TORONTO: Halo Labs Inc. made its first sale of distillate that was cleaned using the Company’s proprietary Superfiltration pilot program at Coastal Harvest in Cathedral City, California. Halo Labs intends to scale this process up to one hundred liters per week, which triples current capacity.
For the initial launch, Halo plans to use its Superfiltration process to clean the Company’s own previously written off waste product (approximately 1.35 million grams). Then the Company plans to offer superfiltration cleaning to other manufacturers and distributors as a tolling service.
Halo also plans to purchase oils and concentrates from other manufacturers and distributors at reduced rates with the intent of reselling cleaned bulk distillate to vape cartridge and edibles companies as well as using this bulk distillate for Halo’s Hush™ product lines.
Coastal Harvest achieved a gross margin of 26% for the nine months ended September 30, 20191 which primarily came from bulk distillate sales. In October 2019 the Company temporarily suspended bulk distillate manufacturing at Coastal Harvest as result of this market segment’s collapse due to the vape-inflicted lung injury outbreak, which was referred to as EVALI (E-cigarette or vaping associated lung injury), and which resulted in various local and state governments banning the sale of vaporizers.
While operations ceased, the Company devoted scientific and engineering resources to develop the proprietary Superfiltration process. As market conditions improved in Q1 2020, Halo re-opened the Cathedral City facility emphasizing Superfiltration with the intent to increase gross margin contribution closer to the 40% range. Halo anticipates it can achieve these financial results by reclaiming starting materials that were previously written off as well as through tolling other cannabis manufacturers’ previously worthless bulk distillate.
Chad Kanner, Senior Vice President of Business Development commented, “Today we made our first sale of bulk distillate cleaned using our proprietary Superfiltration platform. This top grade distillate, which tested by an independent certified lab at over 92% purity of total THC, was made from discarded fats and waxes. This sale shows that our pilot program has not only been successful but that we are gaining confidence in our ability to scale this program and make it one of the Company’s key revenue streams. Further the company has been receiving substantial inbound inquiries about potential purchasing. We feel this pilot program can become a core part of our company operations in California and beyond.”
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.