Figure 4 - CBD Plasticulture Model - University of Kentucky

COWEN COLLABORATIVE INSIGHTS February 25, 2019 - Figure 4 - CBD Plasticulture Model - University of Kentucky CBD% Price per % Dry Matter Yield Gross Returns Per Acre Transplants (clone} Fertilizer -Nitrogen (urea) -Phosphorus (P205} -Potassium (P20) Planting/Setting Black Plastic/Drip Line Harvest Cost Cash rent Application & License Fee Lab Test Other $36,000 $36,000 plants $5.00 $7,500 unit $0.47 $47 unit $0.60 $18 unit $0.38 $17 plants $0.20 $300 acre $515 $515 hrs $12.50 $405 acre $300 $300 per year $400 $400 $300 $300 $669 Total Variable Cost Per Acre Margin Over Variable Cost Per Acre Source: hemp.ca.uky.edu, Cowen and Company 14 Sensitivity Analysis For CBD Plasticulture Model. As shown below, there is a significant change in return for every $1 change in price per CBD%. A deterioration of this pricing with no corresponding change in cost would impact CBD production. Breakeven for the model above is ~$9/Ib for dry matter yield compared to the $30/Ib used to calculate the margin over variable cost per acre used. While price % CBD can fluctuate, the second factor determining the dry matter yield/Ib price is CBD%. Figure 5 - Sensitivity Analysis Price per% CBD Total Revenue Returns Above Variable Costs $43,200 $36,000 $28,800 $21,600 $14,400 $7,200 Source: hemp.ca.uky.edu, Cowen and Company CBD Hemp Clearly An Attractive Option For Growers. No other crop in the U.S. offers the type of return of the CBD Plasticulture Model. We would expect the two largest crops in the U.S.: corn and soybeans to lose some acreage to CBD hemp, though given corn and soybean area planted was 89.1M and 89.2M acres respectively in 2018. (Total planted acres in the U.S. is ~320M acres.) COWEN.COM HOUSE_OVERSIGHT_024830