Mr. Chris Wagner reports

EMERALD HEALTH THERAPEUTICS REPORTS 2ND QUARTER 2018 FINANCIAL RESULTS AND PROVIDES CORPORATE UPDATE

Emerald Health Therapeutics Inc. has filed its financial statements and management's discussion and analysis for the three and six months ended June 30, 2018. The documents are available for viewing on SEDAR and at the company's website.

"I am proud of the success we've had scaling our business so far this year," said Chris Wagner, chief executive officer of Emerald Health Therapeutics. "Since the start of the second quarter, we acquired and began cultivating cannabis at our Quebec-based licensed producer, Agro-Biotech, substantially increased our licensed cannabis production area at our Pure Sunfarms joint venture to roughly 420,000 square feet and obtained from Health Canada Pure Sunfarms' sales licence. We signed our first provincial supply agreement with our home province of B.C. on terms we were very happy with. We also announced a term sheet for a strategic alliance with Factors Group of Nutritional Companies Inc., Canada's largest nutritional supplement marketer and manufacturer, which we expect to significantly expedite our plans to process large quantities of biomass to extract and encapsulate bioactive compounds from cannabis and other plants."

Selected quarterly financial information

The financial information in the attached table summarizes selected financial information for the company for the last eight quarters. The information was derived from annual financial statements prepared in accordance with IFRS (international financial reporting standards) or interim financial statements prepared in accordance with IFRS applicable to the preparation of interim financial statements, IAS 34, interim financial reporting.

                                                    June 30, 2018   March 31, 2018   Dec. 31, 2017   Sept. 30, 2017 

Revenue                                                $  284,262       $  373,218      $  279,362       $  211,316  
Share-based payments                                    2,081,661        1,954,047       1,979,553          271,968 
Interest revenue                                          274,436          250,064          43,024           60,997 
Share of income (loss) from joint venture                 682,431         (301,793)        (44,562)        (278,016)
Net (loss)                                             (5,610,970)      (5,045,420)     (4,027,569)      (1,939,371)
Net (loss) per share (basic and diluted)                    (0.04)           (0.04)          (0.04)           (0.02)
                                                                                                
                                                    June 30, 2017   March 31, 2017   Dec. 31, 2016   Sept. 30, 2016 
 
Revenue                                                $  245,708       $  201,268      $  124,251       $   48,933
Share-based payments                                      369,788          201,186         137,113          467,878
Net (loss)                                             (1,726,523)      (1,205,858)       (880,424)      (1,009,841)
Net (loss) per share (basic and diluted)                    (0.02)           (0.02)          (0.01)           (0.02)

Business update for, and subsequent to, the reporting period

Cannabis sales agreements -- adult-use markets

On July 24, 2018, the company signed a memorandum of understanding (MOU) with the British Columbia Liquor Distribution Branch (BCLDB) to supply the company's high-quality cannabis products to the BCLDB to serve the adult-use market throughout British Columbia.

Expansion projects

The company's joint venture, Pure Sunfarms, continues to move toward achieving its goal of large-scale, high-quality, low-cost cannabis production. On July 27, 2018, Pure Sunfarms received its cannabis sales licence from Health Canada. Additional space continues to be developed for cannabis production at the Pure Sunfarms' 1.1-million-square foot (25-acre) greenhouse facility located on a 50-acre parcel of land in Delta, B.C. (Delta 3), with the entire 1.1-million-square-foot Delta 3 site expected to be in production in 2019.

On Aug. 21, 2018, the company appointed Mandesh Dosanjh as president and chief executive officer of Pure Sunfarms.

Supply agreements

On April 30, 2018, the company entered into a supply agreement with Pure Sunfarms, whereby the company has agreed to purchase 40 per cent of Pure Sunfarms' production in 2018 and 2019 at a set price per gram.

Acquisitions

On May 2, 2018, the company acquired 100 per cent of the issued and outstanding shares of 8611165 Canada Inc. and its affiliate 9353-8460 Quebec Inc. (together Agro-Biotech), as well as the shareholder loans payable by Agro-Biotech, for total consideration of $90-million, subject to adjustment, payable 50 per cent in cash and 50 per cent in common shares.

Agro-Biotech is a licensed producer under the ACMPR (Access to Cannabis for Medical Purposes Regulations) located in Saint-Eustache, Que. Agro-Biotech's assets include land and a 75,000-square-foot indoor grow facility. Agro-Biotech has built out 20,000 square feet of this facility to date. Emerald Health Therapeutics expects to have the remainder of the 75,000-square-foot facility equipped to produce high-quality dried cannabis flower and be fully operational by early 2019.

Emerald Health Naturals Inc. (EHN)

On April 17, 2018, the company entered into a binding agreement with Emerald Health Bioceuticals Inc. (EHB), a company related by common ownership, 1160305 BC Ltd., GAB Innovations Inc. and Dr. Gaetano Morello, a director of the company's parent company, Emerald Health Sciences, with respect to the formation of EHN. Subject to regulatory approval, the company agreed to invest $5-million for a 51-per-cent ownership interest in EHN. EHB will grant EHN the exclusive Canadian distribution rights to EHB's product line for a 49-per-cent ownership interest in EHN. EHB's product line consists of nutritional supplements, which use non-cannabis, non-psychoactive plant-based ingredients to provide potentially beneficial support to the body's endocannabinoid system. The TSX Venture Exchange has given conditional approval to the transaction, subject to receipt and review of material agreements and a news release.

Subsequent to this agreement, the company signed a term sheet to form a strategic alliance with Factors R&D Technology Inc. (FTI), described herein, which includes a provision for EHN to issue shares to FTI representing 25 per cent of its issued share capital. This share issue is expected to reduce the company's future ownership in EHN to 38 per cent.

The formation agreement launches the company's multipronged program to market and sell a proprietary, award-winning non-cannabis line of endocannabinoid-supporting nutritional products in Canadian grocery, natural health product and pharmacy stores.

Factors R&D technology

On Aug. 27, 2018, the company signed a term sheet to form a strategic alliance with FTI, a division of Factors Group of Nutritional Companies, in which FTI will provide pharmaceutical-grade, industrial-scale manufacturing capacity as well as expertise in GMP-level (good manufacturing practices) extraction, soft gel production and packaging. FTI will provide the company with access to a facility capable of processing up to one million kilograms of biomass annually and soft gel production capacity of up to 600 million capsules per year. The company will pay an initial $5-million fee to FTI to cover the initial costs of transition to cannabis extraction.

The term sheet also provides that FTI will enter into an exclusive agreement with EHN (described above). This will enable the companies to collaborate on product innovation, marketing and distribution strategies to provide a range of products containing cannabinoids, where legal, and other herbal formulations to support the human endocannabinoid system to the Canadian and global health products market. The collaboration will initially focus on manufacturing, distribution and sales of EHN's current product line. As part of this arrangement, EHN will issue shares to FTI representing 25 per cent of its issued share capital.

The term sheet is non-binding. The strategic alliance is subject to the negotiation and execution of definitive agreements. The strategic alliance and related activities are also subject to obtaining all necessary regulatory approvals.

Northern Vine Canada Inc.

On May 15, 2018, the company exercised its right to purchase additional common shares of Northern Vine issued from treasury, increasing its ownership of Northern Vine to 65 per cent for $2.75-million.

On Aug. 15, 2018, the company increased its ownership in Northern Vine to 100 per cent by purchasing all of the shares of Northern Vine held by Abattis Bioceuticals Corp. The company paid Abattis $2-million in cash and issued 1,093,938 common shares of the company.

The company will pay Abattis a milestone payment in common shares of Emerald Health Therapeutics valued at $4-million if Northern Vine and/or the company receive gross revenue of $10-million from the sale of products or services introduced by Abattis within 36 months ended August, 2021.

Northern Vine continues to focus on developing its laboratory services for the cannabis industry and expanding its operations in oil extraction.

Financings

In January, 2018, February, 2018, and May, 2018, the company completed financings that resulted in total gross proceeds from unit issuances and warrant exercises of $67.8-million (net proceeds of $67.5-million), and has the potential to a raise an additional $41.8-million if the remaining outstanding warrants from these financings are exercised prior to expiry. The company intends to use the proceeds to finance the completion of capital projects as well as for potential future expansion and acquisitions, including partnership transactions, research and development, expansion of the company's existing extraction capabilities, and for working capital and general corporate purposes.

Financial reports

Full details of the financial reports and operating results for the first quarter of 2018 are described in the company's consolidated financial statements with accompanying notes and the related management's discussion and analysis. These documents and additional information on Emerald Health Therapeutics are available on the SEDAR website.

About Emerald Health Therapeutics Inc.

Emerald Health Therapeutics is licensed in Canada to produce and sell dried cannabis and cannabis oil for medical purposes. Emerald is preparing to serve the fully legalized Canadian adult-use cannabis market starting Oct. 17, 2018. Emerald owns 50 per cent of Pure Sunfarms, which is converting a licensed existing 1.1-million-square-foot greenhouse in Delta, B.C., and is now in commercial production. It owns Agro-Biotech, a Quebec-based licensed cannabis grower with a 75,000-square-foot indoor facility, and is planning to add a 500,000-square-foot greenhouse in Metro Vancouver.

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