Mr. Rob Hill reports

EMERALD HEALTH THERAPEUTICS CONTRACTS FOR 1,200 ACRES OF CANADIAN HEMP HARVEST, REPORTS SIGNIFICANT PROGRESS ON FACTORS GROUP EXTRACTION FACILITY, AND FORMS US HEMP SUBSIDIARY

Emerald Health Therapeutics Inc. has expanded its agreement to purchase harvested hemp flower and leaf, or hemp chaff, from Emerald Health Hemp Inc. (EHH) from 1,000 to 1,200 acres for 2019. EHH is a wholly owned subsidiary of Emerald Health Sciences Inc. and a related party of Emerald. Based on last year's harvest, Emerald expects production from the 1,200 acres to be at least 270,000 kilograms of hemp chaff in 2019 with, conservatively, approximately 2 per cent cannabidiol (CBD) content. Emerald estimates that this hemp may yield 3,500 kg of extracted CBD, which it plans to use to manufacture premium oils, softgels and associated value-added products for Canadian adult-use and medical consumers.

"Emerald, through its partnership with the Factors Group and their scalable processing capacity, is uniquely situated to become one of Canada's leading producers of premium CBD products from hemp," said Dr. Avtar Dhillon, president and executive chairman. "We established our first-mover advantage in 2018 by securing hemp on a large scale and gaining production insights that will benefit us in 2019. With even more supply contracted for this year, we expect significant near-term growth in this market segment."

In 2018, Emerald purchased 134,000 kg of hemp chaff from EHH, which represented total production from 836 acres. The CBD content of this hemp, which was frozen and stored, ranged from 0.8 per cent to 1.0 per cent. This purchase was enabled by the Canadian government's approval on Aug. 10, 2018, to allow harvest of the whole hemp plant for commercial purposes. As a result, licensed companies are now able to use hemp chaff for CBD extraction.

In 2019, Emerald expects to receive hemp harvested earlier in the hemp maturation cycle, when biomass and CBD content are approaching their peak.

Emerald intends that the past and future harvested hemp will be processed through extraction, with some also going through gel encapsulation, in the Factors Group manufacturing facility in Kelowna, B.C. With the support of Emerald, the Factors Group expects to complete final construction on the retrofitting and segmentation of its proposed processing facility in the coming weeks and plans to submit its final evidence package to Health Canada for review and approval shortly thereafter. This operating facility is estimated to have annual extraction capacity of up to one million kg of biomass and can produce up to 600 million CBD softgel capsules per year.

Emerald currently produces and sells in Canada its Sync 25 CBD oil in the adult-use market and other high-CBD products in the medical market.

Emerald has also formed Emerald Health Therapeutics Hemp USA Inc., a wholly owned subsidiary of Emerald Health Therapeutics, which will seek to establish strategic supply agreements with United States-based hemp farmers as well as explore opportunities to export its Canadian hemp-derived CBD products to the U.S.

"CBD, despite being non-psychoactive, currently cannot legally be added to food, beverage or dietary supplement products under U.S. Food and Drug Administration (FDA) rules. However, with the FDA's recent initiation of its CBD policy review, we believe there is potential that in time federal U.S. rules will permit CBD-infused products," said Allan Rewak, vice-president of communications and stakeholder relations. "Emerald intends to maximize every opportunity that becomes allowable."

As part of its efforts to realize these opportunities, Emerald is currently leading and providing guidance to the American Trade Association of Cannabis and Hemp's International Council on CBD and hemp.

Separately, Emerald recently paid $5-million to the vendors of Verdelite Sciences Inc. and Verdelite Property Holdings Inc. as partial payment of the remaining amount due for their sale of shares of Verdelite to Emerald. Emerald is obligated to make additional payments of $5-million on July 16, 2019, and $5-million plus interest of 10 per cent per annum on Aug. 27, 2019, as final settlement of all amounts due with respect to this transaction.

About Emerald Health Therapeutics Inc.

Emerald Health Therapeutics is a Canadian licensed producer of cannabis. Its 50-per-cent-owned Pure Sunfarms joint venture in British Columbia is licensed and fully planted in the first of its two 1.1-million-square-foot greenhouses. The capacity of each greenhouse is estimated to exceed 75,000 kg of cannabis annually. Emerald's Verdelite operation in Saint Eustache, Que., is completing the buildout of its 88,000-square-foot indoor cultivation facility and is scaling up production. Emerald has contracted for approximately 1,200 acres of hemp in 2019 to 2022 with the objective of extracting low-cost cannabidiol.

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