COWEN COLLABORATIVE INSIGHTS February 25, 2019 Global CBD Landscape (Azer) a =a International Drug Conventions (UN) There are three international conventions that are core to the drug control system: (1) 1961 Single Convention on Narcotic Drugs, (2) 1971 Single Convention on Psychotropic Substances and (3) 1988 Single Convention Against Illicit Traffic in Narcotic Drugs and Psychoactive Substances. Under the 1961 Convention, cannabis extracts and tinctures are currently classified as Schedule | substances based on high abuse and dependence potential. Resin and herbal cannabis are classified as Schedule IV, the most prohibitive category, including dangerous substances that have little to no medical benefits. THC is classified as a Schedule I] substance in the 1971 Convention. CBD does not currently have its own scheduled class in the Conventions. Based on recent recommendations from the World Health Organization (WHO), these classifications are likely to change in the short term. Although the cannabis plant, as a whole, is scheduled under the conventions, there is not a distinct separation between marijuana and hemp at the moment. However, there is an exemption in the conventions for industrial uses of hemp, permitted there is no potential for abuse. The language in the treaties is vague and has allowed member states to interpret the conventions in a way that permits the use of hemp to fit their national legislation. This is a principle based on the practice of “good faith.” Cannabis Recommendations (WHO) Beginning in November 2017, CBD was subject to its first pre-critical review conducted by the WHO at the 39th meeting of the Expert Committee on Drug Dependence (ECDD). Following the critical review of CBD at the ECDD’s 40th meeting, it was recommended that “pure CBD should not be scheduled in the International Drug Control Conventions.” Further clarifications were recently added outlining that CBD preparations containing less than 0.2% THC should be removed from th