About Emerald Health Therapeutics

Emerald Health Therapeutics, Inc. engages in the production and sale of cannabis and cannabis products pursuant to the Cannabis Act (Canada) (the Cannabis Act). The company offers various dried cannabis strains and cannabis oils each with varying levels of tetrahydrocannabinol (THC), cannabidiol (CBD) and other cannabinoids. The company does not engage in any U.S. marijuana-related activities. To the extent that the company pursues international expansion, it would conduct business in jurisdictions outside of Canada where such operations are legally permissible in accordance with the laws of the jurisdiction and applicable Canadian regulatory and stock exchange requirements. The company’s primary operations consist of the production of cannabis for the purpose of sale, production of cannabis oils and research and development; sale of medical products through an online secure customer portal and non-medical products directly to provincial and territorial governments and private retail stores (where permitted); registration, sales and customer service by way of its online secure customer portal and telephone; research and development related to the characterization of cannabis strains, new product formulations and delivery systems; and extraction of cannabis oils. Products The company offers various dried cannabis strains, pre-rolls and cannabis oil products each with varying levels of THC and CBD in both the Canadian adult-use and medical-use markets. It sells dried cannabis and cannabis oils through to its medical patients. The company has eight cannabis oil products in production, including THC acid (THCA Indica and THC Sativa) oils, THC oil, two different strength THC oils, two different strengths of oils containing both THC and CBD, and two different strengths of oils containing primarily CBD oil. The cannabis oils are whole plant extracts that deliver the benefits of cannabinoids orally. Following the legalization of cannabis in Canada, the company started selling dried cannabis and pre-rolls to the adult use market. The company produces approximately 13 strains from its own genetics, which are available at different times, subject to growing cycles. Its products are available for purchase from licensed vendors in the recreational market in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Newfoundland and Labrador, Prince Edward Island, Nova Scotia and in the Yukon Territory. Licenses The company holds licenses from Health Canada under the Cannabis Act to produce and sell cannabis products in accordance with applicable laws in Canada. When the Cannabis Act came into force in 2018, the company’s licenses, which were issued under the Access to Cannabis for Medical Purposes Regulations, were deemed to be their functionally equivalent licenses under the Cannabis Act. The company indirectly holds various licenses through its wholly-owned direct and indirect subsidiaries, Emerald Health Therapeutics Canada Inc., Verdélite Sciences Inc. (Verdélite), and Avalite Sciences Inc. (Avalite), as well as others, which are held by the joint venture. The licenses held by the operating subsidiary permit it to cultivate cannabis and produce and sell dried cannabis, cannabis oils, cannabis plants and cannabis seeds; the license held by Verdélite permits it to cultivate, extract, manufacture, synthesize, test and sell cannabis; the license held by Avalite permits it to process cannabis and produce cannabis oil; and the licenses held by the joint venture permit it to cultivate cannabis and produce and sell dried cannabis, cannabis oils, cannabis plants and cannabis seeds, all in accordance with the terms and conditions specified in the applicable license and the Cannabis Act. Distribution The company distributes its recreational cannabis products in accordance with applicable federal and provincial regulatory frameworks. Its recreational products are available from licensed vendors in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Newfoundland and Labrador, Prince Edward Island, Nova Scotia and in the Yukon Territory. The company has supply agreements with the applicable government-owned distributors (where applicable) in each of those provinces/territories. The company also continues to distribute its medical cannabis products directly to its customers. It has approximately 4,000 registered medical clients for its medicinal products. Any cannabis or cannabis extracts sold or provided directly to medical clients must be delivered through secure shipping only and include a means of tracking the package during transit. The company ships all products discretely to clients through Purolator and Canada Post in accordance with current regulations. Medical clients order from the company primarily through its secure online customer portal and through telephone ordering with its customer service team. Business Strategy The company’s strategy is to meet all of its product manufacturing and distribution channel requirements with cannabis grown from the Richmond Facility and Verdélite Facility. Seasonality The output of the company’s greenhouse is affected by seasonal changes in the weather, with the production of cannabis in a greenhouse higher per plant in the summer months as compared to the winter months due to longer daylight hours. Research and Development For the year ended December 31, 2019, the company incurred research and development expenses of $4,279,055.