emeraldhealth therapeutics

EMERALD HEALTH THERAPEUTICS

C S E : E M HO T C Q X : E M H T F

INVESTOR PRESENTATION | 21 . 10 . 15

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Forward LookingStatement

Cautionary Note Regarding Forward-Looking Statements: Certain statements made in this presentation that are not historical facts are forward-looking statements and are subject to important risks, uncertainties and assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. Such statements include: Emerald's business plan and the execution of such plan; the impact of business deals entered into by Emerald; the future success of Emerald; Emerald and its business partners obtaining the required regulatory approvals; business opportunities available to Emerald and its business partners; repayment of amounts owed to Emerald; the launch of new products; and benefits of listing on the Canadian Securities Exchange.

We cannot guarantee that any forward-looking statement will materialize, and readers are cautioned not to place undue reliance on these forward-looking statements. Such statements include uncertainty as a result of COVID-19 including any continued impact on production or operations; changes of law and regulations; changes of government; failure to obtain regulatory approvals; regulatory changes; receipt of amounts owing to Emerald; strategic development of Emerald; production and processing capacity of various facilities; expansion of facilities; failure to obtain necessary financing; results of scientific research; expectations around market and consumer demand and other patterns related to existing, new and planned product forms; timing for launch and shipment of new and existing product forms; ability of new product forms to capture sales and market share; results of production and sale activities; sales volumes; estimates around incremental sales and more generally estimates or predictions of actions of customers, suppliers, partners, distributors, competitors or regulatory authorities; changes in prices and costs of inputs; demand for labour; demand for products; failure of counter-parties to perform contractual obligations; statements regarding the future market of the Canadian cannabis market; statements regarding Emerald’s future economic performance; as well as the risk factors described in Emerald’s annual information form and other regulatory filings. These statements are not historical facts but instead represent management beliefs regarding future events, many of which, by their nature are inherently uncertain and beyond management control.

The forward-looking statements contained in this presentation represent our expectations as of the date hereof. Forward-looking statements are presented for the purpose of providing information about management's current expectations and plans and allowing investors and others to obtain a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Emerald undertakes no obligations to update or revise such statements to reflect new circumstances or unanticipated events as they occur, unless required by applicable law.

C S E : E M HO T C Q X : E M H T F

Emerald Health Therapeutics – The Opportunity

DRIVING THE EVOLUTION OF CANNABINOID PRODUCTS

SCIENCE-BASED INNOVATION

TARGETING EVOLVING CUSTOMER NEEDS

NEW FRONTIER – HEALTH / WELLNESS / MEDICINAL

3

TM

Meeting target market needs for conventional product formats

• Unique cultivars grown in controlled micro-environments

• Representing craft products from micro producers

• Broad scope of oils with potency range

• Serving adult-use, health & wellness,medicinal, and medical consumers

Cannabis 1.0: Dried Whole Flower and Oils

Conceptual packaging shown

5

6

• Value-added products in different forms

• Employ Defined DoseTM: predictable action, precise dosing provide consumer choice, control, and confidence over cannabis experience

• Ex. FuseTM Nano Shots• 30 ml cannabis-infused beverage: 10 mg THC• Onset: 10-20 min.; offset: ~ 90 min.• Gluten-free, vegan, multiple flavours• Launched July in medical & specific provincial channels

• Ex. SYNCTM Tabs• Sublingual tablet: 10 mg THC• Onset: 20-30 min.; offset: ~ 90 min• Sustainably-produced organic coconut oil base• Multiple flavours• Launched April in medical & specific provincial channels

• Serving health & wellness, medicinal and medical consumers

Cannabis 2.0: Specialty Products Offering Choice and Control


Cannabis 3.0: Combining Cannabinoids & Natural Health Products 7

Expertise and intellectual property to create new natural health combination products

• Extensive knowledge of human “endocannabinoid system” and effects of cannabinoids and “phytocannabinoids”

• Develop nutraceutical products with cannabinoid and non-cannabinoid ingredients for wellness purposes

• First 3.0 product launch targeted for year-end: multi-modal with unique natural carrier oil that enhances bioavailability

• Products particularly serving health and wellness, medicinal and medical consumers

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• Highest potency CBD oils in rec market

• Uniquely flavoured cannabis oils

• First Quebec-based brand exclusively positioned for Quebec consumers

• Fast-acting oral spray using nanoemulsion

• Sublingual tablets

• PhytocannTM “phytocannabinoid” natural health products

• Multi-flavoured 30ml cannabis-infused beverage product line

Multiple “Firsts” Through Product Innovation

Distinct brands fulfilling target customer expectations with diverse 1.0, 2.0 and 3.0 cannabis products

Adult-use & medical brand; Canada and international

Made in Québec for Québec adult-use market

Adult-use wellness; differentiated, discreet non-inhaled products

FORMAT FORMATS

Whole flower, oils Flavored oils, sublingual tablets, fast-acting spray

Whole flower

FORMATS FORMATS

Cannabis-infused beverages

Building Multiple Brands to Connect our Products to our Consumers 9

Fast-acting cannabis products for consumers and patients

Product SKUs

Product Lines

Sublingual tablets

Cannabis-infused beverage

New beverage

entries4

12Launching 4Q

Expanding Product Pipeline to Drive Profitability

Product SKUs

Product Lines

BrandsBrands

Delivering differentiated consumer experiences via familiar and novel products to drive sales and bottom-line growth

Feb 2021

Lifestyle brand

10

11

26

5

Planned Year-end 2021

3

Serving patients and consumers with Emerald products

Distribution/Sales Serving Consumers & Patients Canada-wide

Adult-use Market • Emphasis: Quebec, strong Emerald

presence• Emphasis: Ontario, largest

provincial population

• Growing sales team to build channels

• Educating wholesalers/retailers • Goal: expand product listings/sales

Medical Market• Consumers benefit from

prescription and insurer product payment

• Dedicated medical cannabis team• Excellent customer service• Prescription access through strong

clinic partnerships

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Riaz Bandali, BSc, MBAPresident & CEOVenture capital and senior life sciences operating expertise

Rebecca Wong, BScSVP, Quality & Regulatory AffairsLife science qualityand regulatory management

Leadership with Expertise to Drive Innovation Strategy

Souky Mahfoud, MSc, CFADirector, FinanceCapital markets and financial management

Gillian Vandermeirsch, BSc, PhDDirector, New Product DevelopmentLife science R&D management

Moe Jiwan, BAChief Operating OfficerCannabis operating, marketing, product dev. experience

François St-Louis, BSc, DESS, MBASite Director, St. EustacheCannabis and life sciences operations management

Kelsi Rourke, CPA, CMA Director, Sales OperationsCPG sales and financial management

DIRECTORSMANAGEMENT

Jim Heppell, BSc, LLBChairmanVenture capital/life science governance expertise

Bob Rai, BSc. B PharmaDirectorPharmaceuticals /healthcare leadership expertise

Nick Mosgrove, BA Hons.VP, Sales & MarketingSenior cannabis sales and marketing

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Tiffany Beswick Director, Corporate AdministrationPrivate and public co.HR, IT, corporate admin. experience

Punit Dhillon, BA Hons.DirectorSenior life science leadership and governance expertise

Apply Science to Transcend Existing Consumer Experiences

Aspiration: leadership in enabling desired/positive cannabinoid experiences to be available and beneficial to our target consumers

• Push intersection of science and cannabinoids to enable purposeful consumption with confidence and control

• Leverage know-how to conceive, prototype and test new products

• Human studies to characterize product attributes

• Create/monetize strong intellectual property

• Leverage specialized outsourced manufacturing

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Our mantra: predictable product actions

Product Development Goal: Predictable Cannabinoid Experiences

Defined DoseTM

Fast-acting

Stringent manufacturing

standard*

Varied Delivery

Consumption formats

Beneficial product attributes

• Pharmacokinetics/ pharmacodynamics

• Bioavailability • Dose response curves• Cell screening assays• In vivo models• Human clinical studies• Manufacturing processes• Quality control standards

Predictable onset

Durationoffset

Life science inputs

Precise, consistent

dosing

Choice, Control & Confidence

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Defined DoseTM Serves Multiple Consumption Purposes

Emeraldproductplatform

Employ science/rigour of CPG/food/life

science industries

High standard of outcomes benefits for

multiple markets

Consistent product attributes

Predictable experience

Safety

Benefits

Adult

recreational

Medicinal

Medical

prescription

Adult

health & wellness

Defined DoseTM

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Intellectual Property Supports Competitive Positioning

• Generate, license, acquire new patents and other IP to support cannabis 2.0 and 3.0 product concepts

• File broadly, pare down for commercial value

• 7 patents involving novel formats, bioavailability, combinations of cannabinoids and other botanicals

• Patents filed internationally

• First patent out-licensing agreement established

• Leverage IP to drive market opportunities and international partnerships

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Deliver new product forms and attributes to give modern, confident cannabinoid experience

• Expanding product development team

• Expanding R&D and product development budget

• Focus on core strength: innovation

• Leverage third party production expertise and infrastructure

• Smart approach to optimize differentiation and cost structure

Generate product ideas

Develop/source technology to create product

Generate intellectual property protection


Ideation to Commercialization: Leveraging Scientific Know-how

Build/testprototype

Outsource commercial-scale

manufacturing

Market launch/ sales/feedback

CORE STRATEGIC CAPABILITY

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Science Drives Opportunity: “FlowerPod” Case Study

Science-based innovation translates into alternative avenue of commercialization/monetization.

2017Conceptualization

of novel dried flower format

Initialpatents

filed

Prototype development

Discovery of patent by third party;

outreach to Emerald

Preliminary collaboration

2021:License

agreement

2021Anticipated December

commercial launchof new dried flower

vaping product

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Build Confidence in Cannabinoid Products via Human Studies

• Observational studies to assess product effects onwellness and medical conditions

• Leverage clinical development and regulatory expertise

• Partner with reputable academic/medical institutions

• Publish outcomes in scientific journals

• Increase confidence and product preference via study outcomes

• Potential to convert non-cannabis users and expand market

• Two studies planned starting H2 2021 with investigators fromrespected academic medical institutions

• Target indications: back pain and central sensitivity disorders

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CUTTING EDGE SCIENCE



• Opportunity to design, launch and validate new product concepts

• Home base for Emerald to generate revenue and profit

4Scotiabank forecast May 2020

Data adapted by Emerald Health Therapeutics based on Statistics Canada consumer expenditure data

0

300

600

900

1200

1500

4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21Con

sum

er E

xpen

ditu

re

(C$M

)

Illicit market Legal market

• Annual legal spending expected to hit $3.7 B in 20214

Legal Canadian Market Growing/Maturing 22

Canadian legal cannabis market surpassing illicit market sales

Colorado: derivative1 product sales more than double while increasing market share~50% over 5 years vs. dried flower2

Value-Added Specialty Products a Key Growth Opportunity

$0

$500

$1,000

$1,500

$2,000

2016 2017 2018 2019 2020

Sale

s ($

M)

Dried Flower Derivatives

Most mature legal cannabis market shows growing consumer adoption of cannabis derivatives and specialty products

Consumers seek more specific/refined attributes encompassing potency, esthetics (all senses), control, discretion, convenience, effects/outcomes

31%

46%

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Source: Headset – Colorado historical sales data by category, May 2016 – May 20211Derivative products: capsules, beverages, topicals, tinctures, sublinguals, edibles, and vapes2Dried flower: whole dried flower, pre-rolls

Seek relief from chronic pain, arthritis, insomnia, anxiety, other

• Prefer CBD

• Use cannabis through day

• Potency, price and quality important

• Purchase in medical and recreational cannabis markets

• Served by Emerald Cannabis 1.0, 2.0, 3.0 products

• 16.9% of Canadian cannabis market ($)

Top Reasons for Consumption

Relievepain

Treat medical

condition

Sleep

Preference by Product Format

Topical ointments/

creams

Concentrated cannabis

Tincture & sublingual delivery

Source: Market data provided by Deloitte, Jul. 2020

Key Target Markets Seeking Purposeful Actions: “Medical Pursuers”

28% 26% 19%

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Seek to enhance experience of a particular activity

• Relax and increase concentration situationally

• Prefer THC

• Use cannabis few times a week

• Want potent, high-quality products at right dose

• Purchase predominantly in recreational market

• Served by Emerald Cannabis 1.0, 2.0 & 3.0 products

• 16.5% of cannabis market ($)

Medical Pursuers and Focus Enhancers share a preference for more purposeful user experiences

Target Market #2: “Focus Enhancers”

Source: Market data provided by Deloitte, Jul. 2020


Relax Sleep Have fun with friends


EdibleCannabisProducts

Dried flower

50% 44% 19%

Concentratedcannabis

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Huge Untapped Addressable Market: “Likely Users”

Non-cannabis users seeking relief from chronic pain, arthritis, insomnia, anxiety, other

• Desire non-combustible, discreet, convenient formats

• Possible incremental yearly cannabis sales in Canada $2.22B

LikelyUsers

MedicalPursuers

FocusEnhancers

% of Canadian Population

3%

Potential to more than double Emerald’s addressable marketSource: Market data provided by Deloitte, Jul. 2020


Relievepain

Treatmedical

condition

Feel lessstressed/anxious


Topical ointments/

creams

Cannabisinfused

beverage

63% 26% 22%

Ediblecannabisproducts

3%

15%

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Offering Confidence to Experience Cannabinoids

Information and comfort invite trial and conversion

Non-inhaled, “modern”SmokelessDiscreetConvenient

Precise, defined doseGreater predictabilityScientific evidence

Lower likelihood of trialing cannabinoids

Control, confidence and choice of experience

Emerald product focus“Traditional” offerings

InhaledSmokeIndiscreetInconvenient

Unknown dose/potencyUncertain outcomes

Uncertainty and unpredictability

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Functional and wellness botanical products far exceed cannabis market size

• Combine natural health products with cannabinoids

• Create synergistic wellness outcomes

• Create expanded market opportunity by intriguing natural health products consumers

• Initially via regulated channels; eventually through unregulated channels

New Frontier: Convergence of Nutraceuticals and Cannabinoids

Nutraceuticals Global 2024

$50B1

Cannabis USA

CBDTHCCBG

Cannabinoids

HerbsFlowersSpices

OilsCreamsTablets

BeveragesFoods

1Deloitte market data, Dec. 2020: E2020 legal + illicit market 2Market Research Outlet: Global Nutraceuticals Market

$340B2

$$$+++

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Leveraging Partnerships

USA Denmark | Sweden Spain

Securing partnerships to gain access to technology, products and new geographic markets

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USA

LOI with CPG experts, Prima, for co-development

of wellness products

Licensed proprietary IP to FlowerPod in the US and global markets excluding

Canada

Distribution: Emerald oil being sold to Swedish

medical patients

Supply: access high-quality, low-cost Europe-grown supply, with anticipated

GMP certification

Leverages Emerald sales & marketing

infrastructure to sell HYTN’s proprietary

cannabis-beverage line

Canada

Facility• 88,000 s.f. craft-quality cannabis cultivation• Automated packaging and distribution

Grow Area• 21 grow rooms; precision-controlled

micro-environments• 17 processing and packaging rooms

Licensing• Standard Cultivation, Standard Processing• Pursuing new licensing to enhance capabilities

Cultivation• Capacity: 5000 - 6,000 kg annually

Facilities: Cultivation/Production - St. Eustache, Quebec 31

Facilities• Designed for research and development

of new cannabinoid-based products• Process and sell dried and value-added

cannabis products• Medical sales & customer service

Expertise• Multi-decade experience in pharmaceutical

and nutraceutical R&D, formulation, production, Q&A, and regulatory

Licensing• Cannabis Research, Controlled Substances,

Standard Cultivation, Standard Processing & Medical Sales

Facilities: R&D/Production/Medical – Vancouver/Victoria, BC 32

• New product launches expected to drive revenue and gross margin growth through 2021

• Low operating costs

• Substantial cash

• Break-even targeted for Q4 21

-40

-30

-20

-10

0

10

20

30

18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 20Q4 21Q1 21Q2

Cash flow (operating + investing)

CAD$M

Financial Discipline and Focus on Growth

Significant reduction in operating & investing cash use

33

50

60

Capitalization

Cash and Securities

Common shares o/s 213.5M1

Options & warrants 50.9M1

Common shares f/d 264.4M1

Cash CAD$26.9M2

Market Valuation

CAD$21.33M3

121/08/30 221/06/30 321/11/09 4CSE+ OTCQX

Volume (3 month avg.)

465.80K4

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Investor Relations

T: (800) 757 3536 Ext. 5E: [email protected]

Thank youC S E : E M H

O T C Q X : E M H T F

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APPENDIX: INTRO TO EMERALD’S BRANDSTM

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• Focused on delivering quality cannabis consumer experiences

• Craft strain offerings in dried-flower product formats

• Available across Canada, distributed in a targeted defined manner

EmeraldTM

• Craft quality, dried flower products grown and harvested with artisanal care and freshness

• High potency, strain specific oil cannabis oil

• Targeting adult-use Quebec consumers

SouvenirTM

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• Addressing the need for more diverse product offerings in the health & wellness and medicinal adult-use cannabis markets

• Focused on CBD-dominant 1.0 and 2.0 cannabis products

• Offers innovative, differentiated, smokeless product formats

SYNCTMWellness

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• Committed to enhancing consumer experiences by offering pocket-sized formats that enable the user to consume with confidence

• Focused on THC-dominant 2.0 cannabis products

• Offers innovative, fast acting cannabis products, with Defined DoseTM product attributes

FuseTM

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