COWEN COLLABORATIVE INSIGHTS February 25, 2019 Figure 6 - 2017 Production Less Operating Costs Per Acre (Cash Grower Margin/Acre} =e Corn Soybeans Gross Value of Production $620 $455 Operating Costs Seed $99 $58 Fertilizer $116 $25 Chemicals $35 $27 Other Operating Costs $85 $48 Total Operating Costs $335 $158 Cash Grower Margin $285 $297 Source: USDA, Cowen and Company Kentucky Hemp Growth Provides An Indication For Near-Term Acceleration Figure 7 shows hemp production in Kentucky under Kentucky Department of Agriculture (KDA) Industrial Hemp Research Pilot Program. The figure shows the increase in planted acres in 2018 (Sept) as well as the shift toward CBD as a percentage of total hemp (planted acres for CBD rising to 4,121 acres in 2018 from 864 in 2017). In 2018, there were 158 greenhouses in Kentucky representing 764,000 sq. ft., which is included in the 2018 acreage below. (Note 1 acre = 43,560 sq. ft.) On January 22, 2019, the Kentucky Department of Agriculture approved 1,035 applications to cultivate up to 42,086 acres of industrial hemp in 2019, up from 16,100 acres in 2018 and 33 acres in 2014, which was the first growing year. (67 acres of greenhouse space was also approved for hemp cultivation.) We note that of the 16,100 acres approved in 2018, less than half (6,700) was planted. Figure 7 - Kentucky Department of Agriculture Industrial Hemp Research Pilot Program Approved | Approved | Approved Planted | Harvested | % of Grain % CBD & % Grain & Production Year | Processors | Growers Acres Acres Acres or Seeds % Fiber % CBD Grain Fiber 2014 9 20 - 33 - 47% 32% 21% 0% 0% 2015 29 99 1,742 922 500 47% 6% 47% 0% 0% 2016 45 137 4,600 2,300 2,000 34% 6% 60% 0% 0% 2017 49 204 12,800 3,200 2,300 36% 5% 27% 32% 0% 2018 (Sept) 72 210 16,100 6,700 TBD 18% 4% 62% 14% 2% 2019 N/A N/A 42,086 N/A N/A N/A N/A N/A N/A N/A Source: kyagr.com/hemp, Cowen and Company Outlook For Growth The expected growth for hemp is supported by the economics offered. However, there are lim