COWEN COLLABORATIVE INSIGHTS February 25, 2019 Topicals = Outside of nutraceuticals, we expect the topical CBD market to provide the largest contribution to industry sales. We believe the non-ingestible nature of the product makes it more attractive to consumers looking to experiment in CBD and can provide a source of trial into the category. While the CBD market clearly needs more clinical research into the benefits of the cannabinoid, it has been suggested that two of the primary benefits are anti-inflammation and muscle recovery, which can cater to a large and diverse consumer base. Over the next two years, we expect the topical CBD market to grow to $1.5 bn (almost $1 bn less than our outlook for nutraceuticals). We estimate that in 2018, the total addressable U.S. topical market, which includes both OTC and rx offerings was ~$12.8 bn. If we assume no growth in the category base, a $1.5 bn CBD category by 2020 would imply a ~12% share of the market, the largest market share among all of the categories analyzed, excluding nutraceuticals. Figure 48 U.S. Topical Category Generates ~$13 BN In Revenue Figure 49 We Believe CBD Topicals Could Be A $1.5 BN Market in 2 Years U.S. Addressable Topical Market ($ in bn) U.S. CBD Topicals ($ in mm) $14.0 $128 | $12.8 $12.8 $1,600 I $1,500 $12.0 I $1,400 I $10.0 I $1,200 I $1,000 I $1,000 I $8.0 ] $800 I $6.0 ] $600 $500 —s| $4.0 I $400 I I I $2.0 1 $200 SiO) $0.0 2018 =! —2019E 2020E 2018 2019E 2020E . Source: Company Reports and Cowen and Company Source: Cowen and Company Our below scenario analysis provides a wider incremental range of market share outcomes relative to other categories. We can see that every 5 pts of market share capture is worth over $600 mm in revenues. While our analysis contemplates a 2% share of the topical market, we believe that this is unlikely and view the floor at ~7%, which would imply almost $900 mm in revenues by 2020. Given the number of companies providing topical solutions, coupled with what