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HempFusion Provides Operational Update

HempFusion Wellness Inc. (TSX:CBD.U) (US:CBDHF) (FWB:8OO) (“HempFusion” or the “Company”), a leading health and wellness company offering premium probiotic supplements and products containing CBD, is pleased to provide an operational update.

Highlights

  • Brightfield Group’s most recent survey ranks HempFusion #2 in the US for CBD Brand Awareness
  • Probulin Probiotics finished 2020 as the fastest-growing Probiotic brand out of the Top 10 in the US, according to SPINS
  • HempFusion is the #2 CBD holding in AdvisorShares Pure US Cannabis ETF, the only US-listed exchange traded fund dedicated solely to US cannabis exposure
  • HempFusion is one of the select few companies to offer OTC Drug Listed Topical products
  • The Company’s OTC Tropical products have ranked #1 in both sales dollars and units sold at a major Food & Drug Mass (“FDM”) retailer in the US, according to NielsenIQ
  • Complete digital relaunch, increasing online traffic by 10x

2020 in Review

COVID and continued lack of clarity from the FDA related to official regulatory guidance for CBD used in dietary supplements, foods, and beverages has made 2020 a challenging year. However, these challenges have led to strategic changes, establishing the foundation for HempFusion to succeed in 2021 and beyond. There are no quick and easy ways to navigate this dynamic and emerging industry. The Company remains focused and highly optimistic that the five-channel strategy and international expansion will drive significant success throughout 2021 and beyond.

Over the past year, we have experienced multiple challenges brought on by the global pandemic. These challenges have impacted the Company and its supply chain partners, including retailers. They have also brought about a renewal in the way HempFusion thinks and operate as a Company. These changes have already led to certain successes that are occurring in Q1, 2021.

Positive Momentum for 2021

  • Completed a US$17,000,000 initial public offering (“IPO”) and commenced trading on the Toronto Stock Exchange (the “TSX”), becoming the first U.S.-based CBD & wellness products company to list directly on the TSX (senior board). Starting the year as the #2 most recognized CBD brand in America
  • HempFusion remains one of the few companies offering OTC drug listed topical products allowing the opportunity for vast penetration throughout the FDM channel, the largest dollar volume channel
  • As of the end of January 2021, NielsenIQ data ranks HempFusion as the #1 in product sales and units sold in one of the largest FDM retailers
  • Due to this successful performance, this retailer has expanded HempFusion’s products from 78 stores to 798 stores, and HempFusion accounts for roughly 50% of category sales
  • The Company has shifted resources and its distribution of sales from a near-exclusive brick and mortar retail company to include a much larger digital focus; early success has shown a 10x increase in online traffic with significant increase in conversion.
  • The comprehensive digital rebuild and execution of the eCommerce channel has resulted in a shift of company revenue breakdown from 6% online to nearly 24% online in recent months.
  • The Company launched “The Probulin Store” on Amazon, and early 2021 traction is encouraging. Sales have nearly tripled in less than three months
  • HempFusion’s Probulin has seen 10% or greater month-over-month growth since launching on Amazon

FDM/Big Box

  • Successfully launched and continue to lead the category in the 5th largest retailer in the channel
  • Currently engaged with several leading FDM retailers such as Kroger, Albertsons, Walgreens, CVS, Costco, Bashas, SEG (Winne Dixie), among others. These targeted launches will include both ingestible and topical CBD as well as Probulin probiotics

Convenience Channel

  • Officially relaunched with Crossmark, the largest broker network in this channel, with crucial initiatives already in motion that are likely to yield a highly successful outcome as early as H1, 2020

Doctor / Practitioner Channel

  • HempFusion has engaged a lead generation agency that has already yielded success in early 2021, and the Company expects to add significant momentum throughout the year
  • HempFusion has launched with FullScript, one of the premier and most significant online distributors of products throughout the practitioner channel, reaching 80,000 practitioners and over 600,000 patients across the United States and Canada

eCommerce

  • Established a key stronghold on Amazon for Probulin, yielding significant early results with a ROAS (Return On Advertising Spend) of $5.49 as of the end of January 2021
  • Extensive rebuild of both Probulin.com and HempFusion.com, sets up the framework for a large-scale digital footprint expansion
  • Increased online traffic by nearly 10x
  • Officially launched Probulin on the World’s largest eCommerce platform, Alibaba’s Tmall Global, with HempFusion CBD expected to follow

Natural Products Industry

  • Continued focus on expansion to new retailers, including soft commitments with Vitamin Shoppe, expected in Q2 of 2021
  • Continued success with Sprouts Farmers Market becoming the #2 brand for shelf-stable probiotics, the fastest-growing section of the probiotic category
  • According to SPINS, Probulin is the fastest growing probiotic brand in the Natural Products Industry

International Expansion

  • Officially launched both Probulin and HempFusion in Ireland with a strategic distribution partner and with the full acknowledgment of the FSAI (Food Safety Authority of Ireland)
  • Products are on the shelf in both Ireland and the UK. The UK is the largest market for CBD products in Europe
  • Other international targets in motion are Latin America, Canada, India, China, and the rest of Europe

When considering the momentum that we are now experiencing as we enter 2021, it is essential to update shareholders on the regulatory landscape and the advancements we have made over the past several years and months. HempFusion continues to drive the industry forward with research and development, radical transparency and a focus on regulatory compliance.

Domestic & International Regulatory accomplishments

  • Completed all necessary toxicology studies that ultimately leads to Self-Affirmed GRAS. Once published, the toxicology studies are peer-reviewed and signed. HempFusion plans to announce Self-GRAS Affirmation targeted for Q2 2021
  • The NOAEL (No Observed Adverse Effect Level) manuscript is now complete, ready to publish.
  • Submitted Novel Food Application to the FSA in the United Kingdom
  • Submitted all items eligible for the proposed “Public Approval Product List” for the UK
  • Completed a year-long safety study with ValidCare as a co-sponsor of what is considered the most extensive and largest Human Observational toxicology study ever done on CBD
  • ValidCare’s initial findings revealed that HempFusion products had no liver toxicity and the findings, of the entire cohort, has been discussed with FDA officials.
  • Eight HempFusion products were officially listed as OTC Drugs with the FDA including NDC (national drug code) numbers issued for topical products
  • We have launched a full line of USDA Certified Organic Tinctures

The Company has built a strong foundation throughout a challenging 2020. After the completion of a successful IPO, the Company remains focused on executing it’s five channel strategy driving significant revenue growth across domestic and international markets in 2021 and beyond. We remain hyper focused on the long game.

The future is bright.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements and forward-looking information within the meaning of Canadian securities legislation (collectively, “forward-looking statements“) that relate to HempFusion’s current expectations and views of future events. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “expects”, “will continue”, “is anticipated”, “anticipates”, “believes”, “estimated”, “intends”, “plans”, “forecast”, “projection”, “strategy”, “objective” and “outlook”) are not historical facts and may be forward-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In particular and without limitation, this news release contains forward-looking statements relating to the Company’s 2021 plans, focus and objectives.

Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond HempFusion’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the impact and progression of the COVID-19 pandemic and other factors set forth under “Forward-Looking Statements” and “Risk Factors” in the final long form prospectus of the Company dated December 17, 2020 and available under the Company’s profile on SEDAR at www.sedar.com. HempFusion undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. New factors emerge from time to time, and it is not possible for HempFusion to predict all of them or assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement.

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

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