A Message from the CEO - EastWest's Corporate Update on its Vision, Strategy, and Execution

VANCOUVER, BC / ACCESSWIRE / March 28, 2019 / EastWest Bioscience Inc. (the "Company" or "EastWest") (EAST.V) President and CEO Rodney Gelineau gives a corporate update.

Dear Shareholders,

The path to the Canadian and US Hemp and CBD markets is nothing short of exhilarating. We have made key strategic decisions for driving our future vision of the market and in 2019 we are focused on executing on our strategy, carefully adjusting where we recognize the need to and exploring and developing new opportunities as they arise.

Executing our Strategy

We believe our strategy to develop a strong line of well branded consumer products sold through mainstream stores in Canada is paying off. It is paving the way to accelerated CBD product releases into domestic and international markets. Our execution on this continues strongly. We are on target to produce several new products in all four of our mainstream product lines in 2019. Those products are being introduced into an ever-growing list of stores across Canada and being distributed by a growing stable of large distribution networks. These products are strategically placed to allow for rapid adoption of CBD enhanced versions as soon as Canadian law allows. Sales to these networks are already ramping well and we expect revenues through these channels to grow significantly through 2019.

Another area of concentration is the Sangster's network of stores: rebuilding the Sangster's brand and increasing revenues. While Sangster's came with revenues, we are improving cost efficiencies throughout the Sangster's ecosystem as well as rebuilding the marketing, product development and merchandising strategies to increase the revenues and build it into a modern household name. Sangster's also provides the unique ability to pilot and test EastWest's product development, marketing and merchandising internally, in real-time.

Leveraging our Manufacturing Facility

The Penticton facility is municipally zoned M1 which explicitly allows for Marijuana Production. EastWest is currently in negotiations with a BC based licensed cannabis company for a joint venture to conduct laboratory analysis, cannabis cultivation and CBD extraction. The 31,000sf Penticton facility is ideally suited for this potential JV's needs, which will leverage existing infrastructure such as the site's organic materials laboratory, previously in operation by Planet Organic for consumer products testing.

The facility also houses Orchard Vale Naturals ("OVN") EastWest's nutraceutical manufacturing and is our western Canadian warehousing. EastWest is growing revenues by increasing the volume of OEM manufacturing OVN does, as well as negotiating to add 3rd party warehousing. We have identified a market gap and are heavily targeting sellers of products who require short production runs as well as ancillary warehousing and delivery fulfilment services.

Leveraging CBD and the US Markets

We are anticipating the regulatory environment on both sides of the 49th parallel. In Canada, we are monitoring the legislation that will determine if CBD will be legal to sell as natural health products or as pharmacy products, and we continue with parallel strategies for both those scenarios. For US markets, we are awaiting TSX permission to begin sales of CBD products in the USA and hope to have the decision soon.

We are also currently negotiating with manufacturers in the USA for both CBD and non-CBD products and intend to implement our mainstream consumer products strategy for both CBD and non-CBD hemp products in the USA as soon as we have the regulatory authorization to do so.

The future opportunity of the CBD market in the US is understood to be very significant. According to sources published on Bloomberg, estimates suggest that US markets will push sales upwards of US$16B by 2026¹, with some opinions suggesting as high as US$130B by 2029².

While mass-market retailers (like Target, CVS or Walmart) are more likely to introduce cutting-edge natural and organic brands than they were a decade ago, CBD sales are not yet expected to materialize in a big way until all issues of domestic supply and dietary supplement vs. pharmaceutical regulatory reconciliation are resolved, and brands establish a proven track record of consumer interest in the natural and specialty retail channel. EastWest is currently building these channels through its four brands of consumer products. Interestingly, giant retailer CVS announced last week they were going to be introducing CBD in 800 stores in 8 states³, likewise Walgreens announced they will begin selling CBD in 1500 stores⁴. With those mainstream retailer announcements, it is likely the markets will begin to develop quickly, and once CBD products gain mass-market acceptance sales are expected to grow rapidly.