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COWEN COLLABORATIVE INSIGHTS February 25, 2019 coming quarters, driven by adult use legalization in Canada. 1933 and Level Brands are smaller in scale but continue to post solid growth. 2 Figure 101 CWeb Leads Core CBD Companies; CBD Crossover Touches Multiple Industries Most Recent Quarterly Revenues (in$ mm) 90.0 $78.7 75.0 17.7 $21.4 17.2 30.0 $ $13.6 $74 $ $10.0 S46 645 2 — a] ) = aa wv os i w 2 | ¢ #5 2 # 5 a oS 4 = a 2a = a 4 eB FS & |4 S £8 E @ 2 vs hed En ‘s c 5 es = 3 cae) ba a. o ou = = < 3 of ae ‘p 23 = ma S z 3 E 8 §2 g Go “ & rs) = ot zs rs E 2 f= 5 pa = CBD CBD-Crossover/ Other Note: 1933 = 1019 (ended 10/18), Level Brands = 4018 (ended 12/18), All others are 3Q18 (ended 9/18). AUD/USD = 0.72 Source: Company Reports and Cowen and Company Nuances around different business models become increasingly apparent when benchmarking gross margins. Charlotte’s Web and CV Sciences, which we would classify as finished goods producers, command the highest margins, while Turning Point Brands’ unique positioning within OTP products generates margins lower than the level that would be seen for traditional cigarette companies. Core cannabis companies have to contend with being both vertically integrated and in many instances, servicing retail stores, which are lower margin. Figure 102 Finished Goods CBD Producers... Figure 103 ...Command the Highest Gross Margin MRO Gross Profits (in S$ mm) MRQ Gross Profit Margin 0, $40.0 $36.2 TO0.OMS 36.0 78.0% med 80.0% ” 73.1% $28.0 $24.0 60.0% $20.0 $16.0 40.0% $12.0 $8.0 20.0% $4.0 $0.0 0.0% CWEB CVSI | TPB CURA GTI TLRY 1933 LEVB CWEB CVSI| TPB CURA GTI TLRY 1933 LEVB CBD CBD-Crossover/ Other CBD CBD-Crossover/ Other Note: 1933 = 1019 (ended 10/18), Level Brands = 4018 (ended 12/18), All others Note: 1933 = 1019 (ended 10/18), Level Brands = 4018 (ended 12/18), All others are 3Q18 (ended 9/18). AUD/USD = 0.72 are 3Q18 (ended 9/18). AUD/USD = 0.72 Source: Company Reports and Cowen and Company Source: Company Reports and Cowen and Company COWEN.COM 59 HOUSE_OVERSIGHT_024875