EastWest is Executing Its Long-Term US Hemp Strategy

VANCOUVER, BC / ACCESSWIRE / January 24, 2019 / EastWest Bioscience (the "Company"or "EastWest") (EAST.V) is excited that the federal legalization of hemp in the US with the final passage of the US Farm Bill has opened significant opportunities for EastWest. It can now follow through on its long-held strategy to acquire assets, produce, and market hemp products to the 50 States and beyond.

"The final passage of the U.S. Farm Bill is a watershed moment for the future of the hemp-cannabidiol industry,"explains Rodney Gelineau, EastWest's CEO. "As a company, we've focused on the enormous potential of the hemp and CBD side of the Cannabis business. Until the passage of the Farm Bill we have been banned from doing any hemp business in the US. That barrier has now evaporated."

"We can't underestimate the size and importance of the US CBD market to our strategy" continues Gelineau. "EastWest has been anticipating the long-play for CBD. The now unfettered CBD market in entire US is enormous. We are lining up our market strategy of partnerships and acquisitions to be a major player."

The future opportunity of the CBD market in the US is understood to be significant. According to Hemp Business Journal's 2018 CBD Report ("HBJ"), in 2017 the hemp-derived CBD market accounted for $190 million in retail sales and estimates it to grow to $646 million by 2022.

The Company intends to distinguish itself and build consumer confidence by producing and marketing CBD products in compliance with Good Manufacturing Practices (GMP). This is important because it is known there is consumer confusion about different sources and combinations of CBD content in CBD products, for instance whether a product was manufactured with CBD from hemp extract oils or isolates. It's been discovered, according to the 2018 HBJ Report, that even though most companies label with "Hemp Extract"making it clear what is in their product, some manufacturer are "spiking"their extract oil product with isolate to increase the CBD potency.

"Most states with CBD product manufacturers still have no regulatory framework for inspecting CBD production,"continues Gelineau, "which creates an opportunity for CBD companies early on to adopt GMP standards and to build industry and consumer confidence. That's exactly what we intend to do."

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. It is expected to be at least 2020 before CBD products gain any meaningful level of representation in the mass-market retail channel. However, once CBD products gain mass-market acceptance, sales are expected to grow rapidly.

Two markets in which EastWest already has a developmental foothold are Dietary Supplements and Pet Products, which it intends to leverage into the US Markets with the inclusion of hemp derived CBD. With more high-quality CBD products entering the market and regulatory concerns lessening, the dietary natural and specialty channel is expected to remain a leading channel for hemp-based CBD products: HBJ estimates sales in the channel to reach $109 million by 2022 on a compound annual growth rate (CAGR) of 60%.

An emerging trend is occurring where CBD is being included in a synergistic blend which fits with EastWest's Natural Advancement Nutriceutical products. These products will blend CBD with an assortment of other botanicals and supplements. There is also significant interest in the fish oil market to blend CBD with omega-3.

The pet CBD category is also quickly emerging, though accurate market sales data has been sparse. The HBJ predicts the category to extend beyond dogs and cats into equine sports (e.g., horse racing, polo, dressage, rodeo, etc.) and potentially to more exotic mammals in years to come.

EastWest's hemp-based products, including its nutraceutical supplements, food and snacks, pet treats, and body care products now selling in Canada will also have almost immediate market opportunities into the huge national US markets, giving EastWest significant early US market advantage.