Market Overview

CBD Cigarettes Offer Tobacco Smokers a New Path to Quitting

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NEW YORK, July 14, 2020 /PRNewswire/ -- Tobacco cigarettes are still widely used despite governments ramping up regulations in recent years. All forms of tobacco have the potential to be addictive because they all contain nicotine, but cigarettes are the most efficient for delivering nicotine into the body. As a result, nicotine addiction remains a major concern worldwide. In fact, according to the World Health Organization (WHO), addiction to tobacco kills one person prematurely every six seconds, and one in two long-term smokers, largely in low and middle income countries, will die from tobacco addiction. In recent years, new forms of smoking were introduced, like vaping. Overtime, vaping products have become more diverse, and included cannabis as well. Then, concerns over lack of regulation of vaping products kicked in. For example, from January on, it became illegal to sell e-cigarettes in San Francisco and even online sales to addresses within the city limits have been stopped because of a panic about teenagers vaping. However, according to the Guardian, while vaping is banned, sales of legal cannabis and tobacco continue as usual. TAAT Lifestyle & Wellness Ltd. (CSE:TAAT), Imperial Brands PLC (OTC:IMBBY), Schweitzer-Mauduit International, Inc. (NYSE:SWM), Turning Point Brands, Inc. (NYSE:TPB), 22nd Century Group, Inc. (NYSE:XXII).

Nicotine addiction is the number one reason cigarette smokers struggle to quit. Surprisingly, some claim that CBD and hemp-based products can help to battle addiction. For example, according to a study by Morgan et al, in which the impact of CBD on nicotine addiction was measured by conducting a randomized, double-blind, placebo-controlled study on 24 smokers who wished to stop smoking. Two groups received either a CBD inhaler (400 μg/inhalation) or a placebo inhaler. They were told to use the inhaler whenever they felt the urge to smoke, to assess daily cigarette and inhaler use, and to monitor their craving once daily for 1 week. "The results showed a significant reduction in the number of cigarettes smoked (≈40%) in the CBD inhaler group during the week of treatment, with a trend indicating a reduction after follow-up. Both groups also showed a reduction in cravings between day 1 and day 7, though not between day 1 and follow-up," the study concluded.

TAAT Lifestyle & Wellness Ltd. (CSE:TAAT) yesterday announced breaking news that, "it has entered into a letter of intent dated July 10, 2020 to acquire Redwood Reserves Ltd. ("Redwood"), one of the largest and best-established U.S. hemp cigarette brands, for an acquisition price consisting of $1,155,000 and 2,390,000 common shares in the capital of TAAT. This strategic acquisition is intended to provide more cost-effective manufacturing capacity to TAAT, in addition to gaining an established direct distribution network through which Beyond Tobacco™ cigarettes are planned to be supplied to Redwood's extensive network of retailers. As Redwood's product line is currently being sold in more than 1,600 U.S. smoke shops and convenience stores, carried by several distributors, and sold through Redwood's online store, the Company will realize cash flow from Redwood's continued business activities following the proposed acquisition. Additionally, the Company believes that Redwood's product offerings can complement TAAT's Beyond Tobacco™ product upon the planned Q4 2020 product launch.

Subject to a definitive agreement, which the parties have agreed to proceed with diligently and in good faith to negotiate and settle the terms for execution on or before July 31, 2020, TAAT will acquire 100% of Redwood, resulting in Redwood becoming a 100% subsidiary of the Company. The acquisition of Redwood is subject to customary conditions of closing, including without limitation, the satisfactory completion of due diligence by both parties and the receipt of applicable regulatory and governmental approvals.

Founded in Portland, OR in 2019, Redwood produces hemp products that are characterized by an organic growing process, and the unique horticultural properties of Oregon's Willamette Valley which are said to yield hemp of remarkable quality. Its "seed-to-smoke" production chain allows for complete visibility into every step of a Redwood hemp product's journey to maintain the high standard that has earned Redwood a sterling reputation in the hemp industry. Aside from its flagship proprietary blend hemp cigarette products sold in a "stick" format and cigarette-style packaging (shown below), Redwood also offers pre-rolled hemp in a "joint" format, as well as "kief", and various varieties of single-gram "dabs" and flowers in 3.5g and 7g units. Redwood has developed three proprietary hemp strains to include Carolina Dream, Golden Redwood, and Wild Bourbon. All proprietary strains, as well as the Redwood Reserve blend have undergone separate laboratory tests conducted by Confident Cannabis, to provide users a comprehensive overview of their respective qualities. Redwood's laboratory reports can be accessed at the following link: https://redwoodreserves.com/lab-reports/

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/f48b8301-ce56-4d9b-9889-8ebc6cffc1bb

To date, Redwood has established a presence in more than 1,600 U.S. retail stores to include stores in major markets such as New York City, Los Angeles, Dallas, Chicago, Boston, and San Francisco. In the past six months, Redwood has formed agreements with more than one dozen national and regional distribution firms to supply Redwood hemp products to retailers throughout the United States. Redwood presently has open dialogues with additional distribution firms in which new distributorship is being contemplated, to potentially further expand Redwood's retail market reach.

Through strategic search engine optimization, Redwood has gained significant online visibility, even without the use of pay-per-click advertising. As of this writing, Redwood's website benefits from top-level visibility in the Featured Snippets section of Google search results for search terms to include "benefits of CBD cigarettes" (shown below). Moreover, sales volumes on Redwood's online store experienced notable recent growth, with June 2020 sales 421% higher than sales for the month of November 2019, following the online store's launch in October 2019…

'We're enthusiastic about acquiring Redwood for many reasons', said Joe Deighan, Founder of TAAT. 'Their organically-grown proprietary strains of hemp have earned Redwood a loyal base of followers, in addition to strong relationships with retailers and distributors. Aside from that, having access to their production capacity can improve our production timelines for Beyond Tobacco™ and reduce costs considerably. Thus, bringing Redwood under TAAT's umbrella is both an operational play for the Company itself, in addition to a marketing play to capitalize on the brand recognition of a proven and successful seed-to-smoke hemp company under great leadership. I believe Beyond Tobacco™ can prosper in combined marketing and distribution efforts with Redwood's product line, which is already highly sought-after. We look forward to exploring these synergies as we get closer to the planned Q4 2020 launch of Beyond Tobacco™.'"

For our latest "Buzz on the Street" Show featuring TAAT Lifestyle & Wellness Ltd. recent corporate news, please head over to: https://www.youtube.com/watch?v=69RrHBuy6TQ

Imperial Brands PLC (OTCQX:IMBBY) subsidiary Fontem US LLC (Fontem US) announced on April 28th that it had submitted Premarket Tobacco Product Applications (PMTAs) to the U.S. Food and Drug Administration (FDA) seeking authorization for the continued marketing of a wide range of its myblu electronic vaping products.  Fontem US's blu products play a fundamental role in the company's goal of providing adult smokers with options that are potentially less harmful than combustible tobacco products.  "We agree that the electronic vaping industry should be held to the highest product and marketing standards while providing adult smokers with alternative products that could serve the interest of the public health," said Antoine Blonde, president of Fontem US. "Fontem US looks forward to working with the FDA as the agency develops and enforces an evidence-based regulatory policy."

Schweitzer-Mauduit International, Inc. (NYSE:SWM) together with its subsidiaries, provides engineered solutions and advanced materials for various industries worldwide. The Company offers cigarette designers a complete wish list of performance characteristics and options in tobacco and cigarette papers that enable them to differentiate their products while meeting the most stringent regulatory and industry demands. And all tobacco papers we manufacture are produced to the exacting specifications and tight tolerances required for flawless runability on today's high-speed manufacturing equipment.

Turning Point Brands, Inc. (NYSE:TPB), a leading provider of Other Tobacco Products ("OTP") and adult consumer alternatives, announced on June 10th, the acquisition of certain tobacco assets and distribution rights from Durfort Holdings S.R.L. and Blunt Wrap USA for a total consideration of $46 million.  Durfort is the long-time supplier of TPB's Make-Your-Own cigar wrap products. The transaction combines Durfort's and Blunt Wrap USA's world-class intellectual property and manufacturing know-how with TPB's market leading Zig-Zag® MYO cigar wraps brand and national distribution. "We are pleased to enter into this transaction with our business partner," said Larry Wexler, TPB President and CEO. "In addition to the immediately accretive financial benefits, the transaction secures long-term control of our Zig-Zag MYO cigar wrap products and provides us access to a deep portfolio of tobacco products with significant immediate and future strategic value. This solidifies our current market position and provides a base for accelerated expansion with novel and leading-edge products."

22nd Century Group, Inc. (NYSE:XXII), a leading plant biotechnology company in reduced nicotine tobacco and hemp/cannabis plant genetics research, announced on March 11th, that lead scientists from 22nd Century Group and KeyGene had assembled a high quality genome sequence of two hemp/cannabis lines and established a new, proprietary hemp/cannabis bioinformatics platform. Both are believed to be among the highest quality, hemp/cannabis reference genomes in the world. "These exciting, new developments are already enabling the rapid breeding of new and proprietary hemp/cannabis plant lines with truly remarkable and potentially novel medicinal cannabinoid profiles," said Michael Zercher, President & Chief Operating Officer of 22nd Century Group. "Our research partnership with KeyGene will bolster our existing, proprietary hemp/cannabis plant lines and accelerate our molecular breeding work focused on the creation of valuable, new hemp/cannabis plant varieties and related intellectual property. We congratulate 22nd Century's science team as well as our partners at KeyGene on these very exciting achievements, and we look forward to even more exciting and valuable results in our hemp/cannabis plant genetics research," Zercher concluded.

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