Gi — COWEN WASHINGTON COWEN =——_-—« RESEARCH GROUP COLLABORATIVE INSIGHTS COLLABORATIVE INSIGHTS February 25, 2019 = Cannabis COWEN'S COLLECTIVE VIEW OF CBD - AHEAD OF THE CURVE SERIES anno THE COWEN INSIGHT - _— In a collaboration featuring 11 analysts spanning Cowen’'s consumer, health care, industrials Cowen Research and regulatory teams, we offer a deep dive on the global cannabis market, with a particular eaGsee tee emphasis on the U.S. For consumer goods, we believe the U.S. CBD market could represent [email protected] . a $16 bn opportunity by 2025. Vivien Azer 646 562 1351 $16 bn Consumer Opportunity (Azer, Blackledge, Charles, Chen & Kernan) [email protected] John Blackledge In our monthly proprietary consumer survey (n = ~2,500) we were surprised to see that Bae Pea 3c8 nearly 7% of respondents in January 2019 reported using CBD as a supplement. This strong john. [email protected] consumer interest is validated by the growing number of brands and form factors that are now available through increasingly diverse retail channels, including Amazon, Sephora and Andrew M. Charles, CFA Neiman Marcus. That said, consumption of CBD on-premise will likely take longer, given CAG. Sb Tae regulatory uncertainty. And, while our analysis primarily focuses on consumer staples andrew: [email protected] applications for CBD, it is interesting to see a growing number of specialty apparel brands Oliver Chen, CFA embrace hemp as a sustainable textile. oliver [email protected] Retail sales of CBD consumer products in 2018 have been estimated between ~$600 mm and $2 bn. By 2025, we believe CBD offerings could conservatively generate $16 bn in retail John Kernan, CFA sales (assuming a ~40% increase in consumer incidence, to 10%, and spend of less than $2 / saPenrunsaaanil day). Our bottom-up analysis anticipates a diverse category, that is still led by traditional [email protected] health & wellness form factors (e.g., $6.4 bn in nutraceuticals, and $4 bn in topica