Mr. Sandy Pratt reports

EMERALD HEALTH PROVIDES CORPORATE UPDATE

Emerald Health Therapeutics Inc. has provided a corporate update on recent developments and is reiterating its vision for growth in 2017 and onward.

Emerald's vision is to be a leading provider of cannabis products. As the eighth licensed producer in Canada, Emerald's methodical approach to building its business has focused on its core competency: clinical research and the development of intellectual property for downstream cannabis products. The company recently announced several substantial developments and is pursuing multiple opportunities to fulfill its strategy.

Emerald is focused on four pillars to meet the current needs of the Canadian medical marijuana market and future demand in the therapeutic and non-therapeutic adult-use market:

1. Significant production expansion;
2. Research and development and clinical work;
3. Extraction expertise and downstream product development;
4. Expanding nationwide distribution channels.

Rapidly and cost-effectively scaling capacity

Emerald is undergoing two major expansion projects that will greatly increase production capacity, supporting the company's flower and extract production. These projects will enable us to produce high-quality, low-cost cannabis and provide the backbone for all of Emerald's medical and adult-use endeavours.

Metro Vancouver: Subsequent to the announcement last November of the letter of intent, the company has entered into a 30-year lease agreement for 32 acres of land in Metro Vancouver. The company broke ground on phase 1 in April and construction is under way on a 50,000-square-foot state-of-the-art, purpose-built cultivation space that is expected to support the production of at least 5,000 kilograms of cannabis flower per annum. As an already-licensed producer, the company expects to rapidly advance through the new licensing process and have product ready for sale ahead of the anticipated non-therapeutic adult-use market, with first harvest expected in the first half of 2018.

Joint venture with Village Farms: On June 6 the company announced a transformational joint venture (JV) with Village Farms Inc., one of North America's largest vertically integrated greenhouse growers. Village Farms has contributed a 1.1-million-square-foot operating greenhouse facility which is currently configured to produce tomatoes (with the option for the JV to acquire a total of 4.8 million square feet) while it will contribute $20-million in financing. The transaction combines decades of industrial-scale greenhouse growing experience and well-established, optimized management systems with Emerald's regulatory, technical and science-based experience. The company believes that converting an existing facility will greatly accelerate the execution of its go-to-market strategy as it prepares for the adult-use market, while considerably reducing operational scaling risk. The company has begun the application process to obtain a Health Canada licence for a portion of the initial 1.1-million-square-foot greenhouse (estimated to yield more than 75,000 kg per annum once full production capacity is achieved) and has commenced converting part of the greenhouse for cannabis cultivation. The company foresees applying for a production licence in the fall, providing ample time to ramp production and seek a sales licence ahead of legalization of the adult-use market.

Advancing cannabis science

Through a research program supported by a contribution from the National Research Council of Canada's industrial research assistance program (IRAP), Emerald has characterized a rich collection of cannabis strains from its extensive genetic library, creating a strong base for its continuing product development efforts to serve varying client preferences. From its collection of cannabis seeds, the company selected a number of unique strains with a high CBD level and high CBD ratio, as well as other desirable cannabinoids and terpene profiles. These strains allowed the company to provide cannabis oils with the highest CBD potency in Canada. CBD is a primary constituent of cannabis that anecdotally and in initial clinical studies by third parties has displayed medical benefit, without being psychoactive.

Additionally, Emerald was one of the first licensed producers to provide THCA oils. THCA is the native constituent of cannabis plants that is the precursor to THC. While both THCA and THC have been reported to provide analgesic effects, THCA is non-psychoactive.

More recently Emerald announced the formation of an advisory board that will provide strategic guidance to the company as it continues product and market development, pushes forward in developing pharmaceutical formulations, and conducts observational studies and clinical trials. The company has started its research through data collection from patients using its cannabis oils, and plans to commence prospectively designed clinical trials later this year.

Focusing on downstream product development

The extract-based market continues to rapidly grow and is expected to be a meaningful part of the adult-use market. Emerald believes that beyond simple extraction, pharmaceutical-quality formulations supported by clinical research and development will be the next evolution in the medical cannabis market. Such formulations are able to offer repeatedly predictable, consistent dosing and other characteristics desired by the medical community. The company believes that achieving such attributes represents an important opportunity and necessity in developing a valuable portfolio of intellectual property that will strengthen the company's position as a recognizable and valued medical brand in Canada and may lead to future international opportunities.

Emerald already has extraction-based products serving the medical market but important steps are necessary to achieve industrial-scale extraction and the processing capability and quality benchmark for pharmaceutical-quality formulations. Emerald undertook a vital first step by forming its JV with Village Farms, which will optimize raw material supply and cost for downstream extraction-based product development. The company is also taking steps toward scaling extraction and other processes to meet the demand and product criteria for future medical and non-medical extraction-based products.

Expanding distribution channels

The company's end vision is for Emerald to be a leading Canadian supplier of both branded and wholesale cannabis products. Emerald has the systems in place to support clients nationwide and has sales across the country, with an excellent customer service record. With significantly expanded consumer demand expected in conjunction with legalization of the adult-use market in 2018, Emerald is working toward multichannel distribution to fully support the eminent production position it is striving for with its internal and joint venture capacity expansion as well as its product development initiatives.

Join the company on its journey of making lives better through cannabis science.

About Emerald Health Therapeutics Inc.

Emerald Health Therapeutics operates primarily through Emerald Health Botanicals Inc., a wholly owned subsidiary of the company and a licensed producer under the access to cannabis for medical purposes regulations (the ACMPR). Botanicals is authorized to produce and sell both dried medical cannabis flowers and medical cannabis oils in Canada. Botanicals currently operates an indoor facility in Victoria, B.C., with plans for expansion on a 32-acre property in Metro Vancouver and a joint venture with Village Farms utilizing 25 acres of greenhouse complex in Delta, B.C. Botanicals is one of Canada's most medically focused licensed producers, with a team of highly qualified management experienced in pharmaceutical drug discovery, development and distribution.

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