LOS ANGELES – Elegance Brands, Inc. will exclusively license the intellectual property rights for its THC brands and provide support to Halo on operations and manufacturing technology for the manufacture and sale of certain THC-infused beverage products in exchange for a 2% royalty on all sales generated from these brands (the “Licensing Agreement”). In addition to the Licensing Agreement, Halo will acquire manufacturing equipment custom-built for THC beverage production and acquire a minority interest in Elegance.
The Licensing Agreement allows Halo to exclusively license Elegance’s THC-infused beverage product portfolio, including Arvo, Zen, Life Brew, High Life THC Cocktails, Island THC & Coconut Water, Stoney Island THC Cold Brew Coffee, 420 Friendly THC Lemonades, and California THC Bitters.
The first product expected to launch under the partnership is Zen THC Social Tonics in a range of four innovative flavors: Raspberry Hibiscus, Ginger Lime, Mango Habanero, and Citrus Lavender. They are expected to enter distribution by Q4, 2021 in California and Q1, 2022 in Oregon.
THC-infused beverages saw significant growth during 2020. This upward trajectory is expected to continue throughout 2021. With more than 1,000 dispensaries in California licensed to sell THC-infused beverages, sales have steadily increased, and year-over-year growth reached 110% during Q1 of 2021.1 Total California retail sales for THC-infused beverages in Q1 were $7.09 MM, with carbonated beverages making up 73% of those sales. Oregon, a smaller but not insignificant market with more than 700 dispensaries licensed to sell THC-infused beverages, reported $4.1 MM in beverages sales last year, with carbonated beverages making up 78%.
Statistics referenced have been cited from BDSA data reporting, the leading provider of market research solutions for the global cannabinoid industry from forecasts to trends, from the USA to Europe.
Kiran Sidhu, the CEO of Halo, said, “The Transaction will facilitate a long-term and mutually beneficial partnership between both companies. Elegance is well versed in developing and marketing premium beverages and will utilize its experience to support Halo’s efforts to bring THC beverages to market, aid in production, and enhance distribution. Elegance Brands has created a unique and exciting portfolio of THC products, and with this Transaction, we step into one of the fastest-growing segments of the functional beverage market.” Mr. Sidhu added, “Beverages are a strategic addition to Halo’s existing product offering, and through this innovative partnership, we will leverage Elegance’s experience to bring THC beverages to retailers and consumers across the U.S. market. We believe that consumers are actively seeking innovative options for THC beverages, and this partnership aims to meet that demand. We look forward to being a shareholder of Elegance and participating in the value creation from its growing portfolio of premium brands.
“We are proud to be working with Halo and supporting their efforts to innovate the THC beverage market,” said Raj Beri, Founder, CEO, and Chairman of Elegance Brands. “Halo is a recognized and respected cannabis company with a global footprint. The growing interest in THC beverages represents opportunities for bringing new, creative products to consumers in an ever-growing space. The ability to partner with Halo is a tremendous opportunity for us, and we look forward to our combined success.”
Pursuant to the Transaction, Halo, through a wholly owned subsidiary, will acquire 100% of an Elegance subsidiary by way of a three cornered amalgamation, in exchange for that number of Halo common shares (“Halo Shares”) equal to the quotient of (a) Seven Million Three Hundred Thousand US Dollars (US$7,300,000), divided by (b) the greater of (i) the volume weighted average closing price of the Halo Shares for the twenty (20) trading days ending on the trading day immediately prior to the completion of the Transaction, as traded on the NEO Exchange, or (ii) the minimum price permitted on the NEO Exchange.
In addition to the rights under the Licensing Agreement and custom manufacturing equipment, Halo will receive ((i) 9,333,333 Class A Shares in the capital of Elegance (the “Elegance Shares”), resulting in Halo owning approximately 6% of the Elegance Shares on a fully-diluted share basis (assuming all of Elegance’s 91,400,000 Class B Shares convert into Class A Shares of Elegance), and (ii) warrants to acquire 5,000,000 Elegance Shares, with each warrant exercisable at a price of $0.75 per Elegance Share for a period of 18 months from closing of the Transaction.
Completion of the Transaction is subject to the satisfaction or waiver of customary closing conditions, including receipt of approval from the NEO Exchange. The Halo Shares to be issued upon closing of the Transaction will be subject to certain sale restrictions.
About Elegance Brands, Inc.
Elegance Brands, Inc. is a global beverage company that develops, markets, and distributes products with a focus on innovation. In addition to its flagship brand, SWAY Energy + Immunity Drink, Elegance Brands offers a range of functional beverages, plus super-premium spirits and alcohol brands, including Elegance Vodka across a network of best-in-class distributors in the U.S. as well as direct to consumer via its various brands’ websites. For more information about the Elegance story, visit http://www.elegance-brands.com.
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 the Company’s operational expertise in bringing top-tier products to market. Current growth includes expansion in key U.S. markets, the United Kingdom and Africa, with planned expansion into the Canadian retail 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 OG 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 California. In Oregon, the Company has a combined 9 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 grow in California.
Internationally, the Company’s subsidiary Bophelo Bioscience & Wellness Pty. Ltd. (“Bophelo”) is currently cultivating medicinal cannabis in Lesotho. Once fully built out, Halo believes Bophelo to be one of the largest licensed marijuana cultivation sites in the world with a future capacity of up to 495 acres. To further Halo’s global presence, the Company has recently acquired CBPM importation and distribution licensing in the United Kingdom via medical cannabis suppliers Canmart. Halo expects the cultivation and manufacturing operations of Bophelo, combined with the importation and distribution capabilities of Canmart, to drive a well-positioned business to serve the U.K. market.
The Company 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.
Elegance Brands Enters Strategic Partnership and Licensing Arrangement with Halo Collective to Launch THC Beverage Portfolio (CNW Group/Halo Collective Inc.)
Elegance Brands is a global beverage company that develops, markets, and distributes premium products with a focus on innovation. The company currently has assets and brands in two verticals: (1) Non-alcoholic beverages, and (2) Alcoholic beverages. (CNW Group/Halo Collective Inc.)