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COWEN COLLABORATIVE INSIGHTS February 25, 2019 prospects, CBD finished products are highly profitable. While it is still early days, both Charlotte’s Web and CV Sciences are EBITDA positive, generating 30% margins in the most recent quarter, which is an encouraging sign. This intersects at a period where other companies across the broad cannabis landscape have been investing heavily in SG&A, which includes but is not limited to headcount increases and R&D. _ As evidenced by the above chart, in addition to offering very strong revenue growth Figure 104 CWEB and CVSI Are Posting Strong EBITDA... Figure 105 ...With Margins Exceeding 30% MRQ Adj. EBITDA (in$ mm) MRQ Adj. EBITDA Margin $15.0 $13.8 40.0% 30.5% 30.4% 20.9% $10.0 20.0% $5.4 9 A. 0.0% $5.0 > $0.4 -20,.0% 30.0 -40.0% -$0.9 “$5.0 -60.0% -$5.5 -$10.0 “S74 -80.0% -73.3% CWEB CVSI | TPB GTI 1933 CURA TLRY CWEB CVSI | TPB GTI 1933 CURA TLRY CBD CBD-Crossover/ Other CBD CBD-Crossover/Other Note: 1933 = 1019 (ended 10/18) (ended 12/18), All others are 3Q18 (ended 9/18). Note: 1933 = 1019 (ended 10/18) (ended 12/18), All others are 3Q18 (ended 9/18). AUD/USD = 0.72 AUD/USD = 0.72 Source: Company Reports and Cowen and Company Source: Company Reports and Cowen and Company While Charlotte’s Web generated 172% growth last year, we can see that sales are expected to remain robust. Charlotte’s Web is guiding for 2018 revenues to be between $65-80 mm, which would represent ~81% growth at the midpoint of the range. For 2019, the company is guiding for $120-170 mm, which would represent 100% growth at the midpoint. Looking out to 2020, current consensus estimates of $295 mm would imply further robust growth at over 100%. With momentum in CBD expected to ramp on a go-forward basis, we would look for these more established, well capitalized companies such as Charlotte’s Web, CV Sciences and Elixinol to consolidate market share in the form of distribution gains from new channels coming online as well asa from considerable amount of consolidation. Figure 106 Charlotte’s Web’s Top-Line Outlook Charlotte's Web Revenue Estimates (in$ mm) $350 $300 YoY Growth: $250 2018 = ~81% 2019 = ~100% $200 2020 = ~103% $150 $100 $50 so 2017A 2018E 2019E 2020E Source: Company Reports, Bloomberg 60 COWEN.COM HOUSE_OVERSIGHT_024876