COWEN COLLABORATIVE INSIGHTS February 25, 2019 s Beauty The U.S. beauty category, which is inclusive of skin care, cosmetics, haircare, fragrance, bath & body, salon styling tools, and other toiletries, is a ~$87 bn industry according to Euromonitor International and IBIS World Inc. Within mass beauty, the prestige segment grew 6%, accounting for almost $19 bn in revenue in 2018 according to NPD. If we extrapolate the 6% growth in prestige beauty out through 2020, that would result in segment revenues surpassing $21 bn over the next two years. Figure 76 Total U.S. Beauty Is A ~$87 BN Industry Figure 77 Prestige Can Grow To Over $21 BN By 2020 a Total U.S. Beauty Industry Sales ($ in bn) U.S. Prestige Beauty Industry Sales (S in bn) $22.0 ri I $244 $80 671974 $21.0 I $65 I $19.9 $59 $20.0 I $60 $19.0 $18.8 $40 618.0 $17.7 , $20 $17.0 60 $16.0 2013. 2014 «2015. «2016 «= 2017-2018 2017 e018 200.3 020k Source: Company Reports and Cowen and Company Source: NPD and Cowen and Company We expect that CBD beauty will become more of a focus for consumers, as large-scale manufacturers and retailers begin to roll out more products, which will presumably generate positive mix and result in a step-change in market share capture. As such, we believe that a ~1% share of the prestige market is achievable in 2019, doubling to 2% in 2020, which would equate to over $400 mm in sales. The below analysis provides a scenario of revenue outcomes based on share capture, ranging from ~$200 mm to over $600 mm. Figure 78 CBD Beauty Sales Can Surpass $400 MM By 2020 Figure 79 Each 50 bps Of Share Is Worth Over $100 MM In Revenue U.S. CBD Beauty Sales ($ in mm) $500 $420 2020 Market Share Scenario Analysis $400 I | I $300 I $240 Market Share 10% 15%] 20% | 2.5% 3.0% $200 I ] Absolute Sales ($inmm) $209 $314 | $420 | $526 $634 $100 960 ' : ! so 2018 1 2019E 2020E Source: Cowen and Company Source: Cowen and Company 44 COWEN.COM HOUSE_OVERSIGHT_024860