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COWEN COLLABORATIVE INSIGHTS February 25, 2019 _ Figure 4 - CBD Plasticulture Model - University of Kentucky CBD% - Price per % 2 . e Dry Matter Yield $36,000 Gross Returns Per Acre $36,000 Transplants (clone} plants $5.00 $7,500 Fertilizer -Nitrogen (urea) unit $0.47 $47 -Phosphorus (P205} unit $0.60 $18 -Potassium (P20) unit $0.38 $17 Planting/Setting plants $0.20 $300 Black Plastic/Drip Line acre $515 $515 Harvest Cost hrs $12.50 $405 Cash rent acre $300 $300 Application & License Fee per year $400 $400 Lab Test “ $300 $300 Other - > 7 $669 Total Variable Cost Per Acre Margin Over Variable Cost Per Acre Source: hemp.ca.uky.edu, Cowen and Company Sensitivity Analysis For CBD Plasticulture Model. As shown below, there is a significant change in return for every $1 change in price per CBD%. A deterioration of this pricing with no corresponding change in cost would impact CBD production. Breakeven for the model above is ~$9/Ib for dry matter yield compared to the $30/Ib used to calculate the margin over variable cost per acre used. While price % CBD can fluctuate, the second factor determining the dry matter yield/Ib price is CBD%. Figure 5 - Sensitivity Analysis Price per% CBD Total Revenue Returns Above Variable Costs $43,200 $36,000 $28,800 $21,600 $14,400 $7,200 Source: hemp.ca.uky.edu, Cowen and Company CBD Hemp Clearly An Attractive Option For Growers. No other crop in the U.S. offers the type of return of the CBD Plasticulture Model. We would expect the two largest crops in the U.S.: corn and soybeans to lose some acreage to CBD hemp, though given corn and soybean area planted was 89.1M and 89.2M acres respectively in 2018. (Total planted acres in the U.S. is ~320M acres.) 14 COWEN.COM HOUSE_OVERSIGHT_024830