediation. Potentially, it could also reduce the amount of pesticide laden distillate that is sold illegally to unknowing consumers4.

“I would like to thank our founding scientific team, led by Dr. Valery Krasnoperov and engineering staff, led by Christopher Smith, for their relentless work over the past few months on this project. If the pilot program proves to be a success, we expect our proprietary process will give us a strong competitive cost advantage in bulk distillate and vape cartridge sales. The Company’s proprietary remediation process can potentially take unusable product that maybe rife with pesticides and transform it into product that is clean and passes quality and safety tests. In doing so, product thought to be a total loss could be reclaimed and sold for full value,” said Andreas Met, Chief Operating Officer and Co-Founder of Halo.

As result of the Vape Crisis that peaked in the third quarter of 2019, vape pen sales plummeted and the wholesale bulk distillate market declined. Halo took immediate action and discontinued bulk distillate manufacturing in California and Oregon for third parties to mitigate losses.

Specifically, in California and Oregon, distillate prices plunged in late 2019 and early 2020 to less than $5000 per liter. Prices have started to recover and the Company believes that the price will continue to increase, eventually reaching levels seen prior to the Vape Crisis which was between $6,000 to $7,000 per liter.

Halo believes that some reasons for an increase in price levels include greater consumer demand as a result of COVID-19, reduced supply as result of full implementation of seed to sale tracking in California and seasonality.

As previously stated, the Company has segregated approximately one million three hundred and fifty thousand grams of product as of February 29, 2020 that historically has been written off.

Halo is a leading cannabis cultivation, manufacturing, and distribution company that grows and extracts and processes quality cannabis flower, oils, and concentrates and has sold over 5 million grams of oils and concentrates since inception. Additionally, Halo has continued to evolve its business through delivering value with its products and now via verticalization in key markets in the United States and Africa with planned expansion into European and Canadian markets. With a consumer-centric focus, Halo markets innovative, branded, and private label products across multiple product categories.

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