COLLABORATIVE INSIGHTS February 25, 2019

COWEN COLLABORATIVE INSIGHTS February 25, 2019 While we are keen to gain more insights into the evolving use of CBD in the coming months from our survey work, this initial snapshot offers a framework for sizing the ultimate CBD opportunity. With growing consumer awareness, we conservatively believe that CBD use can grow to 10% of adults in the U.S., or ~25 mm consumers (using current population) by 2025. If we assume that the average consumer ultimately spends $640 per year (or less than $2 / day), that would imply a $16 bn market opportunity for CBD. We would note that using the U.S. Census 18+ population projection in 2025, a 10% incidence rate would equate to just over $590 in annual spend to achieve $16 bn. Conversely, holding the $640 in spend constant with the U.S. Census forecasted population would result in over $17 bnin revenues by 2025. 2 That said, we view this estimate as somewhat conservative, as we can envision a scenario where a consumer that uses a CBD tincture or capsule, may also be inclined to convert his or her beauty regimen to include CBD (e.g., CBD infused beauty products), and or use a topical for targeted relief as well. Our $16 bn estimate assumes the following category contributions: Figure 3 We Believe CBD Can Be a $16 BN Revenue Opportunity in the U.S. by 2025 NUTRACEUTICALS $6,400 TOPICALS $4,000 S16BN CBD REVENUE OPPORTUNITY Se BEAUTY $1,120 BEVERAGES $2,400 Note: $ in mm unless otherwise stated. Source: Cowen and Company COWEN.COM 9 HOUSE_OVERSIGHT_024825