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Emerald Health Therapeutics Inc
Symbol C : EMH
Shares Issued 135,437,506
Close 2018-07-12 C$ 2.94
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Emerald Health nails down where it's going

2018-07-12 11:25 ET - News Release

Mr. Chris Wagner reports


Emerald Health Therapeutics Inc. has provided an update on its differentiated strategy to excel in the growing cannabis industry.

"In Emerald's view, the most compelling opportunities and growth in the cannabis industry will arise in serving the unmet needs of individuals seeking medicinal and wellness benefits. We also have evidence that adults using cannabis for purely recreational benefits desire products with predictable characteristics. Our vision is to enable both medicinal and recreational users to consume with confidence," said Chris Wagner, chief executive officer of Emerald.

"Our expectation of being in this business is to develop unique, protected products that are preferred by consumers, command high margins, and achieve attractive profit for the company and its shareholders. Our seasoned team, having cumulatively spent hundreds of years in medicine, pharmaceutical development and sales, biotechnology R&D and clinical development, as well as natural health product development, knows how to run the marathon of developing high-quality products based on the processes, tools and quality standards of the life sciences industry. Critically, we also have tremendous consumer sales and marketing expertise, know-how to position and brand products, and are adept at navigating the ins and outs of dealing with large buyers."

Emerald's business plan is based on three pillars:

Product innovation: Emerald's focus is to conceive and patent novel ideas, license or develop proprietary products, and display thoughtful leadership to position these products to the marketplace. These products may be protected by unique formulations, delivery methods and applications. Even the company's recreational products, often based on unique cannabis strains, will benefit from the company's focus on delivering predictable doses and more sophisticated delivery methods. These initiatives will be confidential until appropriate turning points, but Emerald has filed for patents and is making great strides toward human studies. The dealer licence held by Northern Vine Labs, in which Emerald owns a majority stake, provides valuable latitude to enable an array of research and product development initiatives.

Branding and sales: The company's executive vice-president of sales, marketing and operations, Paul Dillman, is well versed in international consumer product marketing and complemented by an expert internal team, as well as the acclaimed branding and advertising agency DDB Canada. Emerald is composing a highly creative campaign that will uniquely and strongly position Emerald products in the marketplace. The company will initiate its communication around this product line in August.

Emerald has been in frequent and active discussions with all the provincial cannabis distribution agencies across Canada, and has multiple tours of high-level executives of these agencies to allow them to see first-hand the magnitude and quality of Emerald's production capabilities. Emerald's analysis and strategy are based on the reality that demand will clearly outweigh supply in the near term. Emerald has excellent relationships with the provincial distributors and is very well positioned to engage in supply agreements. Emerald does believe that sales growth under the existing medical framework represents an attractively high margin and preferable sales channel. While the initial awards of supply agreements do represent tangible evidence of a relationship, Emerald is confident in its marketing strategy and it has elected to defer the formalization of these types of agreements.

Emerald is taking a powerful strategic step to launch the non-cannabis Endo product line into natural health product, grocery and pharmacy retail channels across Canada. With its first-hand learning that six of 10 cannabis users are also natural health product users, Emerald is motivated by this unique opportunity to sell non-cannabis products that, like cannabis products, affect the endocannabinoid system, are complementary to the company's cannabis product line and create an avenue for very pro-active, widespread advertising that is not allowable for cannabis-based products. Cross-branding is a marketer's delight. Emerald's branding for this product line will be powerful and pervasive.

Production and raw material sourcing: While the company avoided risking investor capital prior to the Canadian government's proclamation in April, 2017, about cannabis legalization plan, Emerald moved quickly to consummate a unique production joint venture with one of the largest, most experienced growers of plants in greenhouses in North America, Village Farms International. In creating the joint venture, Pure Sunfarms, Emerald did not just want a structure of glass and metal, it wanted the opportunity to combine and share its deep knowledge of cannabis and cannabis growing with Village Farms' deep knowledge of growing plants in very large greenhouses. This JV has resulted in an optimal design and implementation of a world-class cannabis growing facility. Emerald has completed and has its cultivation licence for one quarter of the 1.1 million square feet. Emerald is in commercial production and will be harvesting and inventorying product for the Oct. 17 legal adult-use launch date. Emerald has had a positive experience with Health Canada and believes that with its record and its high standards in its operations, the company will receive its sales licence for Pure Sunfarms in a timely manner.

Emerald has also not only gained an expanded and differentiated 75,000-square-foot indoor production capability but also exposure to a new market -- the second largest in Canada -- with its acquisition of Agro-Biotech in Quebec.

Based on Emerald's view of the market and its business strategy, Emerald will be agile and will ensure that it has access to all potential sources of cannabis raw material that will assure suitable quality and low-cost inputs for the value-added, downstream products it is working to develop. These sources may involve outdoor growing in Canada and could also involve sourcing dried flower or extracted product from other global sources. The sourcing of non-dried-flower raw material (for example, oils) from international sources would also be enhanced by its ownership of a dealer's licence through Northern Vine Labs.

Emerald's focus is on great execution and delivering highly appreciated, high-margin products.

About Emerald Health Therapeutics Inc.

Emerald Health Therapeutics is a licensed producer under Canada's Access to Cannabis for Medical Purposes Regulations, and produces and sells dried cannabis and cannabis oil for medical purposes. Emerald is preparing to serve the anticipated legal Canadian adult-use cannabis market starting in 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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