New Uses for CBD Products Continue to Emerge

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Jul 08, 2020, 09:00 ET

NEW YORK, July 8, 2020 /PRNewswire/ -- The evolution of the cannabis industry has introduced new products into the marketplace, causing sales and demand to grow. As the legal cannabis industry continues to progress, innovative producers have begun to develop alternative methods to consume cannabis. Notably, cannabis-based oils have become widely popular because of their potent and immediate effects. Overall, CBD is having a major impact on global markets because it offers a number of therapeutic benefits without the psychoactive effects of THC. Therefore, many countries such as Australia, Canada, Chile, Denmark, Mexico, Portugal, and Thailand have all legalized CBD for medical applications. In particular, CBD is having a profound impact on the U.S. and Canadian markets because of their massive user base. Moreover, the U.S. and Canada have legalized CBD entirely, which prompted many retailers to add CBD products to their shelves. In the North American region, CBD is much more prevalent for treating minor medical conditions like soreness or headaches. Additionally, North American consumers are purchasing CBD-based products for health and wellness purposes. And, according to data compiled by Transparency Market Research, the global CBD hemp oil market is expected to reach USD 2.5 Billion by 2026 while exhibiting a CAGR of more than 11% throughout the forecast period from 2018 to 2026. TAAT Lifestyle & Wellness Ltd. (CSE: TAAT), Universal Corporation (NYSE: UVV), Vector Group Ltd. (NYSE: VGR), Turning Point Brands, Inc. (NYSE: TPB), Imperial Brands PLC (OTC: IMBBY)

CBD and hemp can also be used in fighting addiction. According to the World Health Organization (WHO), the tobacco epidemic is one of the biggest public health threats the world has ever faced, killing more than 8 million people a year around the world. More than 7 million of those deaths are the result of direct tobacco use while around 1.2 million are the result of non-smokers being exposed to second-hand smoke. And E-cigarettes are particularly risky when used by children and adolescents. Nicotine is highly addictive and young people's brains develop up to their mid-twenties. A study from 2018 indicates that, "Cannabidiol (CBD), a non–intoxicating cannabinoid found in cannabis, may be a promising novel smoking cessation treatment due to its anxiolytic properties, minimal side effects and research showing that it may modify drug cue salience." According to the study results, a single 800–mg oral dose of cannabidiol reduced the salience and pleasantness of cigarette cues, compared with placebo, after overnight cigarette abstinence in dependent smokers. Cannabidiol did not influence tobacco craving or withdrawal or any subjectively rated side effects.

TAAT Lifestyle & Wellness Ltd. (CSE: TAAT) announced yesterday that breaking news, "it has entered into a comprehensive distribution agreement on July 3, 2020 with Worldwide Vape Distribution ("WWV") in which WWV plans to distribute both the tobacco and menthol versions of Taat Beyond Tobacco™ cigarettes. Given WWV's significant presence in the state of Texas, in which the tobacco epidemic has received federal-level attention from the CDC1, the Company believes that its relationship with WWV can be helpful in attaining a presence in a potentially key market for the initial adoption of Taat Beyond Tobacco™ cigarettes, possibly in addition to other markets in which WWV does business as a distributor.

Based in northwest Dallas, WWV is one of the largest Texas-based wholesalers of premium vaping products with distribution partners in 38 U.S. states. Through its distribution partners, between direct and indirect relationships WWV collectively has access to more than 10,000 retail stores. In its distribution network, as well as on its online storefront, WWV carries dozens of varieties of liquified tobacco (also known as "e-juice"), as well as disposable electronic cigarettes, hardware, and accessories. Augmenting the customer experience with insights about getting the most from the vaping experience, WWV has a collection of more than 70 original articles on its blog. In total, WWV represents more than 100 brands. An overview of WWV's brand portfolio can be viewed here: https://wwvape.com/brands

The Company recently announced in a June 22, 2020 press release that it was preparing to launch its tobacco-free and nicotine-free cigarettes to the market as a better-for-you alternative to traditional tobacco cigarettes. Taat Beyond Tobacco™ cigarettes contain a minimum of 50mg of CBD, which has been shown to mitigate tobacco withdrawals and reduce overall dependency on tobacco. The product of meticulous engineering, Taat Beyond Tobacco™ cigarettes are designed to emulate the smoking experience of a traditional cigarette between cigarette-style packaging, a proprietary blend of tobacco flavouring, and an enhanced volume of smoke exhaled. In the first phase of retail market testing described in the Company's June 29, 2020 press release, users have indicated they observed no significant experiential differences between Taat Beyond Tobacco™ cigarettes and traditional tobacco cigarettes. Because many users of vaping products such as those distributed by WWV choose these products as a replacement for tobacco cigarettes, TAAT LTD anticipates that distributing its products alongside vaping products will position Taat Beyond Tobacco™ cigarettes among a receptive and knowledgeable audience.

Muhammad Abbas, Chief Executive Officer of WWV commented, 'Ever since the health effects of tobacco smoking became widely known, many consumers have sought alternatives to smoking traditional cigarettes but have struggled to make a change because of how addictive of a habit smoking is. Vaping was a big step in helping consumers to make a positive change, which is what enabled us to build our business into what it is today. Admittedly, many smokers cannot adapt to vaping because of how different it is. TAAT LTD has addressed this by developing a 'stick' product that mimics a cigarette which is designed to deliver a substantially similar smoking experience. We are excited to offer Taat Beyond Tobacco™ cigarettes in both the tobacco and menthol varieties to our customers and retail partners as we expand our product offerings to include the latest and greatest innovations in alternatives to tobacco cigarettes.'

'WWV can be an important distribution partner for us for several reasons,' said Joe Deighan, Founder of TAAT LTD. 'Their presence and reach in the tobacco cigarette alternatives category, especially in the state of Texas, can be key for us to establish our brand in the United States. Because WWV offers such a carefully-curated selection of premium vaping products, we consider their confidence in Taat Beyond Tobacco™ cigarettes to be a vote of confidence in our early-stage product, and we look forward to working with WWV to build our momentum as we seek to position ourselves in the tobacco industry.'"

References

¹ - https://www.cdc.gov/tobacco/about/osh/state-fact-sheets/texas/index.html

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Universal Corporation (NYSE: UVV) announced last year, that the Company's subsidiary, Universal Leaf Philippines, Inc. ("ULPI") will be increasing its purchases of leaf tobaccos in the Philippines, as part of a new leaf supply arrangement for the Philippines with Philip Morris International Management SA ("PMIMSA"). Previously, PMFTC, Inc. ("PMFTC"), an affiliate of PMIMSA, purchased certain quantities of leaf tobaccos produced by their own contracted grower base and processed that tobacco in their own facility. Starting with the 2019 crop, PMFTC will purchase processed grades of tobacco from ULPI. The new arrangement is expected to provide important supply chain efficiencies and is indicative of PMIMSA's and Universal's strong commitment to the grower communities in the Philippines and PMIMSA's intent to remain a major purchaser of Philippine-grown leaf tobacco. Universal initiated operations in the Philippines in the late 1960s. George C. Freeman, III, Chairman, President and Chief Executive Officer of Universal Corporation stated, "We are very excited about this new opportunity to continue to meet the evolving needs of one of our long-standing global business partners, while expanding our leaf purchasing and grower support services in the Filipino grower communities. The expansion of direct contracting by ULPI will provide procurement synergies and economies of scale that will promote efficient leaf utilization of tobaccos supplied to PMFTC and our other customers, and will support the competitiveness of Philippine tobaccos in the global leaf markets. In addition, this new arrangement exemplifies our commitment to prioritize investments for the growth of our core tobacco business consistent with our capital allocation strategy.

Vector Group Ltd. (NYSE: VGR) is a holding company that indirectly owns Liggett Group LLC and Vector Tobacco Inc. and directly owns New Valley LLC, which owns a 100% interest in Douglas Elliman Realty, LLC. Vector Group Ltd. announced on May 8th, corrected financial results for the three months ended March 31, 2020. First quarter 2020 revenues were $454.5 million, compared to revenues of $420.9 million for the first quarter of 2019. The Company recorded operating loss of $4.9 million for the first quarter of 2020, compared to operating income of $42.6 million for the first quarter of 2019. Net loss attributed to Vector Group Ltd. for the first quarter of 2020 was $3.2 million, or $(0.03) per diluted common share, compared to net income of $15.0 million, or $0.08 per diluted common share, for the first quarter of 2019. For the first quarter of 2020, the Tobacco segment had revenues of $287.1 million, compared to $256.8 million for the first quarter of 2019. Operating Income from the Tobacco segment was $69.2 million for the three months ended March 31, 2020 compared to $60.1 million for the three months ended March 31, 2019.

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."

Imperial Brands PLC (OTCQX: IMBBY) subsidiary Fontem US LLC (Fontem US) announced on April 28th that it has 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."

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