COLLABORATIVE INSIGHTS February 25, 2019

COWEN COLLABORATIVE INSIGHTS February 25, 2019 Health Care: Drug Retailer Perspective (Rhyee) 2 CBD Products Gaining Traction With Independent Pharmacies CBD products appear to be gaining traction with independent pharmacies, many of whom are already selling or planning to sell CBD oils. We don't find this surprising given the high demand for and strong expected growth potential of CBD products, as well as the differentiation it affords independents relative to larger chain pharmacies. Independent pharmacies also likely find the high-margin profile of CBD oils attractive, which we suspect is similar to those of more traditional over-the-counter drugs. OTC drugs are a substantial profit driver for independent pharmacies. The greater acceptance of and improving sentiment towards CBD products as a viable business for independent pharmacies is evidenced by a panel held by the National Community Pharmacists Association (NCPA) at its annual convention in October 2018, which served to educate independent pharmacy owners of the legality, clinical uses, potential risks and marketing tactics of CBD oils. For those independent pharmacies that have decided to sell CBD oils, ensuring that they provide high-quality products is paramount, witha focus on looking at the bioavailability of CBD. Additionally, independent pharmacies emphasize the importance of patient education, in regards to treatment and potential side effects. Anecdotally, reports note that many independent pharmacies have received positive feedback from patients, attributing diminished opioid dependence and pain relief to CBD oils. Large Pharmacy Chains Don’t Appear As Quick To Offer CBD Oils Large pharmacy chains, such as CVS Pharmacy and Walgreens, don’t currently sell CBD oil. WBA management has noted that, while the company is monitoring the CBD market and the potential to sell it, WBA currently has no public stance on whether it plans to sell CBD products future. Interestingly, Boots, which is a pharmacy chain in the U.K. owned by WBA, sells CBD oil in three different doses (Figure 107). As such, we wouldn't be surprised if WBA decides to sell CBD products in the future. Figure 107 Boots - Cannabidiol & CBD Oil Offerings Ship to AS | @Findastore | € Help Bool Mia shop by department prescriptions services inspiration & advice Search products, brands and services Q wa cannabidiol & CBD oil filter by: brand Showing 1-3 of 3 Sort by: Best match View 24 tte price 2. 9 0: * 0 0; a — Dragonfly CBD Cannabidiol Oil 300mg 3.3% - 10m! 3 for 2 on selected vitam... Dragonfly CBD Cannabidiol Oil 500mg 5.6% - 110ml 3 for 2 on selected vitam... Dragonfly CBD Cannabidiol Oil 1000mg 11.1% - 10mI 3 for 2 on selected vitam... Source: Boots.com and Cowen and Company COWEN.COM 63 HOUSE_OVERSIGHT_024879