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COWEN COLLABORATIVE INSIGHTS February 25, 2019 _ The CBD Competitive Landscape - Public/Private Company Discussions (Azer) Publicly Traded Companies 1933 Industries. Publicly-traded 1933 Industries (CSE: TGIF: OTCQX: TGIFF) is a vertically integrated cannabis company with operations in both the U.S and Canada. 1933 operates through three subsidiary companies which includes Alternative Medicine Association (AMA), Infused MFG and Spire Global Strategy. AMA (91% ownership), is a licensed medical and adult use cannabis cultivation facility. Infused MFG (91% ownership) produces hemp-based CBD products and Spire Global Strategy (100% Ownership) is an advisory firm offering due diligence, security and intelligence services. The company was an early competitor having launched its first CBD brand in June 2017. The two main brands are Canna Hemp and Canna Fuze, which are distributed across 600 retail locations across the U.S. (largely focused on dispensaries), with 15% of sales coming from e-commerce. In 2018, 1933 delivered ~$12.6 mm in overall revenues, with a gross margin of 49%. Infused MFG specifically contributed 34% to revenues (~$4.3 mm), while achieving a gross margin of 71%. Canopy Growth (Outperform, C$82 PT). Canopy Growth is a leader in global cannabis, with exposure to over a dozen countries spanning five continents. As the market share leader in the nascent adult use market in Canada, WEED generated sales of $83 mm in its most recent quarter. In addition, WEED was the first Canadian licensed producer to partner with a major consumer packaged goods company. In October 2017, they announced the initial relationship with Constellation Brands, which was meaningfully expanded with a $4 bn investment announced in August 2018. The company has announced its intention to invest $100-5150 mm in New York State (where STZ is headquartered), to construct a hemp industrial park focused on extraction and product manufacturing. More recently, management has noted a willingness to invest as much as $500 mm against U.S. CBD with the expectation that this infrastructure could ultimately be converted to capitalize on a U.S. adult use opportunity, when it materializes. Charlotte’s Web. Founded in 2013 and based in Boulder Colorado, Charlotte’s Web is a publicly-traded, market leader within hemp-derived CBD (CSE: CWEB; OTCQX: CWBHF). The company has a vertically integrated business model, consisting of cultivation, manufacturing and distribution. Charlotte’s Web products are sold in 3,680 retail locations, with an expanding channel footprint that includes national grocery, drug, mass market, pet, and natural / specialty retailers. Despite being well distributed, 55% of 9M18 revenue has been derived from the company’s direct to consumer e-commerce model. Going forward, Charlotte’s Web will continue to drive innovation and will look to improve their liquid delivery system to enhance efficacy, convenience and frequency of use. What is more, they will offer botanical blends to target consumer need states (sleep and cognitive function), upgrade bioavailability technology and focus on additional isolated cannabinoid products. To drive sustained growth, the company will look to build brand awareness through media events and social platforms, among others and introduce new, differentiated botanical products in the form of tinctures, capsules, powders, sports performance, topicals, cosmetics, beverages and pet products. Charlotte’s Web will selectively pursue M&A to complement their current strengths and will also look to expand internationally, with a near term focus on the EU, South America and Asia. Through FY 9M18, Charlotte’s Web has delivered revenues of $48 mm (+75%), with a gross margin of 77%. 54 COWEN.COM HOUSE_OVERSIGHT_024870