Hemptown Organics has released the following letter from the Company’s President:

Dear Shareholders,


2019 was a successful year for Hemptown, with rapid growth and a bountiful harvest that saw the company emerge as one of the leading industrial-hemp derived cannabinoid cultivators in the USA. We would like to thank all our partners, including our management team, farming operators, bankers and shareholders. We closed out 2019 with annual revenue of USD$17,600,000 on a consolidated, unaudited basis.

FARM UPDATE

In Oregon, our farms produced 765,000 lbs. of CBG biomass during fiscal 2019. This breaks down as follows:

  • 20,000 lbs. of top shelf flower
  • 45,000 lbs. of A & B hand shucked flower/premium biomass
  • 110,000 lbs. of hand shucked biomass that can be used to make hemp cigarettes or high-end distillates
  • 590,000 lbs. of combined biomass that is used to make crude oil, full/broad spectrum distillates and 99.5%+ pure CBG isolate which is sold into the bulk wholesale market

Our other farming operations also experienced success, with 1,000,000 lbs. of CBD biomass in Kentucky and 386,000 lbs. of CBD biomass in Colorado.

PROCESSING UPDATE
A total of 112,000 lbs. of CBG biomass has been shipped to two different extraction partners where they are presently being processed into crude, isolates and distillates. These are anticipated to be sold as bulk ingredients and to be used to support our product manufacturing facility in Portland. The first 92,000lbs biomass has yielded 5250 liters of CBG crude oil and is now in the secondary extraction process to produce both full/broad-spectrum distillates and pure isolate.

MARKET UPDATE
The CBD biomass market has undergone significant compression over the past year. However, CBG prices are still much higher than CBD (7x+) and the margins we achieved are very respectable. The CBD market however has not fared as well and most of our biomass value remains below our cost of production and will remain in storage while we monitor market conditions. A portion of our CBD will still be processed to T-free distillates and isolates for use in our Portland manufacturing facility, producing white-label finished goods, as well as for our own Hemptown brands.

We are seeing strong demand for CBG isolate out of Europe and the UK. We are currently ramping up our sales efforts in both the bulk ingredients and our white-label manufacturing in these markets.

COMPANY UPDATE
We would like to welcome two new additions to the Hemptown executive team.

Eric Gripentrog – CEO
Eric has worked in the Consumer-Packaged Goods (CPG) industry for 27 years. He comes to us from Panera Bread where he led the CPG division. While at Panera Bread, he increased topline revenue and EBITDA, and outperformed all other Panera business units. In addition to introducing Panera CPG soup into Kroger and Publix for the first time in ten years, he also built a 5-year strategic growth roadmap coupled with launching a new product category aligned to the roadmap. Prior to Panera, Eric was a key member of the executive team at the Kellogg Company where he held several different roles (domestic and international) over 25 years. Eric is known as a change leader. He has led several different businesses with full P&L responsibility, conducted business turnarounds, implemented start-up business units, restructured businesses, developed growth strategies and delivered impressive results in both profitability and sustainability. His strong background in the development, marketing and delivery of leading CPG brands, Eric will play a huge role in the growth of Hemptown as the company expands its footprint in the CPG space.

Robert Fenty (SVP of Manufacturing)
Rob is a 20-year veteran of leading fast paced growth businesses. Over the past 15 years, his consulting expertise has helped numerous companies with best practices, market strategy, product planning, brand building and channel development. He has worked with leadership teams from over 100 leading brands including Starbucks, Nike, Providence St. Joseph Health, Broadcom and Oracle. Rob also spent 8 years with Intel Corporation’s New Business Group leading the growth of businesses from $0 to >$100M within 5 year periods. Rob holds an MBA from the Stanford Graduate School of Business.

GROWTH PLANS AND MOVING DOWN THE VALUE CHAIN
As the industry rapidly evolves and commoditizes, we recognize the need to buildout other aspects of our business, including further development of our white-label and consumer product manufacturing operation, international footprint, as well as the internal development and acquisition of established brands. We have established an internal committee to evaluate acquisitions and strategic opportunities in the current market, working with our banking team and other advisors.

LIQUIDITY STRATEGY
The company continues to evaluate opportunities to provide liquidity to its shareholders. A liquidity event is a top priority for the company, and we continue to work diligently toward this goal with the current market conditions.

Sincerely,

Michael Townsend
President, Director and Founder

For more information or inquiries contact Hemptown Investor Relations at +1-604-200-5969 or info@hemptownusa.com.

About Hemptown Organics Corp.
Hemptown is a diversified company, growing some of the finest hemp in the world to meet the global demand for cannabinoid-based products. Our farmland in Oregon is known for growing the finest hemp flower and biomass in the nation. Hemptown’s product manufacturing capability and a strong leadership team are the pillars for Hemptown’s growth model as the Company pushes into the consumer-packaged-goods sector, with top quality white-label and branded product lines for the consumer market. Hemptown’s fully operational (FDA-licensed and cGMP certified) manufacturing facility in Oregon gives the company a strong leadership position the rapidly expanding global cannabinoid market. For more information, visit www.hemptownusa.com.

Disclaimer for Forward-Looking Statements
This news release contains forward-looking statements that involve various risks and uncertainties regarding future events. Such forward-looking statements are based on current expectations of management, involve a number of risks and uncertainties, and are not guarantees of future performance of the company. These statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements in this news release include statements regarding the intention to sell processed crude, isolates and distillates as bulk ingredients and for use in product manufacturing in the Portland facility and the ability of the company to consummate an liquidity event. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors that may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include general financing and industry market conditions, regulatory risks, trade and supply-chain risks, significant business, competitive, political and social risks and other factors beyond the control of the company. The company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Click here to connect with Hemptown Organics for an Investor Presentation.

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