TORONTO: Halo Labs Inc. has entered into a definitive share purchase agreement to acquire all of the issued and outstanding shares of Canmart Ltd. in exchange for up to 72.463 common shares of Halo.
Canmart is a licensed importer and distributor of cannabis-based products for medicinal use (CBPMs) in the United Kingdom.
Issuance of certain Halo Shares will be subject to milestones and, once issued, will be subject to volume trading restrictions.
The UK population consumes one of the greatest amounts of cannabis per capita in the world. With an estimated 4.7 million cannabis users out of a total general population of 66.4 million in 2019, the number of users per capita even approaches California, currently the single largest cannabis market in the world.
While the estimated number of people in the UK who use cannabis to treat chronic health conditions is only 1.4 million,2 the legal use of medical cannabis is still in its relative infancy. The UK legalized CPBMs, including plant materials, oils, tinctures, edibles and capsules, in November 2018.
Nearly all CPBM prescriptions are imported, because there is no formal domestic manufacturing program in the UK.3 However, as legal prescriptions are on the rise,4 recent regulations have sought to streamline and ease the importation of medical cannabis to the UK. In March 2020, the Medicines & Healthcare Products Regulatory Agency (MHRA) and the Home Office implemented changes that enable Canmart to import large quantities of CPBMs and hold inventory of these approved medicines.
The Company’s research of publicly available information indicates that Canmart and four other companies in the UK currently possess all of the licenses necessary for bulk importation and distribution of CPBMs.
Prohibition Partners anticipates that bulk imports will catalyze demand for CPBM: “As bulk imports increase, so will patient access, driving down the cost of medicines to patients and the National Health Service, improving stability of access, while facilitating an exponential growth in patient numbers.”
By 2024, the UK medical cannabis market is predicted to be worth nearly £1bn (US$1.3bn), servicing more than 400,000 active patients. With lower costs, easier access and up to fifty-two treatable conditions, Prohibition Partners estimates that the total patient base for medical cannabis in the UK could reach four million during the same time period.
This trend is reenforced by the independent research group Drug Science’s Project Twenty21, that launched Europe’s largest medical cannabis patient trials in the UK. Lead investigator, Professor David Nutt, anticipates patient prescriptions will increase by 20,000 due to this trial alone.
The cultivation and manufacturing operations operated by the Halo’s subsidiary, Bophelo Bioscience & Wellness (Pty) Ltd., combined with the importation and distribution capabilities of Canmart, are expected to create a well-positioned business combination to serve the growing UK market. Initially, Bophelo’s cannabis is planned to route through Medcan in Malta, manufactured into CBPMs, imported into the UK, and distributed by Canmart to pharmacies and clinics.
Furthermore, with the cultivation operations currently underway at Bophelo, Halo is leveraging award-winning strains from DNA Genetics and Zkittlez to import and distribute high-quality, low-cost flower and oils to the UK. Through Halo’s vertically integrated global supply chain, UK patients will have access to high-quality, proprietary, branded flower and oils.
Simultaneously, the Cannafeel app, currently being developed by Halo, is expected to increase Canmart patient acquisition, by helping patients understand the benefits of the different cannabis strains Bophelo is currently cultivating, and making recommendations that they can discuss with their medical specialists, bolstering confidence in Canmart CBPMs, medical prescriptions, and brand awareness.
Andreas Met, Co-Founder of Halo and Head of International Operations, comments: “Signing this deal is exciting because the UK’s cannabis market is projected to be larger than Germany by 2024—and potentially could be the largest single medical cannabis market in the world. Once completed, this acquisition—fueled by our Lesotho grow operations—positions Halo to grow rapidly in the UK market, a key component of our international growth plan. In 2021, we plan to import product grown at Bophelo to the UK.”
Established in December 2018, Canmart was one of the first companies set up in response to the legalization of medical cannabis in the UK. With expertise in cannabis education, storage and distribution, Canmart holds all relevant licenses to store and distribute CBPMs in the EU.
Located in the southeast of England, Canmart operates in a 30,000 square foot, third party logistics warehouse, set up to focus on the pharmaceutical and healthcare industries. Leveraging their vast network to bring innovative and high-quality products to market, Canmart currently imports and distributes licensed CBPMs to specialist doctors and their patients throughout the UK, a milestone that began in 2020. Canmart has forged strong relationships with specialist couriers, clinics, hospitals and pharmacies, providing smooth, legal access to products through a multitude of channels–always delivering exceptional service to patients and customers.
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