No securities regulatory authority or stock exchange has expressed an opinion about, or passed upon the fairness or merits of, the transaction described in this document, the securities offered pursuant to such transaction or the adequacy of the information contained in this document and it is an offense to claim otherwise.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF ABACUS HEALTH PRODUCTS, INC.

to be held on June 4, 2020 at 10:00 a.m. EDT

and

MANAGEMENT INFORMATION CIRCULAR

with respect to a proposed

ARRANGEMENT

involving

ABACUS HEALTH PRODUCTS, INC.,

SECURITYHOLDERS OF ABACUS HEALTH PRODUCTS, INC.,

and

CHARLOTTE’S WEB HOLDINGS, INC.

Dated May 4, 2020

RECOMMENDATION TO SHAREHOLDERS

The board of directors of Abacus Health Products, Inc. has, after careful consideration, unanimously determined that the Arrangement is in the best interests of Abacus Health Products, Inc. and is fair and reasonable to holders of Abacus shares and other securityholders of Abacus, and recommends UNANIMOUSLY that shareholders vote IN FAVOUR of the special resolution approving the Arrangement, as described in this Information Circular, at the Special Meeting.

These materials are important and require your immediate attention. Please carefully read this management information circular, including its appendices and the documents incorporated by reference herein, as they contain detailed information related to, among other things, the proposed plan of arrangement that will be voted upon at the special meeting. If you are in doubt as to how to deal with these materials or the matters they describe, please consult your professional advisor. If you have any questions or require more information with regard to voting your shares, please contact our proxy solicitation agent and shareholder communications advisor at:

Gryphon Advisors Inc. North American Toll-Free Number: 1.833.461.3643

Outside North America, Banks, Brokers and Collect Calls: 1.416.661.6592 Email: inquiries@gryphonadvisors.ca

May 4, 2020

Dear Shareholder:

The board of directors (the “Board”) of Abacus Health Products, Inc. (“Abacus” or “we”) cordially invites you to attend the special meeting (the “Meeting”) of its shareholders (the “Shareholders”) to be held at 10:00 a.m. (EDT) on June 4, 2020 at the One King West Hotel located at 1 King Street West, Toronto, Ontario, M5H 1A1, Canada, in the Chairman Boardroom. In light of the recent coronavirus (COVID-19) outbreak and in order to protect the health and safety of Shareholders and the broader community, in addition to holding the Meeting in person, we will also hold our Meeting in a virtual format, which will be conducted via live audio webcast online at web.lumiagm.com/240055051 (password: abacus2020). Shareholders will have an equal opportunity to attend, ask questions and vote at the Meeting in person or online regardless of their geographic location. Inside this document, you will find important information and instructions about how to participate at the Meeting online.

At the Meeting, you will be asked to consider and, if deemed advisable, approve a special resolution approving a proposed arrangement (the “Arrangement”) under the Business Corporations Act (Ontario) pursuant to which, among other things, all of the issued and outstanding subordinate voting shares of Abacus (the “Subordinate Voting Shares”), after conversion of all outstanding proportionate voting shares of Abacus (the “Proportionate Voting Shares” and, together with the Subordinate Voting Shares, the “Abacus Shares”) into Subordinate Voting Shares will be exchanged for 0.85 of a common share (each whole common share, a “Charlotte’s Web Common Share”) of Charlotte’s Web Holdings, Inc. (“Charlotte’s Web”).

The Arrangement

On March 22, 2020, we entered into a definitive arrangement agreement (the “Arrangement Agreement”) with Charlotte’s Web, which includes, among other things, the conditions for the implementation of the Arrangement. The Arrangement will be implemented pursuant to a plan of arrangement (the “Plan of Arrangement”) in accordance with the Business Corporations Act (Ontario). The provisions of the Arrangement Agreement and steps of the Arrangement to be implemented in the Plan of Arrangement are more particularly described in the accompanying notice and management information circular (the “Information Circular”).

The Board believes that the Arrangement will, among other things:

result in the Shareholders receiving significant value for their Abacus Shares, with the Consideration (ashereinafter defined) representing a premium of approximately 38% based on the 10-day volume weightedaverage trading prices, and 43% based on the closing prices, of the Subordinate Voting Shares on theCanadian Securities Exchange (“CSE”) and the Charlotte’s Web Common Shares on the Toronto StockExchange (“TSX”), respectively for the period ending on, and as of, March 20, 2020, being the last tradingday prior to the entering into of the Arrangement Agreement;

result in the creation of the largest vertically integrated hemp-derived CBD products company with a broadproduct portfolio and channel presence;

result in meaningful synergies from (i) economies of scale, (ii) production, (iii) elimination of publiccompany cost duplication, (iv) intellectual property sharing and new product development, and (v) extensionof sales opportunities through cross-selling and leveraging additional distribution channels;

position the combined company to pursue growth in the compelling U.S. and international CBD markets;

provide Shareholders the opportunity to participate in any future increase in the value of Charlotte’s Web,including the opportunity to participate in the synergies and anticipated value creation of the combinedcompany, which will have an experienced operating team; and

provide increased liquidity for Shareholders.

Page 2

At the Meeting, you will be asked to consider, and, if deemed advisable, approve, a special resolution of the Shareholders to approve the Arrangement (the “Arrangement Resolution”). The Arrangement Resolution must be approved by at least 66 % of the votes cast by the holders of Abacus Shares, voting together as a single class. In addition, the Arrangement Resolution is subject to approval by a simple majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, voting together as a single class, excluding the votes in respect of Abacus Shares which are owned, held, controlled or directed by any Interested Parties (as defined in the Information Circular). See the sections entitled “The Arrangement – Shareholder Approval” and “Certain Canadian Securities Law Matters – Multilateral Instrument 61-101”. The Arrangement is also conditional upon, among other things, approval of the Plan of Arrangement from the Ontario Superior Court of Justice (Commercial List), and certain regulatory approvals, all as more particularly described in the Information Circular.

Under the terms of the Arrangement Agreement, Shareholders will be entitled to receive 0.85 of a Charlotte’s Web Common Share for each Subordinate Voting Share held (the “Consideration”), after giving effect to the conversion of all Proportionate Voting Shares. Upon completion of the Arrangement, current holders of Abacus Shares are expected to own a Pro Forma Ownership (as defined in the Information Circular) of approximately 14.7% of the Charlotte’s Web Common Shares (assuming conversion of all outstanding proportionate voting shares of Charlotte’s Web).

Greenhill & Co. Canada Ltd. (“Greenhill”) has delivered an opinion to the Board, which provides that, as of the date thereof, and subject to the assumptions, qualifications and limitations set out therein, and such other matters as Greenhill considered relevant, the Consideration to be received by Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Shareholders (the “Fairness Opinion”). A copy of the Fairness Opinion is included as Appendix C to the Information Circular. Shareholders are urged to read the Fairness Opinion in its entirety.

Recommendation of the Board

Based on the Board’s consideration of, among other things, a presentation by the Corporation’s management, the terms of the Arrangement Agreement and the Fairness Opinion, the Board has UNANIMOUSLY determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to holders of Abacus Shares and other securityholders of Abacus, and has approved the Arrangement and the participation by Abacus therein. The Board recommends UNANIMOUSLY that Shareholders vote IN FAVOUR of the Arrangement Resolution.

Your vote is important. Whether or not you plan to attend the Meeting in person or virtually, we encourage you to vote promptly. Please complete the enclosed form of proxy and submit it to our transfer agent and registrar, Odyssey Trust Company, as soon as possible but no later than 10:00 a.m. (Toronto time) on June 2, 2020 or, if the Meeting is adjourned or postponed, no later than forty-eight (48) hours (excluding Saturdays, Sundays and statutory holidays in Ontario) before the adjourned meeting is reconvened or the postponed meeting is convened. The time limit for the deposit of proxies may be waived or extended by the Chair of the Meeting at his discretion without notice.

The accompanying Notice of Special Meeting of Shareholders and Information Circular provide information about the Arrangement and the Meeting. Please read this information carefully, and if you require assistance, consult your own legal, tax, financial or other professional advisor or contact our proxy solicitation agent and shareholder communications advisor, Gryphon Advisors, by telephone at 1.833.461.3643 (North American toll-free) or 1.416.661.6592 (outside North America) or by e-mail at inquiries@gryphonadvisors.ca.

On behalf of the Board, thank you for your consideration of this matter and your continued support as we prepare for this significant event in the history of Abacus.

Yours sincerely,

/s/ Perry Antelman

Perry Antelman Chair of the Board

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that a special meeting (the “Meeting”) of the holders (the “Subordinate Shareholders”) of subordinate voting shares (the “Subordinate Voting Shares”), the holders (the “Proportionate Shareholders” and, together with the Subordinate Shareholders, the “Shareholders”) of proportionate voting shares (the “Proportionate Voting Shares” and, together with the Subordinate Voting Shares, the “Abacus Shares”) of Abacus Health Products, Inc. (“Abacus” or the “Corporation”) will be held at the One King West Hotel located at 1 King Street West, Toronto, Ontario, M5H 1A1, Canada, in the Chairman Boardroom, on June 4, 2020 at 10:00 a.m. (EDT) for the following purposes:

(a) to consider, pursuant to an interim order of the Ontario Superior Court of Justice (Commercial List) (the“Court”) dated April 30, 2020, as the same may be amended (the “Interim Order”), and, if deemedadvisable, to approve, with or without variation, a special resolution of the Shareholders (the “ArrangementResolution”), the full text of which is set forth in Appendix A to the accompanying management informationcircular dated May 4, 2020 (the “Information Circular”), to approve an arrangement (the “Arrangement”)under Section 182 of the Business Corporations Act (Ontario) (the “OBCA”) involving Abacus andCharlotte’s Web Holdings, Inc. (“Charlotte’s Web”), whereby, among other things, Charlotte’s Web willacquire all of the issued and outstanding Abacus Shares in accordance with the steps set out in the plan ofarrangement (the “Plan of Arrangement”) to effect the Arrangement, all as more particularly described inthe Information Circular; and

(b) to transact such further and other business as may properly be brought before the Meeting or anyadjournment(s) or postponement(s) thereof.

Specific details of the matters to be put before the Meeting are set forth in the Information Circular.

In addition to holding the Meeting in person, the Corporation will hold the Meeting in a virtual format, which will be conducted via live audio webcast online at web.lumiagm.com/240055051 (password: abacus2020). Registered Shareholders and duly appointed and registered proxyholders will be able to attend, ask questions and vote at the Meeting online following the instructions beginning on page 39 of the Information Circular. Non-registered Shareholders who have not duly appointed and registered themselves as proxyholder will be able to attend the Meeting virtually as guests, but guests will not be able to vote or ask questions at the Meeting.

The board of directors of Abacus (the “Board”) UNANIMOUSLY recommends that Shareholders vote IN FAVOUR of the Arrangement Resolution. It is a condition to the completion of the Arrangement that the Arrangement Resolution be approved at the Meeting.

The full text of the Plan of Arrangement implementing the Arrangement is attached as Appendix B to the Information Circular. The Interim Order is attached as Appendix E to the Information Circular.

The record date (the “Record Date”) for determination of Shareholders entitled to receive notice of and to vote at the Meeting is the close of business on April 30, 2020. Shareholders whose names have been entered in the register of holders of Abacus Shares by close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting on the basis of: (i) one vote for each Subordinate Voting Share held, and (ii) 100 votes for each Proportionate Voting Share held. To be effective, the Arrangement Resolution must be approved by: (i) at least 66⅔% of the votes cast by Shareholders, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, and (ii) in accordance with Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions (“MI 61-101”), a majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, excluding the votes cast by any “interested party”, any “related party” of an “interested party” or any “joint actor” (as such terms are defined in MI 61-101).

Registered Shareholders may attend the Meeting in person or virtually or may be represented by proxy. Shareholders may vote by proxy by signing and returning the accompanying form of proxy for use at the Meeting or any adjournment or postponement thereof. To be effective, the enclosed form of proxy must be dated, signed and deposited

Page 2

with the Corporation’s registrar and transfer agent, Odyssey Trust Company: (i) by facsimile at 1-800-517-4553; (ii) by e-mail at proxy@odysseytrust.com; or (iii) through the internet at https://odysseytrust.com/Transfer-Agent/Login, in each case no later than: (a) 10:00 a.m. (Toronto time) on June 2, 2020 or, (b) if the Meeting isadjourned or postponed, no later than forty-eight (48) hours (excluding Saturdays, Sundays and statutory holidays inOntario) before the beginning of any reconvened Meeting. The time limit for the deposit of proxies may be waived orextended by the Chair of the Meeting at his discretion without notice. To vote through the internet you will requireyour 12-digit Control Number found on your form of proxy.

If a Shareholder receives more than one form of proxy because such holder owns Abacus Shares registered in different names or addresses, each form of proxy should be completed and returned.

A non-registered Shareholder exercising voting rights through a nominee, including a bank, trust company or securities broker, should consult the voting instruction form from such Shareholder’s nominee as the nominee may have different and earlier deadlines.

A proxyholder has discretion under the accompanying form of proxy in respect of amendments or variations to matters identified in this Notice and with respect to other matters which may properly come before the Meeting, or any adjournment or postponement thereof. As of the date hereof, management of the Corporation knows of no amendments, variations or other matters to come before the Meeting other than the matters set forth in this Notice. Shareholders who are planning to return the accompanying form of proxy are encouraged to review the Information Circular carefully before submitting the form of proxy.

It is the intention of the persons named in the enclosed form of proxy, if not expressly directed to the contrary in such form of proxy, to vote in favour of the Arrangement Resolution.

For additional information regarding voting, appointing a proxyholder and attending and voting at the Meeting online, see the Information Circular section entitled “Voting Information and General Proxy Matters”.

Pursuant to the Interim Order, registered Shareholders have been granted the right to dissent with respect to the Arrangement Resolution and, if the Arrangement becomes effective, to be paid the fair value of their Abacus Shares in accordance with the provisions of Section 185 of the OBCA, as modified by the Interim Order and the Plan of Arrangement. The right of a Shareholder to dissent is more particularly described in the Information Circular and in the Interim Order and the text of Section 185 of the OBCA, which are set forth in Appendices D and E, respectively, to the Information Circular. To exercise such right to dissent, a dissenting Shareholder must send to the Corporation c/o Osler, Hoskin & Harcourt LLP, 1000 De La Gauchetière Street West, Suite 2100, Montréal, Québec, Canada, H3B 4W5, Attention: Eric Levy, a written objection to the Arrangement Resolution, which written objection must be received by 4:00 p.m. (Toronto time) on June 2, 2020 or, in the event that the Meeting is adjourned or postponed, no later than 48 hours (excluding Saturdays, Sundays and statutory holidays in Ontario) before the adjourned meeting is reconvened or the postponed meeting is convened.

Failure to strictly comply with the requirements set forth in Section 185 of the OBCA, as modified by the Interim Order and the Plan of Arrangement, may result in the loss of any right of dissent. Persons who are beneficial owners of Abacus Shares registered in the name of a broker, dealer, bank, trust company or other nominee who wish to dissent should be aware that only the registered Shareholders are entitled to dissent. Accordingly, a beneficial owner of Abacus Shares desiring to exercise the right of dissent must make arrangements for the Abacus Shares beneficially owned by such holder to be registered in the holder’s name prior to the time the written objection to the Arrangement Resolution is required to be received by the Corporation or, alternatively, make arrangements for the registered Shareholders to dissent on behalf of the beneficial holder. It is strongly recommended that any Shareholders wishing to dissent seek independent legal advice.

Toronto, Ontario, May 4, 2020.

By order of the Board

/s/ Perry Antelman Perry Antelman Chair of the Board

(i)

TABLE OF CONTENTS

GENERAL QUESTIONS AND ANSWERS ............................................................................................................. 1GLOSSARY OF TERMS............................................................................................................................................ 7MANAGEMENT INFORMATION CIRCULAR .................................................................................................. 20GENERAL MATTERS ............................................................................................................................................. 20

Caution Regarding Forward-Looking Statements .................................................................................................. 20Presentation of Financial Information .................................................................................................................... 23Notice to Shareholders Outside of Canada ............................................................................................................. 23Notice to Shareholders in the United States ........................................................................................................... 23Currency Presentation and Exchange Rate Information ......................................................................................... 24Industry and Market Data ....................................................................................................................................... 25Trademarks ............................................................................................................................................................. 25

SUMMARY OF THE ARRANGEMENT ............................................................................................................... 26EXPECTED TIMETABLE OF PRINCIPAL EVENTS ........................................................................................ 36MATTERS TO BE CONSIDERED AT THE MEETING ..................................................................................... 36VOTING INFORMATION AND GENERAL PROXY MATTERS .................................................................... 37

Solicitation of Proxies ............................................................................................................................................ 37Voting Process ....................................................................................................................................................... 37Appointment of Proxyholders ................................................................................................................................ 37Revocation of Proxies ............................................................................................................................................ 38Exercise of Voting Rights by Proxies .................................................................................................................... 38Voting in Person at the Meeting ............................................................................................................................. 38Attending and Voting Virtually at the Meeting ...................................................................................................... 38Interest of Certain Persons in Matters to be Acted Upon ....................................................................................... 40Record Date, Voting Securities and Principal Holders Thereof ............................................................................. 40

THE ARRANGEMENT ............................................................................................................................................ 41The Arrangement ................................................................................................................................................... 41Background to the Arrangement ............................................................................................................................ 41Recommendation of the Board ............................................................................................................................... 45Fairness Opinion .................................................................................................................................................... 46Reasons for the Recommendation .......................................................................................................................... 47Shareholder Approval ............................................................................................................................................ 51Voting Support Agreements ................................................................................................................................... 51Treatment of Convertible Securities ....................................................................................................................... 52Effect on the Corporation if the Arrangement is Not Completed ........................................................................... 52

PRINCIPAL LEGAL MATTERS ........................................................................................................................... 52Court Approval and Completion of the Arrangement ............................................................................................ 52Certain Canadian Securities Law Matters .............................................................................................................. 53

Status under Canadian Securities Laws ............................................................................................................ 53Multilateral Instrument 61-101 ......................................................................................................................... 53Minority Approval Requirements ..................................................................................................................... 54Formal Valuation Exemption ............................................................................................................................ 55

Certain U.S. Securities Law Matters ...................................................................................................................... 55Exemption from 1933 Securities Act Registration ........................................................................................... 55Affiliates – Rule 144 ......................................................................................................................................... 56Affiliates – Regulation S................................................................................................................................... 57Exercise of Replacement Options and Replacement Warrants, Vesting of Replacement SARs ...................... 57

SUMMARY OF ARRANGEMENT AGREEMENT ............................................................................................. 57General ................................................................................................................................................................... 57Conditions Precedent to the Arrangement .............................................................................................................. 57

Mutual Conditions Precedent ............................................................................................................................ 57Conditions Precedent to the Obligations of the Corporation ............................................................................ 58

(ii)

Conditions Precedent to the Obligations of Charlotte’s Web ........................................................................... 58Representations and Warranties ............................................................................................................................. 59Covenants in Respect of the Conduct of Business ................................................................................................. 60

Conduct of Business by the Corporation .......................................................................................................... 60Conduct of Business by Charlotte’s Web ......................................................................................................... 60

Non-Solicitation ..................................................................................................................................................... 60Responding to an Acquisition Proposal ............................................................................................................ 61Adverse Recommendation Change and Alternative Transaction Agreement ................................................... 61Notification of Acquisition Proposals; Certain Disclosure; Subsidiaries and Representatives ......................... 62

Termination and Amendment of Arrangement Agreement .................................................................................... 63Termination ...................................................................................................................................................... 63Amendment ...................................................................................................................................................... 64Termination Fees .............................................................................................................................................. 64

Expenses ................................................................................................................................................................. 65Covenants ............................................................................................................................................................... 66

Covenants of the Corporation relating to the Arrangement .............................................................................. 66Covenants of Charlotte’s Web relating to the Arrangement ............................................................................. 66Covenants relating to Regulatory Approvals .................................................................................................... 67Covenants relating to Notice and Cure Provisions ........................................................................................... 68Covenants relating to Insurance and Indemnification ....................................................................................... 68

ARRANGEMENT MECHANICS ........................................................................................................................... 69Summary of the Arrangement ................................................................................................................................ 69Share Exchange Mechanics – Registered Shareholders ......................................................................................... 71Letter of Transmittal............................................................................................................................................... 71Delivery of Consideration ...................................................................................................................................... 71

Dividends and Distributions ............................................................................................................................. 71Fractional Shares .............................................................................................................................................. 72Loss of Certificates ........................................................................................................................................... 72Extinction of Rights .......................................................................................................................................... 72Withholding Rights ........................................................................................................................................... 72U.S. Securities Laws Exemption ...................................................................................................................... 72Share Exchange Mechanics – Non-Registered Shareholders ........................................................................... 73

INFORMATION CONCERNING THE CORPORATION .................................................................................. 73INFORMATION CONCERNING CHARLOTTE’S WEB ................................................................................... 73INFORMATION CONCERNING CHARLOTTE’S WEB FOLLOWING COMPLETION OF THE ARRANGEMENT ..................................................................................................................................................... 73RISK FACTORS ....................................................................................................................................................... 73

Risk Factors Relating to the Arrangement ............................................................................................................. 73Risk Factors Relating to the Corporation ............................................................................................................... 77Risk Factors Relating to Charlotte’s Web .............................................................................................................. 77Risk Factors Relating to Charlotte’s Web Following Competition of the Arrangement ........................................ 78

DISSENTING SHAREHOLDERS’ RIGHTS ......................................................................................................... 78CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR THE CORPORATION’S SHAREHOLDERS ................................................................................................................. 80

Shareholders Resident in Canada ........................................................................................................................... 81Shareholders not Resident in Canada ..................................................................................................................... 83Eligibility for Investment in Canada ...................................................................................................................... 85

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR THE CORPORATION’S SHAREHOLDERS .................................................................................................................................................... 86

U.S. Holders ........................................................................................................................................................... 87Non-U.S. Holders ................................................................................................................................................... 89Information Reporting and Backup Withholding ................................................................................................... 91Additional Withholding Tax on Payments Made to Foreign Accounts.................................................................. 91

(iii)

COMPARISON OF SHAREHOLDERS’ RIGHTS ............................................................................................... 92 INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS ................................................... 92 INTEREST OF EXPERTS OF THE CORPORATION AND CHARLOTTE’S WEB ...................................... 92 ADDITIONAL INFORMATION ............................................................................................................................. 93 APPROVAL OF THE INFORMATION CIRCULAR .......................................................................................... 93 CONSENT OF GREENHILL & CO. CANADA LTD. .......................................................................................... 94

APPENDICES

Arrangement Resolution ....................................................................................... A-1 Plan of Arrangement .............................................................................................. B-1 Fairness Opinion .................................................................................................... C-1 Dissent Rights (Section 185 of the OBCA) .......................................................... D-1 Interim Order .......................................................................................................... E-1 Notice of Application for Final Order .................................................................... F-1 Information Concerning the Corporation .............................................................. G-1 Information Concerning Charlotte’s Web ............................................................. H-1

Information Concerning Charlotte’s Web Following Completion of the Arrangement .................................................................................................................... I-1

Summary Comparison of Rights of Holders of Charlotte’s Web Common Shares and Abacus Shares .............................................................................................. J-1

1

General Questions and Answers

The following is a summary of certain information contained in this Information Circular, together with some of the questions that you, as a Shareholder, may have and answers to those questions. You are urged to read the remainder of this Information Circular, the form of proxy and the Letter of Transmittal carefully, because the information contained below is of a summary nature, and is qualified in its entirety by the more detailed information contained elsewhere in this Information Circular, the form of proxy and the Letter of Transmittal and the attached appendices, all of which are important and should be reviewed carefully. All capitalized terms used herein but not otherwise defined have the meanings set forth under “Glossary of Terms” in this Information Circular.

Q: Where and when will the Meeting be held?

A: The Meeting will be held at the One King West Hotel located at 1 King Street West, Toronto, Ontario, M5H 1A1, Canada, in the Chairman Boardroom at 10:00 a.m. (Toronto time) and virtually via live audio webcast online at web.lumiagm.com/240055051 (password: abacus2020) on June 4, 2020. Shareholders and duly appointed proxyholders may attend and vote in person or virtually at the Meeting.

Q: What are Shareholders being asked to vote on?

A: At the Meeting, Shareholders will be asked to vote on the Arrangement Resolution approving the Arrangement and Plan of Arrangement under Section 182 of the OBCA involving the Corporation, the Securityholders of the Corporation and Charlotte’s Web, whereby, among other things, Charlotte’s Web will acquire all of the issued and outstanding Abacus Shares, all as more particularly described in this Information Circular.

Q: What is the consideration offered to Shareholders?

A: Pursuant to the Arrangement, Shareholders will receive 0.85 of a Charlotte’s Web Common Share for each Subordinate Voting Share held by the Shareholders at the Effective Time (the “Consideration”), after the automatic conversion of all Proportionate Voting Shares into Subordinate Voting Shares.

Q: Will fractional Charlotte’s Web Common Shares be issued pursuant to the Arrangement?

A: No holder of Abacus Shares will be issued a fractional Charlotte’s Web Common Share. Where the aggregate number of Charlotte’s Web Common Shares to be issued to a holder of Abacus Shares as consideration under the Arrangement would result in a fraction of a Charlotte’s Web Common Share being issuable, the number of Charlotte’s Web Common Shares to be received by such holder will be rounded down to the nearest whole Charlotte’s Web Common Share.

Q: What will I receive for my Abacus Options, Abacus Warrants and Abacus SARs?

A: Pursuant to the Arrangement, at the Effective Time, each Abacus Option, Abacus Warrant and Abacus SAR outstanding immediately prior to the Effective Time shall be exchanged for a Replacement Option, Replacement Warrant or Replacement SAR, respectively. The Replacement Options and Replacement Warrants shall thereafter entitle the holders to acquire Charlotte’s Web Common Shares (rounded down to the nearest whole number) in lieu of Abacus Shares, subject to adjustment in number and exercise price to give effect to the Exchange Ratio. The Replacement SARs shall thereafter entitle the holder to receive, upon vesting, the value of Charlotte’s Web Common Shares in lieu of Abacus Shares, subject to adjustment in number to give effect to the Exchange Ratio.

Q: What is the expected ownership structure of Charlotte’s Web on completion of the Arrangement?

A: Upon completion of the Arrangement, current holders of Abacus Shares are expected to own a Pro Forma Ownership of approximately 14.7% of the Charlotte’s Web Common Shares (assuming conversion of all outstanding Charlotte’s Web Proportionate Voting Shares).

2

Q: Does the Board support the Arrangement?

A: Yes. The Board UNANIMOUSLY: (a) determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to Shareholders and other Securityholders of Abacus; and (b) has approved the Arrangement and the participation by the Corporation therein. The Board recommends UNANIMOUSLY that Shareholders vote IN FAVOUR of the Arrangement Resolution.

In determining that the Arrangement is in the best interests of the Corporation and is fair and reasonable to Shareholders and other Securityholders, and in recommending to Shareholders that they approve the Arrangement Resolution, the Board considered and relied upon a number of factors, including, among others, the following:

the Consideration to be received by Shareholders pursuant to the Arrangement;

the effect of the Arrangement on the Corporation, its operations and its stakeholders;

the presence of procedural safeguards;

the financial fairness of the Consideration;

the terms and conditions of the Arrangement resulting in transaction certainty; and

the risks inherent in the Arrangement, including risks related to announcing and entering into the Arrangement, business risks and transactional risks.

Q: What approvals are required for the Arrangement?

A: To be effective, the Arrangement Resolution must be approved by: (i) at least 66 % of the votes cast by Shareholders present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class; and (ii) in accordance with MI 61-101, a majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, excluding votes cast by any “interested party”, any “related party” of an “interested party” or any “joint actor” (as such terms are defined in MI 61-101).

In addition, the Arrangement must be approved by the Court and the TSX must approve the listing of the Charlotte’s Web Common Shares to be received by holders of Abacus Shares (other than Dissenting Shareholders), and any Charlotte’s Web Common Shares issuable upon the exercise of any Replacement Options and Replacement Warrants, in each case subject only to customary listing conditions. The Court will be asked to make a Final Order approving the Arrangement and to determine that the Arrangement is procedurally and substantively fair and reasonable to the Shareholders. Subject to the Shareholders approving the Arrangement Resolution, the Corporation anticipates that it will apply to the Court for the Final Order following such approval.

Q: Have any Shareholders already agreed to vote in favour of the Arrangement?

A: Yes, Abacus Shareholders representing approximately 20% of the voting rights attached to outstanding Abacus Shares have entered into Voting Support Agreements to vote in favour of the Arrangement.

Q: When will the Arrangement become effective?

A: Subject to the satisfaction or waiver of all conditions precedent to the Arrangement set out in the Arrangement Agreement, the Corporation and Charlotte’s Web expect the Effective Date to occur during the second quarter of 2020.

3

Q: Who is entitled to vote at the Meeting?

A: Shareholders of record at the close of business on the Record Date, April 30, 2020, are entitled to vote at the Meeting.

Q: What is the voting deadline?

A: Registered Shareholders are encouraged to submit their proxies as soon as possible to ensure that their votes are counted. Proxies must be received by Odyssey, the registrar and transfer agent of the Corporation, no later than 10:00 a.m. (Toronto time) on June 2, 2020, or if the Meeting is adjourned or postponed, forty-eight (48) hours (excluding Saturdays, Sundays and statutory holidays in Ontario) before the adjourned meeting is reconvened or the postponed meeting is convened. The time limit for the deposit of proxies may be waived or extended by the Chair of the Meeting at his discretion without notice.

A non-registered Shareholder exercising voting rights through a nominee, including a bank, trust company or securities broker, should consult the voting instruction form from such Shareholder’s nominee as the nominee may have different and earlier deadlines.

Q: How can a registered Shareholder vote?

A: A registered Shareholder is a person whose Abacus Shares are registered in the Shareholder’s own name.

Before the Meeting, a registered Shareholder may vote by submitting a proxy in any of the ways set out below:

On the Internet: A registered Shareholder can go to the website at http://odysseytrust.com/Transfer-Agent/Login and follow the instructions on the screen. The Shareholder will need the 12-digit Control Number found on his, her or its proxy.

By Facsimile: A registered Shareholder can complete the proxy as directed and return it by facsimile at 1-800-517-4553.

By Email: A registered Shareholder can complete the proxy as directed and return it by email at proxy@odysseytrust.com.

At the Meeting, a registered Shareholder may vote in the following ways:

In Person: A registered Shareholder who plans to vote in person does not need to do anything except attend the Meeting. Shareholders should register with the representatives of Odyssey upon arrival at the applicable Meeting.

Virtually: A registered Shareholder who plans to vote at the Meeting online should attend the live audio webcast online at web.lumiagm.com/240055051 (password: abacus2020) by following the instructions beginning on page 39 of this Information Circular.

Q: How can a non-registered Shareholder vote?

A: A non-registered Shareholder is a person whose Abacus Shares are held in an account in the name of a nominee, including a bank, trust company or securities broker.

Before the Meeting, a non-registered Shareholder may vote in any of the ways set out below.

On the Internet: A non-registered Shareholder can go to the website at www.proxyvote.com and follow the instructions on the screen. The Shareholder will need the 16-digit Control Number found on his, her or its voting instruction form.

4

By Telephone: A non-registered Shareholder can call the number located on such Shareholder’s voting instruction form. The Shareholder will need the 16-digit Control Number found on his, her or its voting instruction form.

By Mail: A non-registered Shareholder can complete the voting instruction form as directed and return it in the business reply envelope provided to the Shareholder by the nominee’s cut-off date and time.

By Broadridge QuickVote: The Corporation may utilize Broadridge’s QuickVote™ service to assist non-registered Shareholders with voting their Abacus Shares. Certain non-registered Shareholders who have not objected to the Corporation knowing who they are (non-objecting beneficial owners) may be contacted by Gryphon Advisors to assist them in voting.

At the Meeting, a non-registered Shareholder may vote in the following ways:

In Person: If a non-registered Shareholder wishes to vote in person at the Meeting, such Shareholder must instruct his, her or its nominee to appoint the non-registered Shareholder as proxyholder. In most cases, the non-registered Shareholder can do so by filling in his, her or its name in the space provided for designating a proxy on the voting instruction form sent by such Shareholder’s nominee and then following the execution and return instructions provided by his, her or its nominee. It is not necessary to otherwise complete the form, as the Shareholder will be voting in person at the Meeting. A non-registered Shareholder located in the United States, however, generally will have to first obtain a valid legal proxy from his, her or its nominee and will need to submit such legal proxy to Odyssey. For further details, a Shareholder should contact his, her or its nominee directly.

Virtually: A non-registered Shareholder who wishes to vote at the Meeting online must first appoint themselves as proxyholder as described above. Then the non-registered Shareholder must register with Odyssey by sending an email to Abacus@OdysseyTrust.com on or before 10:00 a.m. (Toronto time) on June 2, 2020, and including the non-registered Shareholder’s proxyholder contact information, amount of Abacus Shares appointed, name in which the Abacus Shares are registered, and name of the broker where Abacus Shares are held. Odyssey will then send to such Shareholder a user ID number (i.e., a Control Number) via email shortly after this deadline. The non-registered Shareholder can then attend the live audio webcast online at web.lumiagm.com/240055051 (password: abacus2020) by following the instructions beginning on page 39 of this Information Circular. Non-registered Shareholders who have not duly appointed and registered themselves as proxyholder will be able to attend the Meeting virtually as guests, but guests will not be able to vote at the Meeting.

Q: What if my Abacus Shares are registered in more than one name or in the name of a company?

A: If your Abacus Shares are registered in more than one name, all registered persons must sign the form of proxy. If your Abacus Shares are registered in a company’s name or any name other than your own, you may be required to provide documents proving your authorization to sign the form of proxy for that company or name. For any questions about the proper supporting documents, contact Odyssey at Abacus@OdysseyTrust.com before submitting your form of proxy.

Q: Who is soliciting my proxy?

A: Management of the Corporation is soliciting your proxy and has engaged Gryphon Advisors to act as proxy solicitation agent and shareholder communications advisor with respect to the matters to be considered at the Meeting. Solicitation of proxies will be primarily by mail, but proxies may also be solicited personally, by advertisement, by telephone, by directors, officers or employees of the Corporation and/or Gryphon Advisors or by any other means management may deem necessary. In connection with these services, Gryphon Advisors will receive an estimated fee of CDN$40,000 plus reasonable out-of-pocket expenses.

5

Arrangements have also been made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to non-registered Shareholders registered in the names of these persons, and the Corporation will reimburse them for their reasonable transaction and clerical expenses.

Costs of solicitation of proxies will be borne by the Corporation.

Q: How do I complete the voting instructions on my form of proxy?

A: On the form of proxy, a Shareholder has two choices: (a) the Shareholder can indicate how such shareholder wants his, her or its proxyholder to vote such holder’s Abacus Shares; or (b) the Shareholder can let his, her or its proxyholder decide how to vote the holder’s Abacus Shares.

If a Shareholder has specified on the form of proxy how such holder wants his, her or its Abacus Shares to be voted on a particular matter, then such holder’s proxyholder must vote the holder’s Abacus Shares accordingly in the case of either a vote by show of hands or a vote by ballot. If a Shareholder has chosen to let such holder’s proxyholder decide how to vote on behalf of the Shareholder, such holder’s proxyholder can then vote in accordance with his, her or its judgment.

Unless contrary instructions are provided, Abacus Shares represented by proxies received by the Corporation and appointing as proxyholder the person(s) designated by management of the Corporation will be voted FOR each matter to be presented at the Meeting.

Q: Can I appoint someone other than the person(s) designated by management of the Corporation to vote my Abacus Shares?

A: Yes. A Shareholder can appoint a person (who need not be a Shareholder) to attend and act for him, her or it and on his, her or its behalf at the Meeting other than the persons designated in the form of proxy or voting instruction form. A Shareholder may exercise such right by inserting the name in full of the desired person in the blank space provided in the form of proxy or the voting instruction form and date and submit the form. If you appoint a non-management proxyholder, please make sure they are aware of such appointment and ensure they will attend the Meeting in order for your vote to count. If the non-management proxyholder will be attending and voting virtually at the Meeting, the Shareholder will also need to register the name of the non-management proxyholder with Odyssey by providing such information by e-mail at Abacus@OdysseyTrust.com on or before 10:00 a.m. (Toronto time) on June 2, 2020 so that they can be provided a user ID number (i.e., Control Number) to access the virtual Meeting as a proxyholder.

Q: Can I revoke or change my vote after I have voted by proxy?

A: Yes. If a registered Shareholder has submitted a proxy, such holder may revoke it (a) by instrument in writing executed by the Shareholder or such Shareholder’s attorney authorized in writing or if the Shareholder is a corporation, under its corporate seal or by an officer or attorney thereof, duly authorized, indicating the capacity under which such officer or attorney is signing, which indicates, clearly, that you want to revoke your proxy, and depositing it with Odyssey, the transfer agent of the Corporation: (i) by facsimile at 1 800-517-4553; or (ii) by e-mail at proxy@odysseytrust.com, not later than 5:00 p.m. (Toronto time), on the Business Day preceding the day of the Meeting (or any adjournment or postponement thereof) or with the Chair on the day of the Meeting (or any adjournment or postponement thereof); (b) by a duly executed and deposited proxy as provided herein bearing a later date or time than the date or time of the proxy being revoked; or (c) as permitted by law. Registered Shareholders may also attend and vote in person or virtually at the Meeting, and if they do so, any voting instructions they previously gave for their Abacus Shares will be revoked.

Only registered Shareholders have the right to revoke a proxy in the above manner. Non-registered Shareholders who wish to change their voting instructions must, in sufficient time in advance of the Meeting, contact their broker or agent in order to revoke their voting instructions and/or provide new voting instructions.

6

Q: How many Abacus Shares are outstanding?

A: As at the Record Date, April 30, 2020, the Corporation had 11,911,471 Subordinate Voting Shares outstanding and 95,873.66 Proportionate Voting Shares outstanding convertible at 100:1 into Subordinate Voting Shares, for an effective equivalent of 9,587,366 Subordinate Voting Shares outstanding.

To the knowledge of the Board and management of the Corporation and based on publicly available information, as at April 30, 2020, no person beneficially owns, or controls or directs, directly or indirectly, Abacus Shares carrying 10% or more of the voting rights attached to the Abacus Shares.

Q: Who will count the votes?

A: Proxies and votes of Shareholders attending the Meeting will be counted by Odyssey, who will act as the scrutineer of the Meeting.

Q: What is the quorum for the Meeting?

A: The quorum required at the Meeting will be not less than two Shareholders present in person or virtually or represented by proxy, at the opening of the Meeting, and holding or representing in the aggregate at least 10% of the voting rights attached to the issued and outstanding Abacus Shares entitled to vote the Meeting.

Q: What if I have other questions?

A: Shareholders who have questions regarding the Meeting, the Arrangement or who have additional questions about the procedures for voting their Abacus Shares should contact their broker or Gryphon Advisors at the telephone numbers or e-mail below:

7

Glossary of Terms

In this Information Circular, including the Summary and Appendices G, H and I, unless there is something in the subject matter inconsistent therewith, or unless otherwise defined elsewhere, the following terms will have the respective meanings set out below, words importing the singular number will include the plural and vice versa and words importing any gender will include all genders. Terms used in the Appendices to the Information Circular, other than Appendices G, H and I, are defined separately and the terms defined below are not used therein, except where otherwise indicated.

“1933 Securities Act” means the United States Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder;

“1934 Exchange Act” means the United States Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder;

“2014 Farm Bill” means section 7606 of the Agricultural Act of 2014;

“2018 Farm Bill” means the Agricultural Improvement Act of 2018;

“Abacus” or the “Corporation” means Abacus Health Products, Inc., a corporation existing under the OBCA;

“Abacus AIF” means the annual information form of the Corporation dated April 29, 2020 for the year ended December 31, 2019;

“Abacus Annual Financial Statements” means the audited consolidated financial statements of the Corporation, together with the notes thereto and the auditors’ reports thereon as at and for the years ended December 31, 2019 and 2018 (as refiled on May 4, 2020);

“Abacus Annual MD&A” means management’s discussion and analysis of the financial and operating results of the Corporation for the year ended December 31, 2019;

“Abacus Disclosure Letter” means the disclosure letter dated as of March 22, 2020 and delivered by the Corporation to Charlotte’s Web with the Arrangement Agreement;

“Abacus Employee” means the officers and employees of the Corporation and its Subsidiaries;

“Abacus Legacy Plan” means the 2018 equity incentive plan of Abacus U.S., adopted on June 30, 2018, as amended on October 4, 2018, assumed by the Corporation on January 29, 2019;

“Abacus Options” means the outstanding options, if any, to purchase Subordinate Voting Shares issued pursuant to (i) the Long-Term Incentive Plan, and (ii) the Abacus Legacy Plan;

“Abacus Plan” means any benefit or compensation plan, program, policy, practice, agreement, Contract, arrangement or other obligation, whether or not funded, which is sponsored or maintained by, or required to be contributed to, or with respect to which any potential liability is borne, by the Corporation or any of its Subsidiaries with respect to the Abacus Employees or former Abacus Employees and includes: (i) employment, consulting, retirement, severance, termination or change in control agreements; and (ii) deferred compensation, equity-based, incentive, bonus, supplemental retirement, profit sharing, pension, insurance, medical, welfare, fringe or other material benefits or remuneration of any kind;

“Abacus Projections” has the meaning given to it under the heading “Risk Factors – Risk Factors Relating to the Arrangement”;

“Abacus SARs” means the stock appreciation rights issued to eligible participants under the Long-Term Incentive Plan;

8

“Abacus Shares” means, collectively, the Subordinate Voting Shares and Proportionate Voting Shares in the capital of the Corporation;

“Abacus U.S.” means the Corporation’s main operating subsidiary, Abacus Health Products, Inc., a corporation existing under the laws of the State of Delaware;

“Abacus Warrants” means the outstanding warrants to purchase Subordinate Voting Shares;

“Abacus Warrant Indenture” means the warrant indenture between the Corporation and Odyssey Trust Company dated May 8, 2019;

“Action” means any action, cause of action, claim, demand, litigation, suit, investigation, grievance, citation, summons, subpoena, inquiry, audit, hearing, arbitration or other similar civil, criminal or regulatory proceeding, in law or in equity;

“Acquisition Proposal” means, at any time, whether or not in writing, any offer, proposal or inquiry (including any modification or proposed modification of any such offer, proposal or inquiry) with respect to (a) any acquisition by any Person or group of Persons of Abacus Shares (or securities convertible into or exchangeable or exercisable for Abacus Shares) in a single transaction or a series of transactions, representing 20% or more of the Abacus Shares then outstanding (assuming, if applicable, the conversion, exchange or exercise of such securities convertible into or exchangeable or exercisable for Abacus Shares), or (b) any acquisition by any Person or group of Persons of Abacus Shares (or securities convertible into or exchangeable or exercisable for Abacus Shares) representing 20% or more of votes attached to the Abacus Shares then outstanding (assuming, if applicable, the conversion, exchange or exercise of such securities convertible into or exchangeable or exercisable for Abacus Shares), or (c) any acquisition by any Person or group of Persons of any assets of the Corporation and/or one or more of its Subsidiaries (including shares or other equity interests of any Subsidiary) individually or in the aggregate contributing 20% or more of the consolidated revenue of the Corporation and its Subsidiaries or representing 20% or more of the assets of the Corporation and its Subsidiaries taken as a whole (in each case based on the consolidated financial statements of the Corporation most recently filed prior to such time as part of the Corporation’s documents publicly filed under the profile of the Corporation on SEDAR) (or any lease, license, or other arrangement having a similar economic effect), whether in a single transaction or a series of related transactions, in each case, whether by plan of arrangement, amalgamation, merger, consolidation, recapitalization, liquidation, dissolution or other business combination, sale of assets, joint venture, take-over bid, tender offer, share exchange, exchange offer or otherwise, including any single or multi-step transaction or series of transactions, directly or indirectly involving the Corporation or any Subsidiary, and in each case excluding the Arrangement and the other transactions contemplated by the Arrangement Agreement and any transaction between the Corporation and/or one or more of its wholly-owned Subsidiaries;

“Advance Notice Provisions” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Advance Notice Provisions”;

“Adverse Recommendation Change” has the meaning given to it under the heading “Summary of Arrangement Agreement – Non-Solicitation”;

“Affiliate” has the meaning specified in National Instrument 45-106 – Prospectus Exemptions;

“Aidance Agreements” means, collectively, the following agreements to which Aidance Scientific, Inc. (or a predecessor entity) and Abacus U.S. (or a predecessor entity) are parties: (i) manufacturing, fulfillment & business services agreement dated June 29, 2018, as amended July 1, 2019; (ii) the agreement replacing exclusive technology license dated May 29, 2018; (iii) business services agreement dated November 12, 2018; (iv) mutual waiver of conflicts agreement dated February 13, 2019; (v) the amended and restated manufacturing, fulfillment and business services agreement entered into on January 1, 2020; and (vi) the confirmatory IP ownership agreement dated March 22, 2020;

“allowable capital loss” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Shareholders Resident in Canada – Taxation of Capital Gain or Capital Loss”;

9

“Alternative Transaction Agreement” has the meaning given to it under the heading “Summary of Arrangement Agreement – Non-Solicitation”;

“Appropriations Rider” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters - United States Federal Regulation of Hemp”;

“Arrangement” means the arrangement under Section 182 of the OBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of the Arrangement Agreement or made at the direction of the Court in the Final Order with the consent of the Corporation and Charlotte’s Web, each acting reasonably;

“Arrangement Agreement” means the arrangement agreement between the Corporation and Charlotte’s Web dated March 22, 2020, as the same may be amended, supplemented or otherwise modified in accordance with the terms thereof;

“Arrangement Resolution” means the special resolution of the Shareholders in respect of the Arrangement to be considered, and, if thought advisable, passed by the Shareholders at the Meeting, the full text of which is set forth in Appendix A to this Information Circular;

“Articles of Arrangement” means the articles of arrangement of the Corporation in respect of the Arrangement, required by the OBCA to be sent to the Director after the Final Order is made, which will include the Plan of Arrangement and otherwise be in form and content satisfactory to the Corporation and Charlotte’s Web, each acting reasonably;

“BCBCA” means the Business Corporations Act (British Columbia);

“Board” means the board of directors of Abacus;

“Breaching Party” has the meaning given to it under the heading “Summary of Arrangement Agreement – Covenants – Covenants relating to Notice and Cure Provisions”;

“Broadridge” means Broadridge Financial Solutions, Inc.;

“Business Day” means any day of the year, other than a Saturday, Sunday or any day on which major commercial banking institutions in Toronto, Ontario, Vancouver, British Columbia, or Boulder, Colorado are closed for business;

“Cannabis” means Cannabis sativa L.;

“Cannabis Act” means the Cannabis Act (Canada);

“CBD” means cannabidiol;

“CDA” means the Colorado Department of Agriculture;

“CDPHE” means the Colorado Department of Public Health and Environment;

“CDS” means CDS Clearing and Depository Services Inc.;

“Certificate” means the certificate of arrangement giving effect to the Arrangement, issued pursuant to Section 183(2) of the OBCA after the Articles of Arrangement have been filed;

“Charlotte’s Web” means Charlotte’s Web Holdings, Inc.;

“Charlotte’s Web AIF” means the annual information form of Charlotte’s Web dated March 27, 2020 for the year ended December 31, 2019;

10

“Charlotte’s Web Articles” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web”;

“Charlotte’s Web Board” or “Charlotte’s Web Board of Directors” means the board of directors of Charlotte’s Web;

“Charlotte’s Web Common Shares” means common shares in the capital of Charlotte’s Web;

“Charlotte’s Web LTIP” means Charlotte’s Web’s 2018 long-term incentive plan;

“Charlotte’s Web MD&A” means the management’s discussion and analysis of the financial condition and financial performance of Charlotte’s Web for the year ended December 31, 2019;

“Charlotte’s Web Projections” has the meaning given to it under the heading “Risk Factors – Risk Factors Relating to the Arrangement”;

“Charlotte’s Web Proportionate Voting Shares” means proportionate voting shares in the capital of Charlotte’s Web;

“Charlotte’s Web Shares” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares”;

“Charlotte’s Web U.S.” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters”;

“Charlotte’s Web Warrants” means the Charlotte’s Web Common Share purchase warrants issued by Charlotte’s Web pursuant to a warrant indenture between Charlotte’s Web and Odyssey, as warrant agent, dated December 3, 2019. Each Charlotte’s Web Warrant is exercisable to purchase one Charlotte’s Web Common Share until December 3, 2021 at an exercise price of CDN$16.50;

“Code” means the United States Internal Revenue Code of 1986, as amended;

“Confidentiality Agreement” means the non-disclosure agreement dated November 8, 2019 between the Corporation and Charlotte’s Web;

“Consideration” means 0.85 of a Charlotte’s Web Common Share per Subordinate Voting Share, after conversion of all outstanding Proportionate Voting Shares;

“Consideration Shares” means Charlotte’s Web Common Shares to be received by holders of Abacus Shares (other than Dissenting Shareholders);

“Contract” means any written binding agreement, arrangement, commitment, engagement, contract, franchise, license, lease, obligation, note, bond, mortgage, indenture, undertaking, joint venture or other obligation;

“Conversion Event” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares”;

“Corporation” means Abacus Health Products, Inc., a corporation existing under the OBCA;

“Court” means the Ontario Superior Court of Justice (Commercial List) in Ontario, Canada or other court as applicable;

“COVID-19” means the novel coronavirus (SARS-CoV-2) and related respiratory disease (coronavirus disease (COVID-19));

“CPG” means consumer packaged goods;

11

“CRA” means the Canada Revenue Agency;

“CSA” means the Canadian Securities Administrators;

“CSE” means the Canadian Securities Exchange;

“DEA” means the U.S. Drug Enforcement Agency;

“Demand for Payment” has the meaning given to it under the heading “Dissenting Shareholders’ Rights”;

“Depositary” means Odyssey Trust Company or such other Person that may be appointed by the Parties in connection with the Arrangement for the purpose of receiving deposits of certificates formerly representing Abacus Shares;

“Director” means the Director appointed pursuant to Section 278 of the OBCA;

“Dissent Rights” has the meaning given to it under the heading “Dissenting Shareholders’ Rights”;

“Dissent Shares” means the Abacus Shares held by Dissenting Shareholders in respect of which such Dissenting Shareholders have given Notice of Dissent;

“Dissenting Non-Resident Holder” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Shareholders not Resident in Canada – Dissenting Non-Resident Holders”;

“Dissenting Resident Holder” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Shareholders Resident in Canada – Dissenting Resident Holders”;

“Dissenting Shareholders” means registered holders of Abacus Shares who duly and validly exercise the Dissent Rights in respect of the Arrangement Resolution in strict compliance with the Dissent Rights, which exercise of Dissent Rights has not been withdrawn, or is not deemed to have been withdrawn, before the Effective Time;

“DPSPs” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Eligibility for Investment in Canada”;

“DSHEA” has the meaning given to it in Appendix H under the heading “Regulatory Framework - United States Regulatory Matters – FDA Regulation”;

“Effective Date” means the effective date of the Arrangement, being the date shown on the Certificate;

“Effective Time” means 12:01 a.m. (Toronto time) on the Effective Date or such other time as the Parties agree in writing before the Effective Date;

“Exchange Ratio” means 0.85 of a Charlotte’s Web Common Share per Subordinate Voting Share, after conversion of all outstanding Proportionate Voting Shares;

“Expense Reimbursement Fee” means CDN$350,000;

“FATCA” or “Foreign Account Tax Compliance Act” has the meaning given to it under the heading “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders – Non-U.S. Holders – Additional Withholding Tax on Payments Made to Foreign Accounts”;

“Fairness Opinion” means the oral opinion of Greenhill provided to the Board on March 22, 2020, which was confirmed subsequently in writing, that concluded that the Consideration to be received by Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Shareholders, a copy of which is attached as Appendix C;

12

“FCEN” or “FCEN Memo” has the meaning given to it in Appendix H under the heading “Risk Factors – Risks Related to the Regulatory Environment”;

“FDA” means the United States Food and Drug Administration;

“FD&C Act” means the Food, Drug, and Cosmetic Act;

“Final Order” means the order of the Court in a form acceptable to the Corporation and Charlotte’s Web, each acting reasonably, approving the Arrangement under section 182(5) of the OBCA, as such order may be affirmed, amended, modified, supplemented or varied by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn, abandoned or denied, as affirmed or amended on appeal;

“Former Abacus Shareholder” means, at and following the Effective Time, a holder of Abacus Shares immediately prior to the Effective Time;

“FPI Condition” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares”;

“FTC” has the meaning given to it in Appendix H under the heading “Risk Factors – Risks Related to the Regulatory Environment – Risks Associated with Numerous Laws and Regulations”;

“Governmental Entity” means: (i) any international, multinational, national, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public body, authority or department, central bank, court, tribunal, arbitral body, commission, board, bureau, commissioner, ministry, governor in council, agency or instrumentality, domestic or foreign; (ii) any subdivision or authority of any of the above; (iii) any quasi-governmental, administrative or private body, including any tribunal, commission, committee, regulatory agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; or (iv) any stock exchange;

“GRAS” means generally recognized as safe;

“Greenhill” means Greenhill & Co. Canada Ltd.;

“Greenhill Engagement Agreement” has the meaning given to it under the heading “The Arrangement - Fairness Opinion”;

“Gryphon Advisors” refers to Gryphon Advisors Inc., the Corporation’s proxy solicitation agent and shareholder communications advisor;

“Harmony Hemp Acquisition” means the acquisition by the Corporation of the principal assets of Benefits US, LLC, a Colorado limited liability company, and Harmony Products, LLC, a Utah limited liability company, which companies owned the Harmony Hemp™ brand;

“hemp” means any part of the Cannabis plant having no more than three-tenths of one percent (0.3%) concentration of THC on a dry-weight basis;

“Hemp” means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a THC concentration of not more than 0.3% on a dry weight basis;

“HSR Act” means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, supplemented or restated from time to time and any successor to such statute and the rules and regulations promulgated thereunder;

“HSR Approval” means all applicable filings pursuant to the HSR Act shall have been made and all applicable waiting periods shall have expired or been terminated;

13

“Holder” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders”;

“IFR” means the interim final rule dated October 31, 2019 issued by the USDA in respect of commercial production of Hemp in the U.S.;

“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board;

“IND” means investigations as a new drug;

“IND Preclusion” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters – FDA Regulation”;

“IRS” has the meaning given to it under the heading “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”;

“Information Circular” means this management information circular dated May 4, 2020, together with all Appendices hereto, distributed to the Shareholders in connection with the Meeting;

“Interested Parties” has the meaning given to it under the heading “Certain Canadian Securities Law Matters – Multilateral Instrument 61-101”;

“Interim Order” means the interim order of the Court dated April 30, 2020 pursuant to Section 182(5) of the OBCA, providing for, among other things, the calling and holding of the Meeting, as the same may be amended by the Court with the consent of the Parties, each acting reasonably, a copy of which order is attached as Appendix E to this Information Circular;

“IT” has the meaning given to it in Appendix H under the heading “Risk Factors – Risks Related to Charlotte’s Web’s Business and Industry – Information Technology Systems and Data Security Breaches”;

“Laws” means any and all laws, statutes, codes, ordinances, decrees, rules, regulations, by-laws, notices, judicial, arbitral, administrative, ministerial, departmental or regulatory judgments, injunctions, orders, decisions, rulings, determinations or awards, decrees or other requirements of any Governmental Entity having the force of law and any legal requirements arising under the common law or principles of law or equity and the term “applicable” with respect to such Laws and, in the context that refers to any Person, means such Laws as are applicable at the relevant time or times to such Person or its business, undertaking, property or securities and emanate from a Governmental Entity having jurisdiction over such Person or its business, undertaking, property or securities;

“Letter of Transmittal” means the letter of transmittal to be delivered by the Corporation to the registered Shareholders together with this Information Circular providing for the delivery of Abacus Shares to the Depositary;

“License Agreement” has the meaning given to it in Appendix H under the heading “Risk Factors – Risks Related to Charlotte’s Web’s Business and Industry – Litigation”;

“Licenses” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters – State Regulation of Hemp”;

“Lien” means any mortgage, deed of trust, charge, pledge, hypothec, security interest, easement, right of way, zoning restriction, lien (statutory or otherwise), or other third party encumbrance, in each case, whether contingent or absolute;

“Line of Credit” means the asset backed line of credit of Charlotte’s Web announced March 23, 2020 with J.P. Morgan for US$10,000,000 with an accordion feature to extend the line to US$20,000,000 with a three year maturity;

“Locked-Up Shareholders” means those Shareholders who have executed Voting Support Agreements;

14

“Long-Term Incentive Plan” means the long-term incentive plan of the Corporation dated December 5, 2018, and as amended and restated as of June 18, 2019;

“Mandatory Conversion” means the mandatory conversion of Proportionate Voting Shares into Subordinate Voting Shares, in accordance with the terms of the Corporation’s organizational documents, which shall have occurred prior to the Effective Time;

“Matching Period” means the five (5) Business Day period following the day of Charlotte’s Web’s receipt of the Superior Proposal Notice;

“Material Adverse Effect” means in respect of any Person, any change, event, occurrence, effect, state of facts, development, condition or circumstance that, individually or in the aggregate with other such changes, events, occurrences, effects, state of facts, developments, conditions or circumstances would reasonably be expected to be material and adverse to the business, operations, financial condition or results of operations of that Person and its Subsidiaries, taken as a whole, except to the extent that any such change, event, occurrence, effect, state of facts, development, condition or circumstance results from:

(a) conditions generally affecting the pharmaceutical and CBD hemp industry in the United States, or the pharmaceutical or CBD hemp products developed and commercialized by the Person or its Subsidiaries in the United States;

(b) any change in global, national or regional political conditions (including strikes, lockouts, riots or facility takeover for emergency purposes), economic, business, banking, regulatory, currency exchange, interest rate, inflationary conditions or financial, capital or commodity market conditions, in each case whether national or global;

(c) any act of terrorism or any outbreak of hostilities or declared or undeclared war, or any escalation or worsening of such acts of terrorism, hostilities or war;

(d) any epidemics, pandemics, earthquakes, volcanoes, tsunamis, hurricanes, tornados or other natural disasters or acts of God;

(e) any adoption, proposal, implementation or other change in Law, or interpretation of Law by any Governmental Entity, including any Laws in respect of Taxes, IFRS or regulatory accounting requirements, in each case after the date hereof;

(f) the announcement of the Arrangement or the pendency of the Arrangement;

(g) the taking of any action required by, or the failure to take any action expressly prohibited by, excluding any obligation to act in the Ordinary Course, the Arrangement Agreement;

(h) any change in the market price or trading volume of any securities of the Person or any suspension of trading in publicly trading securities generally, or any credit rating downgrade, negative outlook, watch or similar event relating to the Person (it being understood that the causes underlying such change in market price or trading volume may be taken into account in determining whether a Material Adverse Effect has occurred); and

(i) the failure of the Person or its Subsidiaries to meet any internal or published projections, forecast or estimates of, or guidance related to, revenues, earnings, cash flows or other financial metrics before, on or after the date hereof (it being understood that the causes underlying such failure may be taken into account in determining whether a Material Adverse Effect has otherwise occurred);

but provided in the case of (a) through (e), such change, event, occurrence, effect, state of facts, development, condition or circumstance does not have a disproportionately greater impact or effect on the Person as compared to companies in comparable industries and operating in the same jurisdiction, and provided further that any Material

15

Adverse Effect arising solely from actions taken as a result of, or results arising from, COVID-19 shall not constitute a Material Adverse Effect;

“Meeting” means the special meeting of Shareholders (including any adjournment(s) or postponement(s) thereof permitted under the Arrangement Agreement) that is convened to consider and, if deemed advisable, to approve the Arrangement Resolution;

“Misrepresentation” has the meaning given to it under the Securities Act (Ontario);

“MI 61-101” means Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions;

“NDI” means new dietary ingredient;

“New Employment Agreement” means the employment agreement between Perry Antelman and Charlotte’s Web dated March 22, 2020 and effective as of the Effective Time;

“NI 44-101” means National Instrument 44-101 – Short Form Prospectus Distributions;

“NI 51-102” means National Instrument 51-102 – Continuous Disclosure Obligations;

“NI 52-109” means National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings;

“Non Claiming Shareholder” has the meaning given to it under the heading “Arrangement Mechanics – Share Exchange Mechanics – Registered Shareholders – Letter of Transmittal”;

“Non-Resident Holder” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Shareholders not Resident in Canada”;

“Non-U.S. Holder” has the meaning given to it under the heading “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”;

“Notice Date” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Advance Notice Provisions”;

“Notice of Dissent” has the meaning given to it under the heading “Dissenting Shareholders’ Rights”;

“OBCA” means the Business Corporations Act (Ontario), including the regulations promulgated thereunder, as amended from time to time;

“ODA” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters – State Regulation of Hemp – Oregon”;

“Odd Lot” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Take-Over Bid Protection”;

“Odyssey” means Odyssey Trust Company;

“Offer to Pay” has the meaning given to it under the heading “Dissenting Shareholders’ Rights”;

“Order” means any Law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the Arrangement enacted, issued, promulgated, enforced or entered by any court or other Governmental Entity of competent jurisdiction;

16

“Ordinary Course” means, with respect to an action taken by any Person, that such action is substantially consistent in nature and scope with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of the business of such Person;

“OSC Rule 56-501” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web”;

“Osler” means Osler, Hoskin & Harcourt LLP;

“Outside Date” means August 17, 2020 or such later date as may be agreed to in writing by the Corporation and Charlotte’s Web;

“Parties” means the Corporation and Charlotte’s Web, and “Party” means either of them;

“Permitted Holders” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Conversion Conditions”;

“Person” includes an individual, partnership, limited partnership, association, body corporate, corporation, company, organization, joint venture, trust, estate, trustee, executor, administrator, legal representative, government (including a Governmental Entity), syndicate or other entity;

“Plan” or “Plan of Arrangement” means the plan of arrangement in the form attached as Appendix B to this Information Circular, and any amendments or variations thereto made in accordance with Section 8.1 of the Arrangement Agreement and the Plan of Arrangement or upon the direction of the Court in the Final Order with the consent of the Corporation and Charlotte’s Web, each acting reasonably;

“Pro Forma Ownership” is the percentage obtained as a result of dividing (a) the total number of Subordinate Voting Shares outstanding (including after the conversion of all Proportionate Voting Shares into Subordinate Voting Shares, and including all Subordinate Voting Shares issuable pursuant to the Harmony Hemp Acquisition) multiplied by the Exchange Ratio, by (b) the sum of the number in (a) and the total number of Charlotte’s Web Common Shares outstanding (including after the conversion of all Charlotte’s Web Proportionate Voting Shares, and including the number of Charlotte’s Web Common Shares issuable upon exercise of outstanding in-the-money options and warrants calculated by using the treasury stock method and using the closing price of the Charlotte’s Web Common Shares on the TSX on March 20, 2020), in each case as of March 20, 2020;

“Projections” has the meaning given to it under the heading “Risk Factors – Risk Factors Relating to the Arrangement”;

“Proportionate Voting Shares” means the shares in the capital of the Corporation designated as Proportionate Voting Shares, each currently entitling the holder thereof to one hundred (100) votes per share at shareholder meetings of the Corporation;

“PVS Offer” has the meaning given to it in Appendix H under the heading “Description of the Share Capital of Charlotte’s Web – Take-Over Bid Protection”;

“RDSPs” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Eligibility for Investment in Canada”;

“Record Date” means April 30, 2020;

“Regulatory Approvals” means any consent, waiver, permit, exemption, review, order, decision or approval of, or any registration and filing with, any Governmental Entity, or the expiry, waiver or termination of any waiting period imposed by Law or a Governmental Entity, and with respect to such consent, waiver, permit, exemption, review, order, decision or approval of, or any registration and filing with, any Governmental Entity, it shall not have been withdrawn, terminated, lapsed, expired or is otherwise no longer effective, in each case in connection with the Arrangement and includes the Required Regulatory Approvals;

17

“Regulation S” means Regulation S as defined under the 1933 Securities Act;

“Replacement Options” means an option or right to purchase Charlotte’s Web Common Shares granted by Charlotte’s Web in replacement of an Abacus Option on the basis set forth in the Plan of Arrangement, as described under the heading “Arrangement Mechanics – Summary of the Arrangement”;

“Replacement SARs” means the stock appreciation rights to be issued by Charlotte’s Web in exchange for each of the outstanding Abacus SARs at the Effective Time pursuant to the Plan of Arrangement, as described under the heading “Arrangement Mechanics – Summary of the Arrangement”;

“Replacement Warrants” means the warrants to purchase Charlotte’s Web Common Shares to be issued by Charlotte’s Web in exchange for each of the outstanding Abacus Warrants at the Effective Time pursuant to the Plan of Arrangement, as described under the heading “Arrangement Mechanics – Summary of the Arrangement”;

“Representatives” means with respect to any Party, officers, directors, employees, accountants, legal counsel, financial advisors, consultants, financing sources and other advisors and representatives of such Party and such Party’s Affiliates;

“Required Regulatory Approvals” means the Stock Exchange Approval and, if required by applicable Law, the HSR Approval;

“Resident Holder” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Shareholders Resident in Canada”;

“RESPs” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Eligibility for Investment in Canada”;

“Roundtable” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters – FDA Regulation”;

“RRIFs” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Eligibility for Investment in Canada”;

“RRSPs” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Eligibility for Investment in Canada”;

“R&D” means research and development;

“Securityholders” means, collectively, the Shareholders and the holders of Abacus SARs, Abacus Options and Abacus Warrants;

“SEC” means the United States Securities and Exchange Commission;

“self-affirmation of GRAS” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters – Charlotte’s Web’s Regulatory Compliance Activities”;

“Section 3(a)(10) Exemption” means the exemption from the registration requirements of the 1933 Securities Act pursuant to Section 3(a)(10) thereof;

“SEDAR” means the System for Electronic Document Analysis and Retrieval;

“Shareholders” means the holders from time to time of Abacus Shares;

“Stanley brothers” means, collectively, Josh Stanley, Joel Stanley, Jesse Stanley, Jon Stanley, Jordan Stanley, Jared Stanley and J. Austin Stanley;

18

“Stock Exchange Approval” means the conditional approval of the TSX to list the Consideration Shares, and any Charlotte’s Web Common Shares issuable upon the exercise of any Replacement Options and Replacement Warrants, in each case subject only to customary listing conditions;

“Subordinate Voting Shares” means the shares in the capital of the Corporation designated as Subordinate Voting Shares, each entitling the holder thereof to one (1) vote per share at shareholder meetings of the Corporation;

“Subsidiary” means a Person that is controlled directly or indirectly by another Person and includes a Subsidiary of a Subsidiary;

“Superior Proposal” means a bona fide written Acquisition Proposal (provided, however, that, for the purposes of this definition, all references to “20%” in the definition of “Acquisition Proposal” shall be changed to “100%”) made by a Person or group of Persons acting jointly (other than Charlotte’s Web and its affiliates) and which or in respect of which:

(a) the Board has determined in good faith, after consultation with its financial advisors and outside legal counsel: (i) would, taking into account all of the terms and conditions of such Acquisition Proposal (including all legal, financial, regulatory and other aspects of the Acquisition Proposal and the Person making such Acquisition Proposal), and if consummated in accordance with its terms (but not assuming away any risk of non-completion), (A) result in a transaction which is more favourable to the Shareholders from a financial point of view than the Arrangement, and (B) the failure to recommend such Acquisition Proposal to Shareholders would be inconsistent with the fiduciary duties of the Board; and (ii) is reasonably capable of being completed in accordance with its terms, without undue delay, taking into account all legal, financial, regulatory and other aspects of such Acquisition Proposal and the Person or Persons making such Acquisition Proposal;

(b) is not subject to any financing condition and in respect of which it has been demonstrated to the satisfaction of the Board, acting in good faith (after receipt of advice from its financial advisors and its outside legal counsel) that adequate arrangements have been made in respect of any financing required to complete such Acquisition Proposal at the time and on the basis set out therein; and

(c) is not subject to any due diligence condition or due diligence termination right in favour of the acquiror;

“Superior Proposal Notice” has the meaning given to it under the heading “Summary of Arrangement Agreement – Non-Solicitation – Adverse Recommendation Change and Alternative Transaction Agreement”;

“Tax Act” means the Income Tax Act (Canada), and the regulations promulgated thereunder, each as amended from time to time;

“Tax Proposals” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders”;

“taxable capital gain” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Shareholders Resident in Canada – Taxation of Capital Gain or Capital Loss”;

“Terminating Party” has the meaning given to it under the heading “Summary of Arrangement Agreement – Covenants – Covenants relating to Notice and Cure Provisions”;

“Termination Fee” means CDN$4,000,000;

“Termination Fee Event” has the meaning given to it under the heading “Termination and Amendment of Arrangement Agreement – Termination Fees”;

“Termination Notice” has the meaning given to it under the heading “Summary of Arrangement Agreement – Covenants – Covenants relating to Notice and Cure Provisions”;

19

“TFSAs” has the meaning given to it under the heading “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Eligibility for Investment in Canada”;

“THC” means delta-9 tetrahydrocannabinol;

“TSX” means the Toronto Stock Exchange;

“Treasury Regulations” has the meaning given to it under the heading “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”;

“United States” or “U.S.” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

“USCSA” means the U.S. Controlled Substances Act;

“USDA” means the United States Department of Agriculture;

“U.S. GAAP” has the meaning given to it under the heading “General Matters – Notice to Shareholders in the United States”;

“U.S. Holder” has the meaning given to it under the heading “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”;

“USPTO” has the meaning given to it in Appendix H under the heading “Risk Factors – Risks Related to Charlotte’s Web’s Business and Industry – Inability to Protect Intellectual Property”;

“USRPHC” has the meaning given to it under the heading “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders – Non-U.S. Holders - Certain U.S. Federal Income Tax Consequences of the Arrangement”;

“Voting Support Agreements” means the voting support agreements and lock-up agreements dated March 22, 2020 between Charlotte’s Web and the Locked-Up Shareholders; and

“Warning Letter” has the meaning given to it in Appendix H under the heading “Regulatory Framework – United States Regulatory Matters – FDA Regulation”.

20

MANAGEMENT INFORMATION CIRCULAR

General Matters

This Information Circular is furnished in connection with the solicitation of proxies by the management of Abacus for use at the Meeting, to be held on June 4, 2020 at the time and place and for the purposes stated in the Notice of Meeting, and at any adjournment(s) or postponement(s) thereof. No person has been authorized to give any information or make any representation in connection with the Arrangement or any other matters to be considered at the Meeting other than those contained in this Information Circular and if given or made, any such information or representation must not be relied upon as having been authorized.

The information concerning Charlotte’s Web contained and incorporated by reference in this Information Circular, including but not limited to the information in Appendix H to this Information Circular, has been provided by Charlotte’s Web. Although the Corporation has no knowledge that would indicate that any of such information is untrue or incomplete, the Corporation does not assume any responsibility for the accuracy or completeness of such information or the failure by Charlotte’s Web to disclose events which may have occurred or may affect the completeness or accuracy of such information but which are unknown to the Corporation.

This Information Circular does not constitute an offer to sell or a solicitation of an offer to purchase any securities or the solicitation of a proxy by any person in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or solicitation of an offer or a proxy solicitation. Neither the delivery of this Information Circular nor any distribution of the securities referred to in this Information Circular will, under any circumstances, create an implication that there has been no change in the information set forth herein since the date as of which such information is given in this Information Circular.

Information contained in or otherwise accessed through the Corporation’s website or Charlotte’s Web’s website, or any website, other than those documents incorporated by reference herein and filed on SEDAR, does not constitute part of this Information Circular.

All summaries of, and references to, the Arrangement Agreement and the Arrangement or Plan of Arrangement in this Information Circular are qualified in their entirety by reference to the complete text of the Arrangement Agreement and the Plan of Arrangement, of which a copy of the Arrangement Agreement is available under the Corporation’s SEDAR profile at www.sedar.com and a copy of the Plan of Arrangement is attached hereto as Appendix B. You are urged to carefully read the full text of the Arrangement Agreement and the Plan of Arrangement.

All capitalized terms used in this Information Circular (including Appendices G, H and I hereto) but not otherwise defined herein have the meanings set forth herein under “Glossary of Terms”. The terms and abbreviations used in the Appendices to this Information Circular, other than in Appendices G, H and I, are defined separately therein. Information contained in this Information Circular is given as of May 4, 2020, unless otherwise specifically stated. Details of the Arrangement are set forth under the headings “Summary of Arrangement Agreement” and “The Arrangement”. For details of the matters to be considered by the Shareholders, see “Matters to be Considered at the Meeting”.

Caution Regarding Forward-Looking Statements

This Information Circular contains certain information that may constitute forward-looking information and statements (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities Laws, including financial and operational expectations and projections. These statements, other than statements of historical fact, are based on management’s current expectations and are subject to a number of risks, uncertainties, and assumptions, including assumptions set forth in this Information Circular, market and economic conditions, business prospects or opportunities, future plans and strategies, projections, technological developments, anticipated events and trends and regulatory changes that affect Abacus, its Subsidiaries and their respective customers and industries. Although Abacus and management believe the expectations reflected in such forward-looking statements are reasonable and are based on reasonable assumptions and estimates as at the date hereof, there can be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove accurate. Forward-looking

21

statements are inherently subject to significant business, regulatory, economic and competitive risks, uncertainties and contingencies that could cause actual events to differ materially from those expressed or implied in such statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “would”, “should”, “believe”, “objective”, “ongoing”, “imply” or the negative of these words or other variations or synonyms of these words or comparable terminology and similar expressions.

In particular, this Information Circular (including Appendices G, H and I to this Information Circular) contains forward-looking statements pertaining to the following:

the perceived benefits of the Arrangement and expected attributes of Charlotte’s Web resulting from the Arrangement, including but not limited to Charlotte’s Web’s potential for operational synergies, potential to maximize profitable growth in core products across key markets, potential to capture additional market share, potential to be the largest vertically integrated hemp-derived CBD company, potential for benefiting from having an experienced and sophisticated management and operational talent, enhanced capital markets and financial profile and balance sheet strength;

the timing of the Meeting and the Final Order;

the anticipated Effective Date;

the delisting of the Subordinate Voting Shares from the CSE and the anticipated timing thereof;

the treatment of Shareholders and Securityholders under securities and tax Laws;

the anticipated ownership structure of Charlotte’s Web on completion of the Arrangement;

the anticipated receipt of all Required Regulatory Approvals and other third party approvals and consents for the Arrangement; and

the exercise of Dissent Rights by Shareholders with regards to the Arrangement.

Some of the risks that could cause results to differ materially from those expressed in the forward-looking statements include:

the conditions to completion of the Arrangement may not be satisfied;

the Corporation may not receive the requisite approval of its Shareholders;

the Arrangement Agreement restricts the Corporation from taking specified actions until the Arrangement is completed without Charlotte’s Web’s consent, which may prevent the Corporation from pursuing attractive business opportunities;

there can be no assurance that if the Corporation solicited expressions of interest from other potential arm’s length investors or acquirors, that one or more would not have been willing to complete a transaction on more favourable terms than Charlotte’s Web;

Required Regulatory Approvals necessary to complete the Arrangement may not be obtained, or conditions may be imposed in connection with such approvals that will increase the costs associated with the Arrangement or have other negative implications for Charlotte’s Web on a consolidated basis following completion of the Arrangement;

litigation relating to the Arrangement may be commenced which may prevent, delay or give rise to significant costs or liabilities on the part of Abacus or Charlotte’s Web;

22

the Parties may discover previously undisclosed liabilities following the Effective Date;

the Arrangement Agreement may be terminated prior to the Effective Time;

the Corporation may be required to pay the Termination Fee or the Expense Reimbursement Fee to Charlotte’s Web in certain circumstances if the Arrangement is not completed;

directors and officers of the Corporation may have interests in the Arrangement that may be different from those of the Shareholders generally;

the focus of management’s time and attention on the Arrangement may detract from other aspects of the respective businesses of Abacus and Charlotte’s Web;

the anticipated benefits and value creation from the Arrangement may not be realized, or may not be realized in the expected timeframes;

dilution and share price volatility, including a material decrease in the trading price of the Charlotte’s Web Common Shares, may occur;

there may be competing offers for the Corporation which arise as a result of or in connection with the Arrangement;

the business of the Corporation may not be successfully integrated following completion of the Arrangement;

the tax treatment of the Arrangement for U.S. Shareholders is subject to uncertainty;

loss of key employees and the risk that Charlotte’s Web may not be able to retain key employees of Abacus or Charlotte’s Web following completion of the Arrangement;

risks relating to the regulatory regime in which Abacus and Charlotte’s Web operate; and

risks relating to the potential adverse effect of the COVID-19 pandemic, or the perception of its effects, on Abacus, Charlotte’s Web and their customers, suppliers and other stakeholders.

With regards to the forward-looking statements in Abacus’s and Charlotte’s Web’s documents incorporated by reference herein, please refer to the forward-looking statements advisories in such documents in respect of the forward-looking statements contained therein, the assumptions upon which they are based and the risk factors in respect of such forward-looking statements.

Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained or incorporated by reference in this Information Circular are expressly qualified by this cautionary statement. Except as required by Law, neither Abacus nor Charlotte’s Web undertakes any obligation to publicly update or revise any forward-looking statements.

Readers should also carefully consider the matters discussed under the headings “Risk Factors”, “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders”, “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders” and other risks described elsewhere in this Information Circular and in the documents incorporated by reference herein, including Appendices H and I, and the headings “Risk Factors” therein. In addition, readers should also carefully consider the matters, including risk factors, discussed in the Abacus AIF and the Abacus Annual MD&A, the Charlotte’s Web AIF and Charlotte’s Web MD&A. Additional information on these and other factors that could affect the operations or financial results of the Corporation and Charlotte’s Web are included in documents available under the Corporation’s and Charlotte’s Web’s profiles, respectively, on SEDAR at www.sedar.com and on the Corporation’s website at www.abacushp.com and Charlotte’s Web’s website at www.charlottesweb.com. Such documents, unless expressly incorporated by reference herein, do not form part of this Information Circular.

23

Presentation of Financial Information

The financial statements of the Corporation and Charlotte’s Web included and incorporated by reference in this Information Circular are presented in United States dollars and prepared in accordance with IFRS.

The unaudited consolidated pro forma income statement of Charlotte’s Web for the year ended December 31, 2019 has been prepared to illustrate the effect of the Arrangement on the earnings of Charlotte’s Web as if it had taken place on January 1, 2019. The unaudited consolidated pro forma statement of financial position of Charlotte’s Web has been prepared to illustrate the effect of the Arrangement on the consolidated financial position of Charlotte’s Web as at December 31, 2019 as if it had taken place on that date. See “Information Concerning Charlotte’s Web Following Completion of the Arrangement”.

Notice to Shareholders Outside of Canada

The Corporation is a corporation governed by the Laws of Ontario, Canada. The Corporation has prepared this Information Circular in accordance with Canadian disclosure standards and the Arrangement is to be carried out in accordance with the applicable Laws in the Province of Ontario and the federal Laws of Canada applicable therein.

Shareholders who are not residents of Canada should be aware that the disposition of Abacus Shares pursuant to the Arrangement, and the acquisition, holding and disposition of Charlotte’s Web Common Shares may have tax consequences in Canada and/or in the jurisdiction in which they are resident which may not be described fully herein. The tax treatment of such Shareholders pursuant to the Arrangement is dependent on their individual circumstances and the tax jurisdiction applicable to such Shareholders. It is recommended that Shareholders consult their own tax, financial and legal advisors in this regard.

Notice to Shareholders in the United States

Abacus is a corporation governed by the Laws of Ontario, Canada. The solicitation of proxies and the actions and transactions contemplated herein involve securities of a Canadian issuer and are being effected in accordance with provincial and Canadian corporate and securities Laws. Shareholders should be aware that requirements under such provincial and Canadian Laws differ from requirements under U.S. corporate and securities Laws relating to U.S. corporations. The proxy rules under the 1934 Exchange Act are not applicable to Abacus nor to this solicitation and therefore this solicitation is not being effected in accordance with the proxy rules under the 1934 Exchange Act.

Certain of the financial information included in this Information Circular has been prepared in accordance with IFRS, which differs from U.S. generally accepted accounting principles (“U.S. GAAP”) in certain material respects, and thus may not be comparable to financial information of U.S. companies. Shareholders are advised to consult their independent tax advisors regarding the U.S. federal, state, local and foreign tax consequences to them of the Arrangement.

THE SECURITIES OF CHARLOTTE’S WEB TO BE ISSUED PURSUANT TO THE PLAN OF ARRANGEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE FAIRNESS OR MERITS OF SUCH SECURITIES OR THE ARRANGEMENT, OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS INFORMATION CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

The following discussion is only a general overview of certain requirements of U.S. securities Laws relating to the Arrangement that may be applicable to Shareholders, holders of Abacus Options, Abacus SARs and Abacus Warrants. Each Abacus Securityholder is urged to consult such Person’s professional advisors to determine the U.S. conditions and restrictions applicable to trades in the Charlotte’s Web Common Shares issuable pursuant to the Arrangement.

The Charlotte’s Web Common Shares, Replacement Options, Replacement SARs and Replacement Warrants to be issued to Shareholders, holders of Abacus Options, holders of Abacus SARs and holders of Abacus Warrants, respectively, under the Plan of Arrangement and any other transactions contemplated by the Plan of Arrangement

24

have not been and will not be registered under the 1933 Securities Act or the securities Laws of any state of the United States and will be issued in reliance upon the Section 3(a)(10) Exemption and exemptions provided under the applicable state securities laws in states in which U.S. Holders reside. The Section 3(a)(10) Exemption exempts from registration a security that is issued in exchange for outstanding securities, claims and other property interests where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all Persons to whom it is proposed to issue securities in such exchange have the right to appear, by a court or by a governmental authority expressly authorized by Law to grant such approval. The Court issued the Interim Order on April 30, 2020, and, subject to the approval of the Arrangement by the Shareholders, a hearing for a Final Order approving the Arrangement is currently expected to take place on June 8, 2020 at 10:00 a.m. (EDT) in Toronto, Ontario. All Shareholders, holders of Abacus Options, holders of Abacus SARs and holders of Abacus Warrants are entitled to appear and be heard at this hearing, provided that they satisfy the applicable conditions set forth in the Interim Order. Accordingly, the Final Order of the Court will, if granted, constitute the basis for the Section 3(a)(10) Exemption with respect to the securities to be issued by Charlotte’s Web under the Arrangement. See “Principal Legal Matters - Court Approval and Completion of the Arrangement”.

The Section 3(a)(10) Exemption will not be available for the Charlotte’s Web Common Shares that are issuable upon exercise of the Replacement Options and the Replacement Warrants. Therefore, the Charlotte’s Web Common Shares issuable upon the exercise of the Replacement Options and Replacement Warrants will be “restricted securities” within the meaning of Rule 144 under the 1933 Securities Act, and may be issued only pursuant to an exemption from the registration requirements of the 1933 Securities Act and applicable state securities Laws or following registration under such Laws. Charlotte’s Web has no present intention to file a registration statement relating to the issuance of Charlotte’s Web Common Shares issuable upon exercise of the Replacement Options and Replacement Warrants and no assurance can be made that Charlotte’s Web will file or have taken effective steps to file, such registration statements in the future.

All of the Charlotte’s Web Common Shares to be received by Abacus Shareholders pursuant to the Arrangement will be freely tradable for purposes of the 1933 Securities Act, except for Charlotte’s Web Common Shares received by any Abacus Shareholder who becomes an “affiliate” (as defined under Rule 144 promulgated by the 1933 Securities Act) of Charlotte’s Web after completion of the Arrangement and any Person deemed to be an affiliate of Charlotte’s Web within 90 days before the closing of the Arrangement. Persons who may be deemed to be affiliates of an issuer generally include individuals or entities that control, are controlled by or are under common control with the issuer, whether through the ownership of voting securities, by contract or otherwise, and generally include executive officers and directors of the issuer as well as principal shareholders of the issuer. Charlotte’s Web Common Shares to be received by Abacus Shareholders pursuant to the Arrangement who are affiliates may resell such Charlotte’s Web Common Shares in accordance with the volume limitations and other requirements of Rule 144 promulgated under the 1933 Securities Act or outside the United States in accordance with Regulation S under the 1933 Securities Act. The summary presented in this Information Circular does not cover resales of any Charlotte’s Web Common Shares received by any Person upon completion of the Arrangement, and no Person is authorized to make any use of this Information Circular in connection with any resale.

See “Principal Legal Matters – Certain U.S. Securities Law Matters”, “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders – Shareholders not Resident in Canada” and “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”.

Currency Presentation and Exchange Rate Information

Unless otherwise stated, all currency amounts referred to in this Information Circular, including the financial statements and related financial information included in this Information Circular, are expressed in U.S. dollars. The financial statements and related financial information of Charlotte’s Web included in this Information Circular are expressed in U.S. dollars. References herein to “$” and to “US$” are to U.S. dollars and references herein to “CDN$” are to Canadian dollars.

The following table sets forth for the U.S. dollar, expressed in U.S. dollars per Canadian dollars, in effect at the end of each period, as reported on Bloomberg: (i) the period end daily average exchange rate; (ii) the daily average exchange rate, and (iii) the high and low daily average exchange rates.

25

Year Ended December 31, 2019 2018 (U.S. dollars per Canadian dollar) Daily exchange rate at end of period $0.7696 $0.7337 Daily average exchange rate $0.7536 $0.7720 High for period $0.7696 $0.8147 Low for period $0.7331 $0.7337

On May 4, 2020, the rate of exchange for U.S. dollars per Canadian dollar was $0.7100 equals CDN$1.00. Foreign exchange rate fluctuations are likely to occur from time to time, and the Corporation does not make any representation with respect to future currency values. Shareholders should consult their own advisors with respect to the potential risk of currency fluctuations.

Industry and Market Data

Unless otherwise indicated, information contained in this Information Circular concerning the industry and the markets in which Abacus and Charlotte’s Web operate, including concerning general expectations, market position, market opportunity and market size, is based on information from industry publications and reports generated by several third parties and management estimates. Unless otherwise indicated, management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from internal research, and are based on assumptions made by management based on such data and management’s knowledge of such industry and markets, which Abacus and/or Charlotte’s Web, as applicable, believes to be reasonable. These industry publications and reports generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Neither Abacus nor Charlotte’s Web has independently verified the data in such publications, reports or resources, and such information is inherently imprecise. In addition, projections, assumptions and estimates of Abacus’ and Charlotte’s Web’s future performance and the future performance of the industry in which Abacus and Charlotte’s Web operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the heading “Risk Factors” in this Information Circular and “Risk Factors” in Appendix H. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by Abacus or Charlotte’s Web.

Trademarks

This Information Circular contains references to the Corporation’s and Charlotte’s Web’s trademarks and service marks. Solely for convenience, trademarks and trade names referred to in this Information Circular may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the Corporation or Charlotte’s Web, as applicable, will not assert, to the fullest extent under applicable Law, its rights or the rights of the applicable licensor to these trademarks and trade names. Other trademarks and tradenames appearing in this Information Circular are the property of their respective holders. The Corporation does not intend its use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of the Corporation by, any other companies.

26

Summary of the Arrangement

The following is a summary of certain information contained in this Information Circular, including its appendices. This summary is not intended to be complete and is qualified in its entirety by the more detailed information contained elsewhere in this Information Circular, including its appendices. Certain capitalized terms used in this summary are defined in the Glossary of Terms of this Information Circular. Shareholders are urged to read this Information Circular and its appendices carefully and in their entirety.

Purpose of the Shareholders Meeting

The purpose of the Meeting is for Shareholders to consider, pursuant to the Interim Order of the Court dated April 30, 2020, and, if deemed advisable, to approve, with or without variation, the Arrangement Resolution, the full text of which is set forth in Appendix A to the Information Circular, to approve the Plan of Arrangement whereby, among other things, Charlotte’s Web will acquire all of the issued and outstanding Abacus Shares, all as more particularly described in this Information Circular, and to transact such further and other business as may properly be brought before the Meeting or any adjournment(s) or postponement(s) thereof.

Date, Time and Place

The Meeting will be held at the One King West Hotel located at 1 King Street West, Toronto, Ontario, M5H 1A1, Canada, in the Chairman Boardroom, at 10:00 a.m. (Toronto time), on June 4, 2020. Registered Shareholders and duly appointed proxyholders may also attend and vote at the Meeting via live audio webcast online at web.lumiagm.com/240055051 (password: abacus2020).

Record Date

The Record Date for determination of Shareholders entitled to receive notice of and to vote at the Meeting is the close of business on April 30, 2020. Shareholders whose names have been entered in the register of holders of Abacus Shares by the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting.

The Arrangement

Background to the Arrangement

On March 22, 2020, the Corporation and Charlotte’s Web entered into the Arrangement Agreement, which sets out the terms and conditions for implementing the Arrangement. The Arrangement Agreement is the result of arm’s length negotiations among representatives of Abacus, Charlotte’s Web and their respective legal and financial advisors. This Information Circular contains information on the principal events leading up to the execution and public announcement of the Arrangement Agreement.

See “The Arrangement – Background to the Arrangement”.

Summary of the Arrangement

Under the terms of the Arrangement, Shareholders will be entitled to receive 0.85 of a Charlotte’s Web Common Share for each Subordinate Voting Share held by the Shareholders at the Effective Time. Prior to the Effective Time, all Proportionate Voting Shares will be converted to Subordinate Voting Shares. Upon completion of the Arrangement, current holders of Abacus Shares are expected to own a Pro Forma Ownership of approximately 14.7% of Charlotte’s Web Common Shares (assuming conversion of all outstanding Charlotte’s Web Proportionate Voting Shares).

The Arrangement is conditional upon, among other things, the Arrangement Resolution being approved by at least 66 % of the votes cast by the holders of Abacus Shares, voting together as a single class. In addition, the Arrangement Resolution is subject to approval by a simple majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, voting together as a single class, excluding the votes cast by any Interested Parties.

See “The Arrangement – Summary of the Arrangement”.

27

Recommendation of the Board

Based on the Board’s consideration of, among other things, a presentation by the Corporation’s management, the terms and conditions of the Arrangement Agreement and the Fairness Opinion, the Board has UNANIMOUSLY determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to holders of Abacus Shares and other securityholders of Abacus, and has approved the Arrangement and the participation by the Corporation therein. Accordingly, the Board recommends UNANIMOUSLY that Shareholders vote IN FAVOUR of the Arrangement Resolution.

See “The Arrangement – Recommendation of the Board”.

Fairness Opinion

Greenhill has opined to the Board that, as of March 22, 2020, and subject to the assumptions, limitations and qualifications set out in the Fairness Opinion, the Consideration to be received by Shareholders pursuant to the Arrangement is fair, from a financial point of view, to Shareholders.

See “The Arrangement – Fairness Opinion”.

Reasons for the Recommendation

Based on the Board’s consideration of, among other things, a presentation by the Corporation’s management, the terms and conditions of the Arrangement Agreement and the Fairness Opinion, the Board has UNANIMOUSLY determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to holders of Abacus Shares and other securityholders of Abacus, and has approved the Arrangement and the participation by the Corporation therein. In making its recommendation, the Board considered numerous factors including, but not limited to, those listed below:

Attractive premium. Shareholders will be entitled to receive the Consideration under the Plan of Arrangement, which represents a premium of approximately 38% based on the 10-day volume weighted average trading prices, and 43% based on the closing prices, of the Subordinate Voting Shares on the CSE and the Charlotte’s Web Common Shares on the TSX, respectively for the period ending on, and as of, March 20, 2020, which was the last trading day prior to the Announcement Date.

Creation of the largest vertically integrated hemp-derived CBD company. Charlotte’s Web is the market leader in production and distribution of innovative hemp-derived CBD wellness products. The Corporation is a market leader in OTC topical products that combine active pharmaceutical ingredients with hemp extract. The Arrangement is expected to combine Charlotte’s Web and the Corporation creating the world’s largest vertically integrated hemp-derived CBD products company.

Compelling synergy potential. The Board believes that the Arrangement will result in meaningful synergies from (i) economies of scale, (ii) production (scaling of low cost manufacturing and extraction), (iii) elimination of public company cost duplication, (iv) intellectual property sharing and new product development, and (v) extension of sales opportunities through cross-selling and leveraging additional distribution channels, which would include the expansion of the combined topical portfolio through DTC (direct to consumer), F/D/M (food/drug/mass) and B2B (business to business) channels.

Strong balance sheet to pursue growth. As of December 31, 2019, Charlotte’s Web and the Corporation maintained a cash and cash-equivalents balance, cumulatively, of $90.4 million.

Continued participation by shareholders in future growth. Shareholders will receive Charlotte’s Web Common Shares pursuant to the Plan of Arrangement and will have the opportunity to participate in any future increase in the value of Charlotte’s Web, including the opportunity to participate in the synergies and anticipated value creation of the combined company through the Arrangement.

Experienced operating team & best practice. The Board believes that the combined management team of Charlotte’s Web following the completion of the Arrangement, which will include Perry Antelman, Chief

28

Executive Officer of Abacus, will benefit from having industry leading Consumer Packaged Goods experience to drive operational excellence, best in class marketing, proven innovation, unique digital/data capability and advantaged customer/channel relationships.

Increased liquidity for Shareholders. Shareholders will receive Charlotte’s Web Common Shares under the Arrangement, which shares are currently listed and posted for trading on the TSX, providing the Shareholders with greater liquidity given the higher daily trading volume of the Charlotte’s Web Common Shares compared to the Subordinate Voting Shares.

Receipt of Fairness Opinion. The Board has received the Fairness Opinion, in which Greenhill provided an opinion to the effect that, as of the date of such opinion, and subject to the assumptions, limitations and qualifications set forth therein and such other matters as Greenhill considered relevant, the Consideration to be received by the Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Shareholders.

Evaluation and analysis. The Board has given lengthy consideration to the business, operations, assets, financial condition, operating results and potential prospects for Charlotte’s Web following the Arrangement as well as current industry, economic and market conditions and related risks, all relative to those of the Corporation on a standalone basis.

Terms of the Arrangement Agreement. The Arrangement Agreement is the result of an arm’s length negotiation process and includes terms and conditions that are reasonable in the judgment of the Board, after consultation with its legal and financial advisors.

Support of Board. The Board has unanimously recommended support for the Arrangement.

Key Shareholder support. The Locked-Up Shareholders, who collectively hold approximately 6% of the issued and outstanding Subordinate Voting Shares and approximately 38% of the issued and outstanding Proportionate Voting Shares (which collectively represent approximately 20% of the voting rights attached to outstanding Abacus Shares), as at the Record Date, entered into the Voting Support Agreements pursuant to which they have agreed, among other things, to vote FOR the Arrangement Resolution.

Increased access to capital. Following its acquisition by Charlotte’s Web, the Corporation is expected to have greater access to capital, which should assist in funding its growth.

Treatment of holders of options, stock appreciation rights and warrants. In connection with the Arrangement, all Abacus Options, Abacus SARs and Abacus Warrants outstanding immediately prior to the Effective Date will be exchanged for Replacement Options, Replacement SARs and Replacement Warrants, respectively, and such Replacement Options and Replacement Warrants will thereafter entitle the holders to acquire Charlotte’s Web Common Shares (rounded down to the nearest whole number) in lieu of Abacus Shares, subject to adjustment in number and exercise price to give effect to the Exchange Ratio. The Replacement SARs will thereafter entitle the holders to receive, upon vesting, the value of Charlotte’s Web Common Shares in lieu of Abacus Shares, subject to adjustment in number to give effect to the Exchange Ratio.

Impact on stakeholders. The Board conducted a stakeholder impact analysis whereby the directors of the Board considered, among other things, the interests of the Corporation’s stakeholders and concluded that, having regard to all relevant considerations, the Arrangement is in the best interests of the Corporation.

Tax-deferred rollover treatment. Shareholders who dispose of Abacus Shares under the Arrangement and receive Charlotte’s Web Common Shares may receive tax-deferred rollover treatment in respect of their Abacus Shares for Canadian and U.S. income tax purposes.

Other factors. The Board also carefully considered the Arrangement with reference to current economics, industry and market trends affecting each of the Corporation and Charlotte’s Web in their respective markets, information concerning the business, operations, assets, financial condition, operating results and prospects of each of the Corporation and Charlotte’s Web and the historical trading prices of the Subordinate Voting

29

Shares and Charlotte’s Web Common Shares, taking into account the results of the Corporation’s due diligence review of Charlotte’s Web and its business.

The Board’s reasons for the recommendation contain forward-looking information and statements and are subject to various risks and assumptions. See “Caution Regarding Forward-Looking Statements” and “Risk Factors”.

See “The Arrangement – Reasons for the Recommendation”.

Shareholder Approval

Pursuant to the Interim Order and the OBCA, in order to be effective, the Arrangement Resolution must be approved, with or without variation, by the affirmative vote of at least 66 % of the votes cast by holders of Subordinate Voting Shares and Proportionate Voting Shares, entitled to vote at the Meeting, with all Shareholders voting together as a single class. In addition, pursuant to MI 61-101, the Arrangement Resolution must be approved by at least a majority of the votes cast by holders of Subordinate Voting Shares and Proportionate Voting Shares entitled to vote at the Meeting, voting together as a single class, excluding all Abacus Shares held by Interested Parties. The votes attaching to the Abacus Shares held by the Interested Parties will be excluded for the purposes of determining whether “minority approval” has been obtained.

See “The Arrangement – Shareholder Approval”.

Interest of Certain Persons in the Arrangement

Shareholders should be aware that certain directors and certain executive officers of the Corporation have interests in connection with the Arrangement that may present them with actual or potential conflicts of interest in connection with the Arrangement. These interests and benefits are described under the heading “The Arrangement – Interest of Certain Persons in the Arrangement” and “Certain Canadian Securities Law Matters – Multilateral Instrument 61-101”.

Voting Support Agreements

Each director and officer of the Corporation, as well as certain key Shareholders, have entered into Voting Support Agreements with Charlotte’s Web, representing approximately 20% in the aggregate of the voting rights attached to the issued and outstanding Abacus Shares as at the Record Date. Pursuant to the Voting Support Agreements, those persons agreed, subject to certain conditions, to vote their Abacus Shares in favour of the Arrangement Resolution and any other matter necessary for the consummation of the Arrangement and the other transactions contemplated by the Arrangement Agreement.

The Voting Support Agreement entered into by Perry Antelman will further restrict the sale of his resulting Charlotte’s Web Common Shares for a 15-month period post-closing with incremental releases commencing six (6) months after the Effective Date.

See “The Arrangement – Voting Support Agreements”.

Effect on Abacus if the Arrangement is Not Completed

If the Arrangement Resolution is not approved by Shareholders or if the Arrangement is not completed for any other reason, Shareholders will not receive any consideration for any of their Abacus Shares in connection with the Arrangement and the Corporation will remain a reporting issuer and the Subordinate Voting Shares will continue to be listed on the CSE. The Arrangement Agreement requires that the Corporation pay the Termination Fee of CDN$4,000,000 or, as applicable, the Expense Reimbursement Fee of CDN$350,000 to Charlotte’s Web in connection with the termination of the Arrangement Agreement, if the Arrangement is not completed as a result of certain prescribed events.

See “Risk Factors – Risk Factors Relating to the Arrangement”, “Summary of Arrangement Agreement – Termination and Amendment of Arrangement Agreement – Termination Fees” and “Summary of Arrangement Agreement – Expenses”.

30

Principal Legal Matters

Court Approval and Completion of the Arrangement

The Arrangement requires approval by the Court pursuant to the OBCA. Prior to the mailing of this Information Circular, the Corporation obtained the Interim Order, which provides for the calling and holding of the Meeting, Dissent Rights for Shareholders and other procedural matters. Subject to the terms of the Arrangement Agreement and any applicable order of the Court, and if the Arrangement Resolution is approved by Shareholders at the Meeting in the manner required by the Interim Order, the Corporation intends to make an application to the Court for the Final Order to take place promptly following the Meeting.

See “Principal Legal Matters – Court Approval and Completion of the Arrangement”.

Certain Canadian Securities Law Matters

A general overview of certain requirements of Canadian securities Laws that may be applicable to Shareholders is described in this Information Circular. Each Shareholder is urged to consult such holder’s professional advisors to determine the Canadian conditions and restrictions applicable to trade in the Charlotte’s Web Common Shares issuable pursuant to the Arrangement.

The issuance of Charlotte’s Web Common Shares pursuant to the Arrangement will constitute a distribution of securities that is exempt from the prospectus requirements of applicable Canadian securities Laws. Charlotte’s Web Common Shares issued pursuant to the Arrangement may be resold in each province and territory of Canada provided that certain conditions are met.

To the extent the Shareholder resides in a non-Canadian jurisdiction, the Charlotte’s Web Common Shares received by the Shareholder may be subject to certain additional trading restrictions under applicable securities Laws of such jurisdiction. All Shareholders residing outside Canada are advised to consult their own legal advisors regarding such resale restrictions.

See “Principal Legal Matters – Certain Canadian Securities Law Matters”.

Multilateral Instrument 61-101

The Arrangement is subject to the requirements of MI 61-101. MI 61-101 regulates certain transactions to ensure equality of treatment among securityholders, generally requiring enhanced disclosure, approval by a majority of shareholders excluding “interested parties”, “related parties” or “joint actors”, independent valuations and, in certain instances, approval and oversight of the transaction by a special committee of independent directors.

If the Arrangement constitutes a “business combination”, MI 61-101 requires that the Arrangement Resolution be approved by a majority of the minority of Shareholders. A transaction such as the Arrangement constitutes a “business combination” for purposes of MI 61-101 if, at the time the Arrangement is agreed to, a “related party” of the Corporation, such as a director or senior officer (as defined in MI 61-101) or a holder of 10% or more of the voting rights attached to the Abacus Shares, is entitled to receive, as a consequence of the transaction, a “collateral benefit” (as defined in MI 61-101).

A “collateral benefit” is broadly defined for purposes of MI 61-101 and means, subject to certain specified exclusions, any benefit that a related party of the issuer is entitled to receive, directly or indirectly, as a consequence of the transaction, including, without limitation, an increase in salary, a lump sum payment, a payment for surrendering securities or other enhancement in benefits related to past or future services as an employee, director or consultant of the issuer or of another person, regardless of the existence of any offsetting costs to the related party or whether the benefit is provided, or agreed to, by the issuer or another party to the transaction.

Concurrently with the entering into of the Arrangement Agreement, Charlotte’s Web has entered into the New Employment Agreement with Perry Antelman, the Chief Executive Officer of the Corporation. The increase in base salary and other enhancement in benefits under the New Employment Agreement may be considered a “collateral

31

benefit” received by Perry Antelman for the purposes of MI 61-101. Accordingly, the Arrangement is considered a “business combination” under MI 61-101 and is subject to minority approval and disclosure requirements.

See “Principal Legal Matters – Certain Canadian Securities Law Matters – Multilateral Instrument 61-101”.

Summary of Arrangement Agreement

The Arrangement will be effected pursuant to the Arrangement Agreement. The Arrangement Agreement contains, among other things, covenants, representations and warranties of and from each of the Corporation and Charlotte’s Web and various conditions precedent to the Arrangement, both mutual and with respect to the Corporation and Charlotte’s Web. Unless all of such conditions are satisfied or waived by the Party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Arrangement will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all.

The following is a summary of certain provisions of the Arrangement Agreement and is qualified in its entirety by reference to the full text of the Arrangement Agreement, a copy of which is available under the Corporation’s profile on SEDAR at www.sedar.com.

Conditions Precedent

The obligations of the Parties to complete the Arrangement are subject to the satisfaction or waiver of certain conditions set out in the Arrangement Agreement, which are summarized in this Information Circular.

See “Summary of Arrangement Agreement – Conditions Precedent to the Arrangement”.

Representations and Warranties

The Arrangement Agreement contains customary representations and warranties for an agreement of this type, which are summarized in this Information Circular.

See “Summary of Arrangement Agreement – Representations and Warranties”.

Covenants

The Arrangement Agreement contains customary covenants for an agreement of this type, which are summarized in this Information Circular. Each of Abacus and Charlotte’s Web have also agreed to certain customary negative and affirmative covenants relating to the operation of their respective business (including the business of their Subsidiaries) during the period from the date of the Arrangement Agreement until the earlier of the Effective Time and the time that the Arrangement Agreement is terminated in accordance with its terms, including that each Party shall, and shall cause each of its Subsidiaries to, conduct its and their respective businesses in the Ordinary Course and use commercially reasonable efforts to preserve intact its business organizations, assets, properties, rights, goodwill and business relationships, as well as to keep available the services of its executive officers and employees as a group.

Shareholders should refer to the Arrangement Agreement for details regarding the additional negative and affirmative covenants given by the Corporation in relation to the conduct of its business prior to the Effective Time.

See “Summary of Arrangement Agreement – Covenants in Respect of the Conduct of Business”.

Non-Solicitation

Abacus is subject to restrictions on its ability to solicit proposals, to provide non-public information to, or participate or engage in discussions or negotiations with third parties or take certain other actions regarding any Acquisition Proposal, with customary exceptions for unsolicited Acquisition Proposals that the Board determines in good faith are, or could reasonably be expected to lead to, a Superior Proposal.

See “Summary of Arrangement Agreement – Non-Solicitation”.

32

Termination of the Arrangement Agreement

The Arrangement Agreement requires that Abacus pay the Termination Fee of CDN$4,000,000 or, as applicable, the Expense Reimbursement Fee of CDN$350,000 to Charlotte’s Web in connection with the termination of the Arrangement Agreement, if the Arrangement is not completed as a result of certain prescribed events.

The Arrangement Agreement may be terminated at any time prior to the Effective Time (notwithstanding any approval of the Arrangement Agreement or of the Arrangement Resolution by Shareholders and/or by the Court, as applicable) by mutual written agreement of the Parties and by either Party, if: (a) the Arrangement Resolution is not approved by the Shareholders entitled to vote thereon at the Meeting in accordance with the Interim Order; provided however, that a Party may not terminate the Arrangement Agreement if the failure of such approval to be obtained was primarily caused by, or is a result of, a breach by such Party of any of its obligations under the Arrangement Agreement; (b) any court or other Governmental Entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered any final and non-appealable Order; provided however, that a Party may not terminate the Arrangement Agreement if such Order was primarily caused by, or is a result of, a breach by such Party of any of its obligations under the Arrangement Agreement; (c) the Effective Time does not occur on or prior to the Outside Date; provided however, that a Party may not terminate the Arrangement Agreement if such Order was primarily caused by, or is a result of, a breach by such Party of any of its obligations under the Arrangement Agreement; (d) (i) prior to the approval of the Arrangement Resolution at the Meeting, the Board has effected an Adverse Recommendation Change, or (ii) the Corporation has breached the non-solicitation covenants set out in the Arrangement Agreement in any material respect and such breach is a consequence of an act undertaken by the breaching party with the actual knowledge that the taking of such act would be reasonably expected to cause a breach of the Arrangement Agreement. The Arrangement Agreement also contains termination rights in favour of each of Charlotte’s Web and the Corporation, all as more particularly described in this Information Circular.

See “Summary of Arrangement Agreement – Termination and Amendment of Arrangement Agreement”.

Arrangement Mechanics

The Plan of Arrangement sets out certain procedures, events and transactions that must take place in order for the Arrangement to proceed. In particular, mechanics are established for exchanging Abacus Shares for the Consideration payable under the Arrangement, the delivery of the Consideration, the depositing of a duly completed Letter of Transmittal and other required documents by Former Abacus Shareholders and the proper resolution of lost or unsurrendered share certificates.

See “The Arrangement – Arrangement Mechanics”.

Share Exchange Mechanics – Registered Shareholders

Letter of Transmittal

Enclosed with this Information Circular is a Letter of Transmittal which is being delivered to all registered Shareholders. The Letter of Transmittal, when validly completed and duly executed and returned by a registered Shareholder to the Depositary with the certificate(s) representing the Abacus Shares (if applicable) and any other required documents, will enable such Shareholders to receive the Consideration to which they are entitled pursuant to the Plan of Arrangement.

Delivery of Consideration

Upon return to the Depositary of a properly completed Letter of Transmittal by a registered former Shareholder together with certificate(s), if any, that immediately before the Effective Time represented one or more outstanding Abacus Shares that were exchanged for the Consideration and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such holder following the Effective Time, certificates or book-entry advice statements representing the Charlotte’s Web Common Shares that such holder is entitled to receive under the Plan of Arrangement.

33

After the Effective Time and until surrendered for cancellation, each certificate, if any, that immediately prior to the Effective Time represented one or more Abacus Shares shall be deemed at all times to represent only the right to receive in exchange therefor the Consideration that the holder of such certificate, if any, is entitled to receive under the Plan of Arrangement.

See “Arrangement Mechanics – Share Exchange Mechanics – Registered Shareholders – Delivery of Consideration”.

Share Exchange Mechanics – Non-Registered Shareholders

Shareholders whose Abacus Shares are registered in the name of a broker, investment dealer or other intermediary should contact that broker, investment dealer or other intermediary for instructions and assistance in depositing their Abacus Shares with the Depositary. Non-registered Shareholders do not need to return a Letter of Transmittal.

NON-REGISTERED SHAREHOLDERS SHOULD CONTACT THEIR BROKER, INVESTMENT DEALER OR OTHER INTERMEDIARY TO CONFIRM THAT THEIR BROKER, INVESTMENT DEALER OR OTHER INTERMEDIARY HAS MADE ARRANGEMENTS TO RECEIVE THE NUMBER OF CHARLOTTE’S WEB COMMON SHARES REQUIRED TO SATISFY THE CONSIDERATION PAYABLE TO SUCH NON-REGISTERED SHAREHOLDER PURSUANT TO THE PLAN OF ARRANGEMENT. THE DEPOSITARY WILL NOT BE INVOLVED IN FACILITATING THIS PROCESS.

See “Arrangement Mechanics – Share Exchange Mechanics – Non-Registered Shareholders”.

Information Concerning the Corporation

The Corporation is engaged in the development and commercialization of over-the-counter topical medications with active pharmaceutical ingredients and which contain organic and natural ingredients, including a cannabinoid-rich hemp extract containing CBD from the Cannabis sativa L plant. The Corporation’s products are aimed at the rapidly growing markets for topical pain relief and therapeutic skincare and are based on proprietary patent-pending technologies developed by the Corporation. The Corporation’s formulations combine advanced science with organic and natural ingredients to provide safe relief. The Corporation currently offers three lines of products: CBD CLINIC™, marketed to the professional practitioner market, and CBDMEDIC™ and Harmony Hemp™, marketed to the consumer market. The Corporation’s products are offered across the United States and are produced by contract manufacturers, including in an FDA registered and audited manufacturing facility.

See Appendix G attached to this Information Circular for detailed information concerning the Corporation.

Information Concerning Charlotte’s Web

Charlotte’s Web is the market leader in the production and distribution of innovative hemp-derived CBD wellness products. Founded by the Stanley brothers, Charlotte’s Web’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into hemp-derived CBD extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products), CBD capsules, CBD topicals, as well as CBD pet products. Charlotte’s Web hemp-derived CBD extracts are sold through select distributors, brick and mortar retailers, and online through Charlotte’s Web’s website.

See Appendix H attached to this Information Circular for detailed information concerning Charlotte’s Web.

Information Concerning Charlotte’s Web Following Completion of the Arrangement

See Appendix I attached to this Information Circular for detailed information concerning Charlotte’s Web following completion of the Arrangement.

Dissenting Shareholders’ Rights

Registered Shareholders may exercise rights of dissent with respect to their Abacus Shares in connection with the Arrangement pursuant to and in the manner set forth in Section 185 of the OBCA as modified by the Interim Order

34

and the Arrangement Agreement provided that, notwithstanding subsection 185(6) of the OBCA, written notice setting forth such registered Shareholder’s objection to the Arrangement Resolution and exercise of Dissent Rights must be received by the Corporation not later than 4:00 p.m. (Toronto time) on the Business Day that is two Business Days preceding the date of the Meeting, or in the event that the Meeting is adjourned or postponed, no later than 48 hours (excluding Saturdays, Sundays and statutory holidays in Ontario) before the adjourned meeting is reconvened or the postponed meeting is convened. Shareholders may only exercise Dissent Rights under Section 185 (as modified by the Plan of Arrangement and the Interim Order) in respect of Abacus Shares which are registered in their name.

See “Dissenting Shareholders’ Rights”, Appendices D and E attached to this Information Circular for detailed information concerning Dissenting Shareholders’ Rights.

Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders

This Information Circular contains a summary of certain Canadian federal income tax considerations generally applicable to certain Shareholders who, under the Arrangement, exchange one or more Abacus Shares for Charlotte’s Web Common Shares. Any comments herein regarding such considerations are qualified in their entirety by reference to that summary. See “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders”. Shareholders should consult their own tax advisors for advice with respect to the Canadian income tax consequences to them in respect of the Arrangement.

Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders

This Information Circular contains a summary of certain U.S. federal income tax considerations generally applicable to certain Shareholders who, under the Arrangement, exchange one or more Abacus Shares for Charlotte’s Web Common Shares. Any comments herein regarding such considerations are qualified in their entirety by reference to that summary. See “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”. Shareholders should consult their own tax advisors regarding the specific U.S. income tax consequences of the Arrangement to them.

Comparison of Shareholders’ Rights

Pursuant to the Plan of Arrangement, Shareholders will receive Charlotte’s Web Common Shares in exchange for their Abacus Shares. The rights of Shareholders are currently governed by the OBCA and by the Corporation’s constating documents. Since Charlotte’s Web is organized under the BCBCA, the rights of Charlotte’s Web shareholders are governed by the BCBCA and by the constating documents of Charlotte’s Web. Although the rights and privileges of a shareholder of a corporation organized under the BCBCA are, in many instances, comparable to those of a shareholder of a corporation organized under the OBCA, there are several differences. See Appendix J to this Information Circular for a comparison of these rights. This summary is not intended to be exhaustive and Shareholders should consult their legal advisors regarding all of the implications of the effects of the Arrangement on such Shareholders’ rights.

Risk Factors

In assessing the Arrangement, Shareholders should carefully consider the risks described in this Information Circular which relate to the Arrangement, the failure to complete the Arrangement and the post-Arrangement business and operations of Charlotte’s Web. Readers are cautioned that such risk factors are not exhaustive. These risk factors should be carefully considered in conjunction with the other information included in this Information Circular, including the documents incorporated by reference herein and documents filed by the Corporation and Charlotte’s Web pursuant to applicable Laws from time to time. See sections entitled “Risk Factors” in this Information Circular and in Appendices H and I to this Information Circular.

Unaudited Pro Forma Financial Information

The (i) unaudited consolidated pro forma income statement of Charlotte’s Web for the year ended December 31, 2019, and (ii) the unaudited consolidated pro forma statement of financial position of Charlotte’s Web as at December 31, 2019, have been prepared on the basis set out in the notes contained in Schedule A in Appendix I of this Information Circular and are based on the audited consolidated income statement and audited consolidated statement of financial

35

position of Charlotte’s Web as at and for the year ended December 31, 2019 and the audited consolidated statement of earnings and audited consolidated statement of financial position of the Corporation as at and for the year ended December 31, 2019.

The unaudited consolidated pro forma income statement of Charlotte’s Web for the year ended December 31, 2019 has been prepared to illustrate the effect of the Arrangement on the earnings of Charlotte’s Web as if it had taken place on January 1, 2019.

The unaudited consolidated pro forma statement of financial position of Charlotte’s Web has been prepared to illustrate the effect of the Arrangement on the consolidated financial position of Charlotte’s Web as at December 31, 2019 as if it had taken place on that date.

See Schedule A in Appendix I of this Information Circular for the (i) unaudited consolidated pro forma income statement of Charlotte’s Web for the year ended December 31, 2019, and (ii) the unaudited consolidated pro forma statement of financial position of Charlotte’s Web as at December 31, 2019.

36

Expected Timetable of Principal Events

Unless otherwise indicated, the dates given in this expected timetable are based on the Corporation’s current expectations and may change without further notice. The precise date for completion of the Arrangement is not ascertainable as at the date of this Information Circular as the Arrangement is subject to a number of conditions beyond the control of the Corporation.

Expected Date/Time Event

April 30, 2020 (Toronto time)(1) Record Date for determining Shareholders entitled to vote at the Meeting

April 30, 2020(1) Interim Order

June 1, 2020 at 5:00 p.m. (Toronto time) Deadline for Broadridge to have received voting instruction forms from Shareholders

June 2, 2020 at 10:00 a.m. (Toronto time) Deadline for Odyssey to have received proxy forms or voting instructions from Shareholders

June 4, 2020 at 10:00 a.m. (Toronto time) Meeting of Shareholders

June 8, 2020 at 10:00 a.m. (Toronto time) Court hearing in respect of the Final Order

Effective Date at 12:01 a.m. (Toronto time)(2) Expected Effective Time of the Arrangement(3)

Notes: (1) These events have occurred and are not expected to be subject to further change. (2) The Corporation expects that the Subordinate Voting Shares will be delisted from the CSE promptly following the Effective Date. (3) The Depositary will arrange for the delivery of share certificate(s) or book-entry advice statement(s) representing the Charlotte’s Web

Common Shares to registered Former Abacus Shareholders as soon as practicable following the Effective Date and upon receiving duly completed Letters of Transmittal along with the certificate(s) (if any) representing the registered Former Abacus Shareholder’s Abacus Shares and any other required documents from such registered Former Abacus Shareholder.

Matters to be Considered at the Meeting

At the Meeting, Shareholders will be asked to consider the Arrangement Resolution in the form set forth in Appendix A of this Information Circular. Shareholders are urged to review this Information Circular when considering the Arrangement Resolution. In particular, see, “The Arrangement”, “Principal Legal Matters” and “Summary of Arrangement Agreement”. For information relating to the impact of the Arrangement on the Corporation and on Charlotte’s Web, see “Information Concerning Charlotte’s Web Following Completion of the Arrangement” included in Appendix I.

To be effective, the Arrangement Resolution must be approved by: (i) at least 66 % of the votes cast by Shareholders, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class; and (ii) in accordance with MI 61-101, a majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, excluding votes cast by any “interested party”, any “related party” of an “interested party” or any “joint actor” (as such terms are defined in MI 61-101). The votes attaching to the Abacus Shares held by the Interested Parties will be excluded for the purposes of determining whether “minority approval” has been obtained. See “The Arrangement – Shareholder Approval” and “Interest of Certain Persons in the Arrangement”.

Unless otherwise directed, the management designees named in the accompanying form of proxy for the Meeting intend to vote in favour of the Arrangement Resolution.

It is a condition to the completion of the Arrangement that the Arrangement Resolution be approved at the Meeting.

37

Voting Information and General Proxy Matters

Solicitation of Proxies

Management of the Corporation is soliciting the enclosed proxy and the Corporation will bear the expenses of this solicitation. The Corporation has engaged Gryphon Advisors to act as proxy solicitation agent and shareholder communications advisor with respect to the matters to be considered at the Meeting. The solicitation will be conducted primarily by mail but proxies may also be solicited personally, by advertisement, by telephone, by directors, officers or employees of the Corporation and/or Gryphon Advisors or by any other means management may deem necessary. In connection with these services, Gryphon Advisors will receive a fee of approximately CDN$40,000 plus reasonable out-of-pocket expenses. The Corporation shall directly deliver proxy documents to registered Shareholders through the Corporation’s registrar and transfer agent, Odyssey, and the Corporation shall bear the cost of such delivery. The Corporation will also reimburse brokers and other persons holding Abacus Shares on their behalf or on behalf of nominees for reasonable costs incurred in sending the proxy documents to non-registered Shareholders.

Voting Process

The voting process differs depending on whether you are a registered or non-registered Shareholder.

If you have Abacus Shares registered in your own name, you are a registered Shareholder. If you beneficially own Abacus Shares but they are not registered in your own name, you are a non-registered Shareholder. If your Abacus Shares are listed in an account statement provided to you by a broker, then it is likely that those Abacus Shares are not registered in your name, but under the broker’s name or under the name of an agent of the broker such as CDS, the nominees for many brokerage firms, or their nominees.

Securities regulation requires brokers or agents to seek voting instructions from non-registered Shareholders in advance of the Meeting. Non-registered Shareholders should be aware that brokers or agents can only vote Abacus Shares if instructed to do so by the non-registered Shareholder. Your broker or agent will have provided you with a voting instruction form or form of proxy for the purpose of obtaining your voting instructions. Every broker has its own mailing procedures and provides instructions for voting. You must follow those instructions carefully to ensure your Abacus Shares are voted at the Meeting.

If you are a non-registered Shareholder receiving a voting instruction form or proxy from a broker or agent, you cannot use that proxy to vote in person at the Meeting. To vote your Abacus Shares at the Meeting, the voting instruction form or proxy must be returned to the broker or agent well in advance of the Meeting, as instructed by the broker or agent. If you wish to attend and vote your Abacus Shares in person at the Meeting, follow the instructions for doing so provided by your broker or agent.

Appointment of Proxyholders

The persons named as proxyholders in the enclosed form of proxy or voting instruction form, Henry (Hank) R. Hague, III and Perry Antelman, are directors or officers of Abacus. You are entitled to appoint a person, who need not be a Shareholder, other than the persons designated in the enclosed form of proxy, to represent you at the Meeting. If you are a registered Shareholder, such right may be exercised by inserting in the blank space provided in the form of proxy the name of the person to be designated or by completing another form of proxy and depositing the form of proxy with the registrar and transfer agent of the Corporation, Odyssey: (i) by facsimile at 1-800-517-4553; (ii) by e-mail at proxy@odysseytrust.com; or (iii) through the internet at https://odysseytrust.com/Transfer-Agent/Login, at any time before the proxy deadline, being 10:00 a.m. (Toronto time) on June 2, 2020 or, in the event the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and statutory holidays in Ontario) before the adjourned meeting is reconvened or the postponed meeting is convened. Non-registered Shareholders should follow the instructions provided by their broker or agent and must return the form of proxy or voting instruction form as directed by their broker or agent sufficiently in advance of the proxy deadline to enable their broker or agent to act on it before the proxy deadline. The Corporation reserves the right to accept late proxies and to waive the proxy deadline with or without notice, but is under no obligation to accept or reject any particular late proxy.

38

Revocation of Proxies

Only registered Shareholders may revoke their proxy by providing new voting instructions in a new proxy with a later date. Any new voting instructions, however, will take effect only if received prior to the proxy deadline. Registered Shareholders may also revoke their proxy without providing new voting instructions by giving written notice indicating, clearly, that the registered Shareholder wishes to revoke their proxy, signed by such Shareholder, or by his or her attorney authorized in writing, to the registrar and transfer agent of the Corporation, Odyssey: (i) by facsimile at 1-800-517-4553; (ii) by e-mail at proxy@odysseytrust.com; or (iii) through the internet at https://odysseytrust.com/Transfer-Agent/Login, no later than the close of business on the last Business Day preceding the day of the Meeting or any adjournment or postponement thereof, or to the chairman of the Meeting on the day of the Meeting or any adjournment or postponement thereof or in any other manner permitted by law; provided that if the registered Shareholder is not an individual, the written notice must be signed by a duly authorized signatory of such Shareholder. Registered Shareholders may attend and vote in person or virtually at the Meeting, and if they do so, any voting instructions they previously gave for such Abacus Shares will be revoked.

Non-registered Shareholders who wish to change their voting instructions must, in sufficient time in advance of the Meeting, contact their broker or agent in order to revoke their voting instructions and/or provide new voting instructions.

Exercise of Voting Rights by Proxies

The person named as proxy will vote or withhold from voting the Abacus Shares for which he or she is appointed in accordance with the instructions of the Shareholder appointing him or her. In the absence of such instructions, the management designees named in the attached form of proxy will vote such Abacus Shares in favor of all the matters identified in the attached Notice of Meeting, as applicable. The enclosed form of proxy confers discretionary authority upon the person named therein to vote as he or she sees fit with respect to amendments or variations to matters identified in the Notice of Meeting and to other matters that may properly come before the Meeting or any adjournment or postponement thereof, whether or not the amendment, variation or other matter that comes before the Meeting is routine or is contested. As at the date of this Information Circular, the management of the Corporation knows of no such amendment, variation or other matter expected to come before the Meeting other than the matters referred to in the Notice of Meeting.

Voting in Person at the Meeting

Registered Shareholders may attend and vote in person at the Meeting. Non-registered Shareholders wishing to attend and vote in person at the Meeting should follow the instructions provided by their broker or agent. If you are a Canadian resident non-registered Shareholder, you need only insert your name in the space provided for the proxyholder appointment in the voting instruction form or proxy form, and return it as instructed by your broker or agent, and you should not complete the voting section of the proxy form or voting information form, as you will vote in person at the Meeting. If you are a United States resident non-registered Shareholder, you will likely be instructed to mark the appropriate box on the other side of the voting instruction form to request that your broker or agent issue and mail to you a legal proxy, and you will need to send the voting instruction form to your broker or agent, receive the legal proxy from your broker or agent and deposit the legal proxy with Odyssey prior to the proxy deadline.

Attending and Voting Virtually at the Meeting

Registered Shareholders and duly appointed and registered proxyholders may virtually attend the Meeting using an internet connected device such as a laptop, computer, tablet or mobile phone, and the meeting platform will be supported across browsers and devices that are running the most updated version of the applicable software plugins.

Shareholders and duly appointed proxyholders attending the Meeting online must remain connected to the internet at all times during the Meeting in order to vote when balloting commences. It is the Shareholder’s and duly appointed proxyholder’s responsibility to ensure that they remain connected for the duration of the Meeting. Registered Shareholders and duly appointed proxyholders wishing to attend the Meeting online should allow ample time to check in. Online check-in will begin one hour prior to the Meeting on June 4, 2020, at 10:00 a.m. (Toronto time).

39

Registered Shareholders

Registered Shareholders and duly appointed proxyholders wishing to attend and to vote virtually at the Meeting should follow these steps:

1. Log into web.lumiagm.com/240055051 at least 15 minutes before the Meeting starts. You should allow ample time to check into the virtual Meeting and to complete the related procedures.

2. Click on “I have a Login”.

3. Enter your 12-digit Control Number as your username (on your proxy form).

4. Enter the Password: abacus2020

Registered Shareholders who currently plan to attend the Meeting should consider voting their Abacus Shares in advance so that their vote will be counted if they later decide not to attend the Meeting.

Registered Shareholders should note that if they participate and vote on any matter at the virtual Meeting they will revoke any previously submitted proxy.

Non-Registered Shareholders

Non-Registered Shareholders wishing to attend and to vote at the Meeting online or appoint a person (who need not be a Shareholder) to attend and act for him, her or it and on his, her or its behalf should instead follow these steps:

1. Appoint yourself or the desired person to act on your behalf as a proxyholder. This step is necessary because the Corporation and Odyssey do not have a record of the non-registered Shareholders of the Corporation and as a result, will have no knowledge of your shareholdings or entitlement to vote, unless you appoint yourself as a proxyholder. In most cases, the non-registered Shareholder can appoint themselves as proxyholder by filling in his, her or its name in the space provided for designating a proxy on the voting instruction form sent by such Shareholder’s nominee and following the execution and return instructions provided by his, her or its nominee. It is not necessary to otherwise complete the form, as the Shareholder will be voting in person at the Meeting.

2. Register with Odyssey. A non-registered Shareholder must register themselves or the appointed proxyholder with Odyssey by sending an email to Abacus@OdysseyTrust.com on or before 10:00 a.m. (Toronto time) on June 2, 2020, which must include the non-registered Shareholder’s or appointed proxyholder’s contact information. Odyssey will then send such Shareholder or appointed proxyholder a user ID number (i.e., the Control Number) via email shortly after this deadline.

3. Log into web.lumiagm.com/240055051 at least 15 minutes before the Meeting starts. You should allow ample time to check into the virtual Meeting and to complete the related procedures.

4. Click on “I have a Login”.

5. Enter your user ID number (i.e., the Control Number), which Odyssey will have provided to you by email and enter the password: abacus2020

Notwithstanding the foregoing, non-registered Shareholders located in the United States will generally have to first obtain a valid legal proxy from their intermediary and will need to submit such legal proxy to Odyssey: (i) by facsimile at 1-800-517-4553; (ii) by e-mail at proxy@odysseytrust.com; or (iii) through the internet at https://odysseytrust.com/Transfer-Agent/Login. For further details, a Shareholder should contact his, her or its intermediary directly. Requests for registration from non-registered Shareholders located in the United States that wish to attend and vote at the Meeting online must be deposited with Odyssey by email at Abacus@OdysseyTrust.com on or before 10:00 a.m. (Toronto time) on June 2, 2020. Once such legal proxy is deposited with Odyssey in accordance with these instructions, such Shareholder should receive from Odyssey

40

a user ID number (i.e., the Control Number) via email shortly after this deadline and may then proceed with following instructions 3, 4 and 5 above.

Interest of Certain Persons in Matters to be Acted Upon

No director or executive officer of Abacus at any time since the beginning of Abacus’s last completed financial year, or any associate or Affiliate of any such director or executive officer, has had any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, except as set forth in this Information Circular.

In particular, concurrently with the entering into of the Arrangement Agreement, Charlotte’s Web entered into the New Employment Agreement with Perry Antelman, a director and the Chief Executive Officer of Abacus to be effective at the Effective Time. A condition of closing of the Arrangement for the benefit of Charlotte’s Web is that the New Employment Agreement shall not be amended, modified, altered or replaced in any respect and Perry Antelman shall, until the New Employment Agreement becomes effective as of the Effective Time, continue to be employed by Abacus U.S. on the same terms as his existing employment agreement dated January 31, 2019. The Board is aware of these interests and considered them along with other matters described below under “The Arrangement – Reasons for the Recommendation – Interest of Certain Persons in the Arrangement” and “Certain Canadian Securities Law Matters”.

Record Date, Voting Securities and Principal Holders Thereof

The Board of the Corporation has fixed April 30, 2020 as the Record Date for determination of persons entitled to receive notice of the Meeting. Only Shareholders of record at the close of business on the Record Date who either attend the Meeting virtually or complete, sign and deliver a form of proxy in the manner and subject to the provisions described above will be entitled to vote or to have their Abacus Shares voted at the Meeting.

The Corporation is authorized to issue an unlimited number of Subordinate Voting Shares without par value and an unlimited number of Proportionate Voting Shares without par value. As of the Record Date, there were 11,911,471 Subordinate Voting Shares and 95,873.66 Proportionate Voting Shares issued and outstanding. On all matters upon which holders of Abacus Shares are entitled to vote:

each Subordinate Voting Share is entitled to one vote per Subordinate Voting Share; and

each Proportionate Voting Share is entitled to 100 votes per Proportionate Voting Share, and each fraction of a Proportionate Voting Share is entitled to the number of votes calculated by multiplying the fraction by 100 and rounding the product down to the nearest whole number.

The Subordinate Voting Shares are “restricted securities” within the meaning of such term under applicable Canadian securities Laws. As of the Record Date, the Subordinate Voting Shares and the Proportionate Voting Shares represent respectively approximately 55.6% and 44.4% of the aggregate voting rights attached to the securities of the Corporation.

As of the date hereof, neither Charlotte’s Web nor any of its affiliates owns, or controls or directs, directly or indirectly, any Abacus Shares. Additional information concerning the rights attaching to the Abacus Shares can be found in the Abacus AIF, a copy of which has been filed on SEDAR at www.sedar.com under the Corporation’s profile.

As of the date of this Information Circular, to the knowledge of the Board and management of the Corporation and based on publicly available information, no person beneficially owns, or controls or directs, directly or indirectly, Abacus Shares carrying 10% or more of the voting rights attached to the Abacus Shares.

41

The Arrangement

The Arrangement

On March 22, 2020, the Corporation and Charlotte’s Web entered into the Arrangement Agreement pursuant to which, among other things and subject to certain terms and conditions, Charlotte’s Web agreed to acquire all of the issued and outstanding Subordinate Voting Shares, after conversion of all outstanding Proportionate Voting Shares into Subordinate Voting Shares, pursuant to a plan of arrangement under the OBCA. The Arrangement is conditional upon, among other things, approval of the Plan of Arrangement by the Court, Required Regulatory Approvals being obtained or waived, and the Arrangement Resolution being approved by: (i) at least 66 % of the votes cast by the holders of Abacus Shares, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, and (ii) a majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, excluding the votes cast by any Interested Parties.

Under the terms of the Arrangement, Shareholders will be entitled to receive 0.85 of a Charlotte’s Web Common Share for each Subordinate Voting Share held by the Shareholders at the Effective Time. Upon completion of the Arrangement, current holders of Abacus Shares are expected to own a Pro Forma Ownership of approximately 14.7% of the Charlotte’s Web Common Shares (assuming conversion of all outstanding Charlotte’s Web Proportionate Voting Shares).

Based on the Board’s consideration of, among other things, a presentation by the Corporation’s management, the terms and conditions of the Arrangement Agreement and the Fairness Opinion, the Board has UNANIMOUSLY determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to holders of Abacus Shares and other securityholders of Abacus, and has approved the Arrangement and the participation by the Corporation therein. Accordingly, the Board recommends UNANIMOUSLY that Shareholders vote IN FAVOUR of the Arrangement Resolution.

Background to the Arrangement

On March 22, 2020, Abacus and Charlotte’s Web entered into the Arrangement Agreement, which sets out the terms and conditions for implementing the Arrangement. The Arrangement Agreement is the result of extensive arm’s length negotiations among representatives of Abacus, Charlotte’s Web and their respective legal and financial advisors. The Board met formally in-person or by telephone eight times from November 28, 2019 until the public announcement of the Arrangement Agreement. Members of the Board engaged in discussions with financial and legal advisors on numerous other occasions.

The following is a summary of the principal events leading up to the execution and public announcement of the Arrangement Agreement.

The Board evaluates business alternatives and strategic opportunities available to Abacus as part of its ongoing review and oversight of Abacus’ business, with a view to the best interests of Abacus. In connection with such evaluation process, under the supervision and direction of the Board, management from time to time participates in discussions with third parties regarding possible commercial arrangements, joint ventures, partnerships and other transactions. As part of this process, the Board has considered a variety of strategic alternatives available to Abacus, including continuing Abacus’ business strategy as a stand-alone entity, modifying Abacus’ business strategy, strategic partnerships, potential acquisitions and combinations of Abacus with various other industry participants.

On August 28, 2019, Perry Antelman, Chief Executive Officer of Abacus, received an introductory e-mail from Deanie Elsner, Chief Executive Officer of Charlotte’s Web, extending an invitation to connect to discuss potential business opportunities between the two companies going forward. Charlotte’s Web had a long-term supplier contract with Abacus so both companies were familiar to one another and had a common respect for what each had accomplished. An introductory phone call was scheduled for September 6, 2019.

On September 6, 2019, Perry Antelman, Chief Executive Officer of Abacus, and Deanie Elsner, Chief Executive Officer of Charlotte’s Web, engaged in a telephone call to provide a business overview and to discuss potential

42

business opportunities between Abacus and Charlotte’s Web. During the call, opportunities were discussed, from joint partnership arrangements to a potential acquisition of Abacus by Charlotte’s Web.

Following the call, on September 7, 2019, Abacus and Charlotte’s Web agreed to organize site visits of Abacus’ U.S. corporate headquarters and the manufacturing facility of Aidance, in Rhode Island.

On October 10, 2019, Deanie Elsner and Russ Hammer, respectively Chief Executive Officer and Executive Vice President, Chief Financial Officer of Charlotte’s Web, traveled to Rhode Island to meet with representatives of Abacus, including Perry Antelman and Phillip Henderson, respectively Chief Executive Officer and Senior Vice President, Corporate Development of Abacus, and complete site visits of Abacus’ U.S. corporate headquarters and the manufacturing facility of Aidance.

On October 13, 2019, representatives of Charlotte’s Web and Abacus agreed to organize site visits of Charlotte’s Web headquarters and manufacturing facilities in Boulder, Colorado.

On November 8, 2019, Messrs. Antelman and Henderson, respectively Chief Executive Officer and Senior Vice President, Corporate Development of Abacus, traveled to Boulder, Colorado, to meet with representatives of Charlotte’s Web, including Ms. Elsner and Mr. Hammer, and complete site visits of Charlotte’s Web headquarters and manufacturing facilities. On the same day, Abacus and Charlotte’s Web entered into a confidentiality agreement to facilitate the exchange of information and to encourage comprehensive discussions in connection with a potential negotiated transaction involving the acquisition of Abacus by Charlotte’s Web. Discussions of such potential transaction included the retention of key management personnel, including Mr. Perry Antelman.

On November 26, 2019, Charlotte’s Web delivered an initial non-binding letter of intent to Abacus, which included the indicative terms of a proposed conditional acquisition of all of the issued and outstanding Abacus Shares by way of a plan of arrangement. The initial letter of intent included, among other terms, the transaction structure, consideration, key conditions to consummating the potential transaction, key termination rights and related fees as well as certain covenants to be given by Abacus. The initial letter of intent provided for a fixed exchange ratio in the range of 0.4433 to 0.4788 of a Charlotte’s Web Common Share for each Subordinate Voting Share (following the conversion of all Proportionate Voting Shares into Subordinate Voting Shares), representing a 25-35% premium to the 10-day volume weighted average price of the Subordinate Voting Shares of $4.91 for the period ended and including November 26, 2019, based on the volume weighted average price of the Charlotte’s Web Common Shares for the same period.

On November 28, 2019, at a meeting of the Board, Mr. Antelman outlined Charlotte’s Web’s proposal set out in the initial letter of intent with representatives of management and Osler present. Management presented an analysis regarding the recent performance of Abacus and other companies in the CBD or cannabis industries, key themes and potential risk factors facing such industries, Abacus’ standalone business plans, as well as an analysis of the potential benefits and inherent risks of the potential transaction with Charlotte’s Web. An extensive discussion ensued, and members of the Board asked questions with respect to the strategic and financial advantages and risks of and considerations affecting the potential transaction with Charlotte’s Web, including the significant risks to Abacus’ business plan in the absence of a strategic transaction, potential synergies with Charlotte’s Web, the economic terms of the potential transaction and the ability of the combined company to achieve success in light of anticipated market conditions. Osler advised the Board of the duties and responsibilities of the directors in the context of the non-binding proposal. The Board agreed that it should sufficiently engage with Charlotte’s Web in order to advance the proposal but that no decision would be made regarding how best to proceed with the alternatives available to Abacus until such time as the Board received financial advice. The Board discussed options for possible financial advisors. It was agreed that members of management should meet with representatives of certain financial advisors and, following such meetings, make a recommendation to the Board regarding the selection of the financial advisor.

After their meetings with representatives of certain financial advisors, members of management of Abacus informed Greenhill that they would recommend the appointment of Greenhill to the Board, and Greenhill became involved in negotiations with Charlotte’s Web and its financial advisor, Canaccord Genuity Corp. (“Canaccord Genuity”).

On December 24, 2019, following negotiations between principals of Abacus and Charlotte’s Web and their respective legal and financial advisors, and after receiving advice from Osler and Greenhill, Abacus submitted a revised non-binding letter of intent to Charlotte’s Web, which included a counteroffer designed to increase Shareholder value with

43

a fixed share exchange ratio in the range of 0.775 to 0.85 of a Charlotte’s Web Common Share for each Subordinate Voting Share, representing a Pro Forma Ownership in the range of approximately 13.5% to 14.5%.

On January 6, 2020, Canaccord Genuity and Charlotte’s Web, after consultation with DLA Piper (Canada) LLP (“DLA Piper”) provided comments on Abacus’ revised letter of intent, and indicated that the exchange ratio of 0.775 to 0.85 of a Charlotte’s Web Common Share for each Subordinate Voting Share was not acceptable to Charlotte’s Web.

The Board met on January 9, 2020, with representatives of management and Osler present, to consider, among other things, the appointment of Greenhill as financial advisor and the terms of the revised proposal under the updated letter of intent. After discussing and considering the credentials and independence of Greenhill, and the terms of the engagement letter with Greenhill, the Board unanimously confirmed the hiring of Greenhill as independent financial advisor under the terms of the Greenhill Engagement Letter. Following such Board approval, representatives of Greenhill joined the Board meeting and proceeded to provide a detailed review of Charlotte’s Web proposal and the terms of the letter of intent. Greenhill discussed its preliminary analysis of the exchange ratio and resulting Pro Forma Ownership proposed by Charlotte’s Web. Osler also provided advice to the Board regarding the duties and responsibilities of the Board in connection with the potential transaction. The Board then discussed the potential transaction as well as strategy and next steps. Following receipt of advice from Greenhill and Osler, the Board agreed that Abacus should submit a counteroffer to Charlotte’s Web, with a share exchange ratio of 0.733 to 0.764 of a Charlotte’s Web Common Share for each Subordinate Voting Share, representing a Pro Forma Ownership in the range of approximately 13.0% to 13.5%. The Board authorized management to counteroffer on those terms. Following the meeting, a revised letter of intent which reflected the foregoing counteroffer was submitted to Charlotte’s Web.

On January 10, 2020, Canaccord Genuity advised that, after consideration, Charlotte’s Web’s best and last offer to move to the next stage of consideration of the potential transaction would be an exchange ratio of 0.7198 to 0.7486 of a Charlotte’s Web Common Share for each Subordinate Voting Share, and submitted a revised letter of intent to Abacus.

On January 12, 2020, the Board met, with representatives of management, Osler and Greenhill, present to consider the foregoing revised proposal of Charlotte’s Web. The Board reviewed materials prepared by Greenhill assessing the letter of intent, including key transaction considerations. The Board authorized and approved Abacus entering into the letter of intent. Following the receipt of Board approval, Abacus entered into the letter of intent with Charlotte’s Web (the “Letter of Intent”), which provided for a fixed exchange ratio in the range of 0.7198 to 0.7486 of a Charlotte’s Web Common Share for each Subordinate Voting Share.

On January 17, 2020, Abacus granted Charlotte’s Web and its advisors access to a virtual data room containing certain material information regarding Abacus for purposes of Charlotte’s Web’s ongoing due diligence review process.

On January 19, 2020, the Board met to consider the proposed Harmony Hemp Acquisition and received legal advice from Osler (Greenhill having previously provided financial advice to management) on the impact of the Harmony Hemp Acquisition on the proposed transaction with Charlotte’s Web.

On January 27, 2020, Abacus, Charlotte’s Web and their respective financial advisors met in Boston, Massachusetts, to discuss matters relating to the operations and corresponding financial performance of Abacus.

On February 6, 2020, integration team leaders Paul Lanham, Senior Vice President of Charlotte’s Web and Mario Pasquale, Vice President Corporate Treasurer of Charlotte’s Web, completed site visits of Abacus’ U.S. corporate headquarters and the manufacturing facility of Aidance, in Rhode Island.

On February 7, 2020, the Board approved the Harmony Hemp Acquisition. Following the receipt of Board approval, Perry Antelman, Chief Executive Officer of Abacus, made a telephone call to Deanie Elsner, Chief Executive Office of Charlotte’s Web, to explain that Abacus would be announcing a small acquisition of an unnamed company which would be completed within the parameters of the Letter of Intent. The completion of the Harmony Hemp Acquisition was publicly announced on February 11, 2020.

On February 25, 2020, the Board met, with representatives of management, Osler and Greenhill present, and was provided with an update on the status of the negotiations with Charlotte’s Web by management and Osler. Following

44

discussion, the Board determined that it was in the best interests of Abacus to agree to extend the exclusivity period of Charlotte’s Web from February 27, 2020 to March 16, 2020, in order to continue to engage in negotiations with Charlotte’s Web and to allow Abacus and Charlotte’s Web to complete their due diligence review of one another. The exclusivity period was subsequently extended to March 23, 2020.

On February 26 and 27, 2020, Abacus, Charlotte’s Web and their respective financial advisors met in Boulder, Colorado, for business, financial and legal due diligence meetings. Abacus also completed site visits of Charlotte’s Web’s headquarters and manufacturing facilities in Boulder on February 26 and 27, 2020.

On February 27, 2020, Charlotte’s Web granted Abacus and its advisors access to a virtual data room containing certain material information regarding Charlotte’s Web for purposes of Abacus’ ongoing due diligence review.

On March 10, 2020, DLA Piper provided a first draft of the Arrangement Agreement to Osler, which provided for a fixed exchange ratio of 0.72 of a Charlotte’s Web Common Share for each Subordinate Voting Share. The draft Arrangement Agreement also contemplated that the obligation of Charlotte’s Web to complete the transaction would, among other things, be subject to the execution by Perry Antelman, Chief Executive Officer of Abacus, of a new employment agreement with Charlotte’s Web, on terms and conditions acceptable to Charlotte’s Web.

On March 13, 2020, further to discussions and negotiations between Canaccord Genuity and Greenhill, and the principals of Abacus and Charlotte’s Web, Charlotte’s Web offered an exchange ratio of 0.85 of a Charlotte’s Web Common Share for each Subordinate Voting Share and such exchange ratio was agreed upon by the parties.

On March 16, 2020, the Board met, with representatives of management, Osler and Greenhill present, to discuss the transaction, including the status of ancillary legal documentation. Greenhill presented its financial analysis related to the potential transaction with Charlotte’s Web, including in respect of its assessment on value as well as the strategic rationale for the potential transaction. Osler then reviewed the draft Arrangement Agreement with the Board, and summarized certain material issues relating to the draft Arrangement Agreement. It was noted that the draft Arrangement Agreement permitted superior proposals and that Greenhill should review the quantum of the termination fee and provide its recommendation to the Board. Without limitation, the Board also discussed the closing condition in favor of Charlotte’s Web that Perry Antelman, Chief Executive Officer of Abacus, enter into a new employment agreement with Charlotte’s Web. As the new employment agreement could potentially result in Perry Antelman receiving a “collateral benefit” within the meaning of MI 61-101, Osler provided advice to the Board in connection with such new development. The Board also discussed other potential strategic options available to Abacus, including continuing Abacus’ current business strategy as a standalone entity.

During the course of the following days, drafts of the other ancillary agreements in respect of the potential transaction were exchanged between Osler and DLA Piper, and the terms of the Arrangement Agreement and related transaction documents were negotiated between the parties.

On March 17 and March 19, 2020, Abacus held diligence calls with Charlotte’s Web, to further advance its due diligence review of Charlotte’s Web, with the assistance of Abacus’ financial and legal advisors, including external regulatory advisors and external litigation advisors.

On March 20, 2020, Charlotte’s Web informed Abacus that in order to move to the next stage of the potential transaction, Abacus U.S. and Aidance would need to enter into a confirmatory intellectual property ownership agreement to confirm certain intellectual property rights of Abacus U.S. Subsequently, Abacus U.S., Aidance and Charlotte’s Web began negotiations of the terms of the confirmatory intellectual property between Abacus U.S. and Aidance, which was dated effective March 20, 2020 and executed concurrently with the entering into of the Arrangement Agreement.

On March 20, 2020, Abacus entered into a confidentiality agreement with certain key Shareholders to advise them of the potential transaction with Charlotte’s Web and discuss their interest in potentially supporting such transaction and entering into Voting Support Agreements if the Board was to pursue such a transaction.

On March 22, 2020, the Board met, with representatives of management, Osler and Greenhill present, to consider the potential transaction, the draft Arrangement Agreement and other transaction agreements, to receive the advice of its legal and financial advisors, to receive an update on legal due diligence and other relevant matters, and to consider

45

other factors relevant to the potential transaction. Greenhill presented to the Board its opinion concerning fairness, from a financial point of view, of the consideration to be received by Shareholders pursuant to the Arrangement, which was subsequently confirmed in writing. Osler provided further guidance on the duties of the Board under Canadian law with respect to the potential transaction, including as a result of the potential “collateral benefit” under MI 61-101 of Perry Antelman, Chief Executive Officer of Abacus, under the New Employment Agreement. Members of management, including Perry Antelman and Phillip Henderson, who are also members of the Board, left the meeting for an in camera session of independent directors with Greenhill and Osler. The independent members of the Board discussed the transaction and matters relating to the transaction, including the terms of the New Employment Agreement, received advice from Greenhill and Osler and gave consideration to the provisions of MI 61-101. Perry Antelman and Phillip Henderson were then invited to re-join the meeting. Following the presentations of its legal and financial advisors, as well as a review and consideration of the terms of the Arrangement Agreement and other transaction documents and other factors, including the treatment of Shareholders and the other securityholders of Abacus and the other factors set out below under “Reasons for the Recommendation”, and after consulting with its legal and financial advisors and management, including receiving the oral Fairness Opinion, and after further discussion and deliberation, the Board unanimously determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to holders of Abacus Shares and other securityholders of Abacus, and approved the Arrangement and the participation by Abacus therein. The Board also unanimously recommended that Shareholders vote in favour of the transaction at the special Meeting to be called to approve the transaction.

Later in the evening on March 22, 2020, the Arrangement Agreement and Voting Support Agreements were executed and delivered, and Abacus and Charlotte’s Web issued a joint press release on March 23, 2020 publicly announcing the Arrangement.

On April 1, 2020, a committee of independent directors of Abacus comprised of Hannan Fleiman and Jesse Kaplan reviewed matters relating to the benefit to be received by Perry Antelman under the New Employment Agreement, and following its assessment of the value of the benefit concluded that the benefit could constitute a “collateral benefit” under MI 61-101.

On April 29, 2020, the Board approved the contents and mailing of this Information Circular to Shareholders, subject to the receipt of the Interim Order.

On April 30, 2020, the Court granted the Interim Order, attached as Appendix E to this Information Circular.

Recommendation of the Board

Following the Board’s consideration of, among other things, a presentation by the Corporation’s management, the terms of the Arrangement Agreement and the Fairness Opinion, the Board has UNANIMOUSLY determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to holders of Abacus Shares and other securityholders of Abacus, and has approved the Arrangement and the participation by the Corporation therein. Accordingly, the Board recommends UNANIMOUSLY that Shareholders vote IN FAVOUR of the Arrangement Resolution.

Abacus Shareholders representing approximately 20% of the voting rights attached to the outstanding Abacus Shares have entered into Voting Support Agreements, pursuant to which they have agreed, among other things, to vote all of their Abacus Shares IN FAVOUR of the Arrangement Resolution.

In forming its recommendation, the Board considered numerous factors, including, without limitation, the factors listed below under “Reasons for the Recommendation” and the impact of the Arrangement on all affected stakeholders. The Board based its recommendation upon the totality of the information presented to and considered by it in light of the knowledge of the Board members of the business, financial condition and prospects of the Corporation and after taking into account the advice of the Corporation’s financial and legal advisors and the advice and input of management of the Corporation.

The Corporation, on behalf of the Board, retained Greenhill to act as the exclusive financial advisor to the Corporation in connection with the Arrangement, including to provide an opinion to the Board as to the fairness, from a financial point of view, of the Consideration to be received by Shareholders pursuant to the Arrangement.

46

Fairness Opinion

The Corporation retained Greenhill as its exclusive financial advisor in connection with any material transaction involving Charlotte’s Web or any third party pursuant to an engagement agreement dated as of January 9, 2020 (the “Greenhill Engagement Agreement”), to provide advice and assistance to the Corporation with respect to, among other things, the Arrangement and, if requested, to prepare and deliver to the Board an opinion as to the fairness, from a financial point of view, of the Consideration to be received by Shareholders pursuant to the Arrangement.

The Fairness Opinion was rendered on the basis of securities markets, economic, financial and general business conditions prevailing as at March 22, 2020 and the condition and prospects, financial or otherwise, of the Corporation and Charlotte’s Web as they were reflected in the information reviewed by Greenhill. In its analyses and in preparing the Fairness Opinion, Greenhill made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of Greenhill, the Corporation or any party involved in the Arrangement. Although Greenhill believes that the assumptions used in its analyses and in preparing the Fairness Opinion were reasonable and appropriate in the circumstances, some or all of them may nevertheless prove to be incorrect.

Pursuant to the terms of the Greenhill Engagement Agreement, the Corporation will pay fees to Greenhill for its services as the Corporation’s financial advisor, a portion of which was payable upon delivery of the Fairness Opinion and a substantial portion of which is contingent on the completion of the Arrangement or certain alternative transactions involving Charlotte’s Web or any other party. Additionally, the Corporation has agreed to reimburse Greenhill for reasonable out-of-pocket expenses (including the fees of Greenhill’s external legal counsel) and indemnify Greenhill in certain circumstances.

Greenhill provided the Board with an opinion to the effect that, as of March 22, 2020, and subject to certain assumptions, qualifications and limitations, the Consideration payable by Charlotte’s Web to Shareholders under the Arrangement is fair, from a financial point of view, to such Shareholders. The Fairness Opinion addresses only the financial fairness of the Consideration and does not address any other aspect of the Arrangement. The Fairness Opinion was only one of many factors considered by the Board in evaluating the Arrangement and was not determinative of the views of the Board with respect to the Arrangement or the Consideration set forth in the Arrangement Agreement.

In considering the fairness, from a financial point of view, of the Consideration payable by Charlotte’s Web to Shareholders pursuant to the Arrangement, Greenhill considered, among other things, a comparison of the Consideration to the exchange ratios implied by discounted cash flow analyses of the Corporation and Charlotte’s Web; a comparison of publicly available financial multiples of selected precedent transactions to multiples implied by the Consideration; a comparison of the price of the Abacus Shares implied by the Consideration to the recent market trading prices of the Subordinate Voting Shares; and a comparison of the financial multiples implied by the Consideration to financial multiples of selected publicly-traded companies that Greenhill considered relevant for such purpose.

Neither Greenhill nor any of its affiliates or associates is an insider, associate or affiliate (as such terms are defined in the Securities Act, RSO 1990, c S.5) of the Corporation or Charlotte’s Web, or any of their respective associates or affiliates. Neither Greenhill nor any of its affiliates or associates is acting as an advisor to the Corporation in connection with any matter, other than acting as a financial advisor to the Corporation.

The full text of the Fairness Opinion, which sets forth among other things, assumptions made, matters considered, information reviewed and limitations on the review undertaken by Greenhill in connection with preparing the Fairness Opinion, is attached as Appendix C to this Information Circular. The Fairness Opinion was provided solely for the use of the Board in connection with the Board’s evaluation of the Consideration from a financial point of view, payable by Charlotte’s Web to Shareholders pursuant to the Arrangement and may not be relied upon by any other person or for any other purpose. Greenhill does not provide tax, legal, regulatory or accounting advice. Greenhill has acted as the Corporation’s financial advisor and not as an advisor to any Shareholder or other stakeholder of the Corporation. The Fairness Opinion is not intended to and does not constitute a recommendation as to how Shareholders should vote in respect of the Arrangement Resolution, as each Shareholder should evaluate the Arrangement in the context of such Shareholder’s own financial objectives, risk appetite, investment horizon, tax position and other considerations deemed relevant by such Shareholder. Greenhill expressed no view as to, and the Fairness Opinion does not address, any other

47

aspect or implication of the Arrangement or the underlying business decision of the Board to effect the Arrangement, the relative merits of the Arrangement as compared to any alternative transaction or business strategy that may be available to the Corporation or the effect of any other transaction in which the Corporation might engage, a formal valuation of the Corporation or Charlotte’s Web or any of their respective securities or assets.

Reasons for the Recommendation

Based on the Board’s consideration of, among other things, a presentation by the Corporation’s management, the terms and conditions of the Arrangement Agreement and the Fairness Opinion, the Board has UNANIMOUSLY determined that the Arrangement is in the best interests of Abacus and is fair and reasonable to holders of Abacus Shares and other securityholders of Abacus, and has approved the Arrangement and the participation by the Corporation therein. Accordingly, the Board recommends UNANIMOUSLY that Shareholders vote IN FAVOUR of the Arrangement Resolution.

In reaching its conclusions and formulating its recommendations of the Arrangement to the Shareholders, the Board considered a number of factors, including those listed below, with the benefit of input from the Corporation’s management and financial and legal advisors.

The following is a summary of the principal reasons for the recommendation that Shareholders vote FOR the Arrangement Resolution:

Attractive premium. Shareholders will be entitled to receive the Consideration under the Plan of Arrangement, which represents a premium of approximately 38% based on the 10-day volume weighted average trading prices, and 43% based on the closing prices, of the Subordinate Voting Shares on the CSE and the Charlotte’s Web Common Shares on the TSX, respectively for the period ending on, and as of, March 20, 2020, which was the last trading day prior to the Announcement Date.

Creation of the largest vertically integrated hemp-derived CBD company. Charlotte’s Web is the market leader in production and distribution of innovative hemp-derived CBD wellness products. The Corporation is a market leader in OTC topical products that combine active pharmaceutical ingredients with hemp extract. The Arrangement is expected to combine Charlotte’s Web and the Corporation creating the world’s largest vertically integrated hemp-derived CBD products company. For Charlotte’s Web, the combination (i) provides scale in the food/drug/mass (“F/D/M”) channel, which benefits from the current U.S. regulatory environment that favours topical-CBD products, (ii) expands Charlotte’s Web’s reach into OTC topical medications, retail skincare and beauty segments, (iii) provides access to the Corporation’s extensive network of medical practitioners, and (iv) positions Charlotte’s Web at the forefront of the growing and valuable sports landscape through existing partnerships at the Corporation. For the Corporation, the acquisition provides the advantages of (i) joining an established, industry leading platform with strong brand equity, (ii) benefiting from a low-cost vertical supply chain that produces “the world’s most trusted hemp extract™”, and (iii) gaining access to Charlotte’s Web’s direct to consumer (“DTC”) channel. The combined entity is anticipated to hold the leading market share of U.S. CBD sales within the F/D/M channel, according to Nielsen market data.

Compelling synergy potential. The Board believes that the Arrangement will result in meaningful synergies from (i) economies of scale, (ii) production (scaling of low cost manufacturing and extraction), (iii) elimination of public company cost duplication, (iv) intellectual property sharing and new product development, and (v) extension of sales opportunities through cross-selling and leveraging additional distribution channels, which would include the expansion of the combined topical portfolio through DTC, F/D/M and B2B (business to business) channels. The Arrangement will allow the Corporation to benefit from Charlotte’s Web’s vertically integrated operations to procure a consistent, cost-effective supply of raw material feedstock for its products.

Strong balance sheet to pursue growth. As of December 31, 2019, Charlotte’s Web and the Corporation maintained a cash and cash-equivalents balance, cumulatively, of $90.4 million. Pro forma for the Arrangement, the combined company is expected to have ample liquidity to continue to pursue the compelling U.S. CBD market opportunity.

48

Continued participation by shareholders in future growth. Shareholders will receive Charlotte’s Web Common Shares pursuant to the Plan of Arrangement and will have the opportunity to participate in any future increase in the value of Charlotte’s Web, including the opportunity to participate in the synergies and anticipated value creation of the combined company through the Arrangement. Abacus Shareholders will have a Pro Forma Ownership of approximately 14.7% of the Charlotte’s Web Common Shares (assuming conversion of all outstanding Charlotte’s Web Proportionate Voting Shares).

Experienced operating team & best practice. The Board believes that the combined management team of Charlotte’s Web following the completion of the Arrangement, which will include Perry Antelman, Chief Executive Officer of Abacus, will benefit from having industry leading Consumer Packaged Goods (“CPG”) experience to drive operational excellence, best in class marketing, proven innovation, unique digital/data capability and advantaged customer/channel relationships.

Increased liquidity for Shareholders. Shareholders will receive Charlotte’s Web Common Shares under the Arrangement, which shares are currently listed and posted for trading on the TSX, providing the Shareholders with greater liquidity given the higher daily trading volume of the Charlotte’s Web Common Shares compared to the Subordinate Voting Shares. In addition, Charlotte’s Web Common Shares have an increased weighting in index tracking portfolios than the Subordinate Voting Shares.

Receipt of Fairness Opinion. The Board has received the Fairness Opinion, in which Greenhill provided an opinion to the effect that, as of the date of such opinion, and subject to the assumptions, limitations and qualifications set forth therein and such other matters as Greenhill considered relevant, the Consideration to be received by the Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Shareholders.

Evaluation and analysis. The Board has given lengthy consideration to the business, operations, assets, financial condition, operating results and potential prospects for Charlotte’s Web following the Arrangement as well as current industry, economic and market conditions and related risks, all relative to those of the Corporation on a standalone basis. The Board recognizes that it has become much more challenging to complete a quality transaction given the ongoing COVID-19 situation globally.

Terms of the Arrangement Agreement. The Arrangement Agreement is the result of an arm’s length negotiation process and includes terms and conditions that are reasonable in the judgment of the Board, after consultation with its legal and financial advisors.

Support of Board. The Board has unanimously recommended support for the Arrangement.

Key Shareholder support. The Locked-Up Shareholders, who collectively hold approximately 6% of the issued and outstanding Subordinate Voting Shares and approximately 38% of the issued and outstanding Proportionate Voting Shares (which collectively represent approximately 20% of the voting rights attached to outstanding Abacus Shares), as at the Record Date, entered into the Voting Support Agreements pursuant to which they have agreed, among other things, to vote FOR the Arrangement Resolution.

Increased access to capital. Following its acquisition by Charlotte’s Web, the Corporation is expected to have greater access to capital, which should assist in funding its growth. Charlotte’s Web has access to greater financial resources than the Corporation and is expected to attract capital from a larger pool of investors, including institutional investors precluded from investing in companies listed on the CSE.

Treatment of holders of options, stock appreciation rights and warrants. In connection with the Arrangement, all Abacus Options, Abacus SARs and Abacus Warrants outstanding immediately prior to the Effective Date will be exchanged for Replacement Options, Replacement SARs and Replacement Warrants, respectively, and such Replacement Options and Replacement Warrants will thereafter entitle the holders to acquire Charlotte’s Web Common Shares (rounded down to the nearest whole number) in lieu of Abacus Shares, subject to adjustment in number and exercise price to give effect to the Exchange Ratio. The Replacement SARs will thereafter entitle the holders to receive, upon vesting, the value of Charlotte’s Web

49

Common Shares in lieu of Abacus Shares, subject to adjustment in number to give effect to the Exchange Ratio.

Impact on stakeholders. The Board conducted a stakeholder impact analysis whereby the directors of the Board considered, among other things, the interests of the Corporation’s stakeholders and concluded that, having regard to all relevant considerations, the Arrangement is in the best interests of the Corporation.

Tax-deferred rollover treatment. Shareholders who dispose of Abacus Shares under the Arrangement and receive Charlotte’s Web Common Shares may receive tax-deferred rollover treatment in respect of their Abacus Shares for Canadian and U.S. income tax purposes. See “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders” and “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”.

Other factors. The Board also carefully considered the Arrangement with reference to current economics, industry and market trends affecting each of the Corporation and Charlotte’s Web in their respective markets, information concerning the business, operations, assets, financial condition, operating results and prospects of each of the Corporation and Charlotte’s Web and the historical trading prices of the Subordinate Voting Shares and Charlotte’s Web Common Shares, taking into account the results of the Corporation’s due diligence review of Charlotte’s Web and its business.

Certain of the Board’s reasons for the recommendation contain forward-looking information and statements and are subject to various risks and assumptions. See “Caution Regarding Forward-Looking Statements”.

In making its recommendation, the Board also observed that numerous procedural safeguards were and are present to permit the Board to effectively represent the interests of the Corporation, Shareholders, and the Corporation’s other stakeholders including, among others:

Shareholder approval. The Shareholder Approval is protective of the rights of Shareholders. The Arrangement Resolution must be approved by at least 66 % of the votes cast by the holders of Abacus Shares, voting together as a single class. In addition, the Arrangement Resolution is subject to approval by a simple majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, voting together as a single class, excluding the votes cast by any Interested Party.

Limited conditions and requirements for completion of the Arrangement. The obligation of Charlotte’s Web to complete the Arrangement is subject to a limited number of conditions, which the Board believes are reasonable under the circumstances.

Court process. The Arrangement will be subject to a judicial determination of the Court that the Arrangement is procedurally and substantively fair and reasonable to Shareholders.

Dissent Rights. Registered Shareholders who do not vote in favour of the Arrangement will have the right to require a judicial appraisal of their Abacus Shares and obtain “fair value” pursuant to the proper exercise of the Dissent Rights (subject to compliance with certain conditions).

Ability to respond to and accept a Superior Proposal. The Arrangement Agreement does not prevent a third party from making an unsolicited Acquisition Proposal, and subject to compliance with the terms of the Arrangement Agreement, the Board is not precluded from considering and responding to an unsolicited Acquisition Proposal that is, or could reasonably be expected to lead to, a Superior Proposal at any time prior to the approval of the Arrangement Resolution by Shareholders.

The Board also considered numerous uncertainties, risks and other potential negative factors associated with the Arrangement, including, among others, the following:

Risks related to announcing the Arrangement. The effect of the public announcement of the Arrangement Agreement, including the Corporation’s and Charlotte’s Web’s ability to attract and retain key personnel during the pendency of the transactions contemplated by the Arrangement Agreement and the potential effect

50

on the Corporation’s and Charlotte’s Web’s continuing business relationships with business partners and customers.

Non-completion. The risks to the Corporation if the Arrangement is announced and not completed, including the costs to the Corporation in pursuit of the Arrangement, the diversion of management’s attention away from conducting the Corporation’s business in the ordinary course, the potential impact on the Corporation’s current business relationships (including with current and prospective employees, suppliers and industry partners) and the trading price of the Subordinate Voting Shares and the market’s perceptions of the Corporation’s prospects.

Potential longer term benefits as an independent company. If the Arrangement is successfully completed, the Corporation will no longer exist as an independent, publicly traded company and Shareholders will be unable to participate in the longer term potential benefits of the business of the Corporation on a standalone basis.

Business risks, including, among others:

the risk that the potential benefits of the Arrangement are not fully realized, or only partially realized, and recognizing that many of those benefits are uncertain and that there are many potential integration and regulatory challenges associated with successfully combining the businesses;

the integration plan for a transaction of the nature of the Arrangement, due in part to the size of the businesses and the need to maintain confidentiality, was completed at a very high level, which could cause a number of the assumptions around organization, operations and technology to be incorrect;

the integration of the operations of Charlotte’s Web and Abacus will require significant management attention and other resources;

costs relating to implementing the Arrangement may be significantly higher than expected;

that the Corporation is subject to certain restrictions on the conduct of the business prior to the consummation of the Arrangement which may limit the Corporation’s ability to respond to changing market and business conditions;

the potentially disruptive effect the Arrangement may have on the parties as it may interrupt business operations, result in system integration issues, divert management’s time away from their usual roles or result in a loss of customers or key personnel; and

inherent risks arising from general economic conditions in the global economy and jurisdictions in which the parties operate.

Transactional risks, including, among others:

that there is no certainty that all conditions precedent to the Arrangement will be satisfied or waived, and failure to complete the Arrangement could negatively impact the market price of the Abacus Shares;

the risks relating to obtaining the Required Regulatory Approvals by the Outside Date;

the fact that Shareholders cannot be certain of the value of the Charlotte’s Web Common Shares they will receive for their Abacus Shares under the Arrangement since the market price of Charlotte’s Web Common Shares and Abacus Shares will fluctuate but the Exchange Ratio for the Consideration is fixed;

the conditions to Charlotte’s Web’s obligation to complete the Arrangement and Charlotte’s Web’s

51

right to terminate the Arrangement Agreement in certain circumstances;

the requirement that the Corporation pay Charlotte’s Web the Termination Fee if it terminates the Arrangement Agreement due to the Corporation accepting a Superior Proposal or if the Board changes its recommendation with respect to the Arrangement; and

the requirement that the Corporation pay Charlotte’s Web the Expense Reimbursement Fee, if the Arrangement Agreement is terminated in certain circumstances.

COVID-19. The Board considered the recent outbreak of COVID-19 and the challenges resulting therefrom, including the potential impact on the Corporation’s and Charlotte’s Web’s operations, and the impact on their customers, suppliers and other stakeholders.

The foregoing summary of the information and factors considered by the Board is not intended to be exhaustive but includes the material information and factors considered by the Board in its consideration of the Arrangement. In reaching its conclusion and recommendation, the Board did not find it practicable to, and did not, quantify or otherwise attempt to assign any relative weight to each of the specific factors considered. The conclusion and recommendation of the Board was made after consideration of all the above noted factors and in light of their own knowledge of the business, financial condition and prospects of the Corporation and was based upon the advice of the Board’s financial and legal advisors.

Shareholder Approval

In order for the Arrangement to be effected, Shareholders will be asked to consider and, if deemed advisable, approve the Arrangement Resolution and any other related matters at the Meeting. The Arrangement Resolution must be approved by: (i) at least 66 % of the votes cast by the holders of Abacus Shares, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, (ii) a majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares, present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, excluding the votes cast by any Interested Parties.

The full text of the Arrangement Resolution and the Plan of Arrangement are attached to this Information Circular as Appendices A and B, respectively.

Voting Support Agreements

Directors and officers of the Corporation, as well as certain key Shareholders, have entered into Voting Support Agreements with Charlotte’s Web, representing approximately 20% in the aggregate of the issued and outstanding voting rights attached to the Abacus Shares.

Pursuant to the Voting Support Agreements, Shareholders agreed, subject to certain conditions, to vote their Abacus Shares in favour of the Arrangement Resolution and any other matter necessary for the consummation of the Arrangement and the other transactions contemplated by the Arrangement Agreement.

The Voting Support Agreement entered into by Perry Antelman, Chief Executive Officer of the Corporation, will further restrict the sale of his resulting Charlotte’s Web Common Shares for a 15-month period post-closing with incremental releases commencing six (6) months after the Effective Date. Perry Antelman’s release schedule for his resulting Charlotte’s Web Common Shares is set out as follows: (a) 25% will be released 6 months from the Effective Date; (b) 25% will be released 12 months from the Effective Date; (c) 25% will be released 13.5 months from the Effective Date; and (d) 25% will be released 15 months from the Effective Date.

The Voting Support Agreements will be terminated automatically without any required notice upon the earliest of:

(a) the date upon which Charlotte’s Web and the applicable Shareholder mutually agree to terminate the Voting Support Agreement;

(b) the termination of the Arrangement Agreement in accordance with its terms;

52

(c) unless extended by mutual agreement of the applicable Shareholder, on the one hand, and Charlotte’s Web, on the other hand, the Voting Support Agreement shall automatically terminate on the Outside Date if the Effective Time has not yet occurred; and

(d) notice by the applicable Shareholder being delivered to Charlotte’s Web if, prior to the Meeting, without the prior written consent of the applicable Shareholder, there is any reduction in the portion of the Consideration to be received by the Shareholder for each Abacus Share pursuant to the Plan of Arrangement or a change in the form of consideration payable for the Abacus Shares as set out in the Arrangement Agreement.

Treatment of Convertible Securities

Pursuant to the Arrangement Agreement, and in accordance with and subject to the provisions of the Plan of Arrangement, the Board or an appropriate committee thereof shall take such actions as may be required to effect and/or procure the following, which actions are permitted under the relevant governing document for the applicable security:

all outstanding Abacus Options, whether vested or unvested, shall cease to represent an option or other right to acquire Abacus Shares and shall be exchanged at the Effective Time for Replacement Options;

all outstanding Abacus SARs, whether vested or unvested, shall cease to represent a stock appreciation right determined with reference to Abacus Shares and shall be exchanged at the Effective Time for Replacement SARs; and

all outstanding Abacus Warrants, whether vested or unvested, shall cease to represent a warrant or other right to acquire Abacus Shares and shall be exchanged at the Effective Time for Replacement Warrants.

Subject to the provisions of the Plan of Arrangement, the term to expiry, conditions to and manner of exercise, as applicable, and other terms and conditions of each of the Replacement Options, Replacement SARs and Replacement Warrants shall be the same as the terms and conditions of the Abacus Warrants, Abacus SARs and Abacus Warrants, as applicable, for which they are exchanged.

Effect on the Corporation if the Arrangement is Not Completed

If the Arrangement Resolution is not approved by Shareholders or if the Arrangement is not completed for any other reason, Shareholders will not receive any consideration for any of their Abacus Shares in connection with the Arrangement and the Corporation will remain a reporting issuer and the Subordinate Voting Shares will continue to be listed on the CSE. See “Risk Factors - Risk Factors Relating to the Arrangement”. The Arrangement Agreement requires that the Corporation pay the Termination Fee of CDN$4,000,000 or, as applicable, the Expense Reimbursement Fee of CDN$350,000 to Charlotte’s Web in connection with the termination of the Arrangement Agreement, if the Arrangement is not completed as a result of certain prescribed events. See “Summary of Arrangement Agreement – Termination and Amendment of Arrangement Agreement – Termination Fees” and “Summary of Arrangement Agreement – Expenses”.

Principal Legal Matters

Court Approval and Completion of the Arrangement

The Arrangement requires approval by the Court pursuant to the OBCA. Prior to the mailing of this Information Circular, the Corporation obtained the Interim Order, which provides for the calling and holding of the Meeting, Dissent Rights for Shareholders and other procedural matters. Subject to the terms of the Arrangement Agreement and any applicable order of the Court, and if the Arrangement Resolution is approved by Shareholders at the Meeting in the manner required by the Interim Order, the Corporation intends to make an application to the Court for the Final Order to take place promptly following the Meeting. Under the terms of the Interim Order, Abacus Securityholders have the right to appear and make submissions at the application for the Final Order, by submitting a notice of appearance in compliance with the terms of the Interim Order. At the hearing for the Final Order, the Court will consider, among other things, the procedural and substantive fairness and reasonableness of the Arrangement and the rights of every Person affected. The Court may approve the Arrangement either as proposed or as amended in any

53

manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court deems fit. If the Court approves the Arrangement with amendments, depending on the nature of the amendments, Charlotte’s Web and the Corporation may agree not to complete the Arrangement.

Certain Canadian Securities Law Matters

The following is only a general overview of certain requirements of Canadian securities Laws relating to the Arrangement that may be applicable to Securityholders. Each Securityholder is urged to consult his, her or its professional advisors to determine the Canadian conditions and restrictions applicable to trade in the Charlotte’s Web Common Shares issuable pursuant to the Arrangement.

The issuance of Charlotte’s Web Common Shares pursuant to the Arrangement will constitute a distribution of securities that is exempt from the prospectus requirements of applicable Canadian securities Laws. Charlotte’s Web Common Shares issued pursuant to the Arrangement may be resold in each province and territory of Canada, provided: (i) that Charlotte’s Web is a reporting issuer in a jurisdiction of Canada for the four months immediately preceding the trade; (ii) the trade is not a “control distribution” as defined in NI 45-102; (iii) no unusual effort is made to prepare the market or create a demand for those securities; (iv) no extraordinary commission or consideration is paid in respect of that trade; and (v) if the selling securityholder is an “insider” or “officer” of Charlotte’s Web (as such terms are defined by applicable Canadian securities Laws), the insider or officer has no reasonable grounds to believe that Charlotte’s Web is in default of applicable Canadian securities Laws. To the extent that a Shareholder resides in a non-Canadian jurisdiction, the Charlotte’s Web Common Shares received by the Shareholder may be subject to certain additional trading restrictions under applicable securities Laws of such jurisdiction. All Shareholders residing outside Canada are advised to consult their own legal advisors regarding such resale restrictions.

Status under Canadian Securities Laws

The Corporation is a reporting issuer (or its equivalent) in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland, and, accordingly, is subject to applicable securities Laws of such province. Subject to applicable Laws, promptly following completion of the Arrangement, Charlotte’s Web will apply to have the Corporation cease to be a reporting issuer under applicable Canadian securities Laws.

Charlotte’s Web is a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. Following completion of the Arrangement, Charlotte’s Web will remain a reporting issuer in such jurisdictions.

Multilateral Instrument 61-101

The Arrangement is subject to the requirements of MI 61-101. MI 61-101 regulates certain transactions to ensure equality of treatment among securityholders, generally requiring enhanced disclosure, approval by a majority of securityholders excluding “interested parties”, “related parties” or “joint actors”, independent valuations and, in certain instances, approval and oversight of the transaction by a special committee of independent directors. The protections of MI 61-101 apply to a reporting issuer proposing to carry out a “business combination” (as defined in MI 61-101) that terminates the interests of securityholders without their consent.

If the Arrangement constitutes a “business combination”, MI 61-101 requires that the Arrangement Resolution be approved by a majority of the minority of Shareholders. In determining minority approval for a business combination, the Corporation is required to exclude the votes attached to Abacus Shares that, to the knowledge of the Corporation and its directors and officers after reasonable inquiry, are beneficially owned or over which control or direction is exercised by all “interested parties” and their “related parties” and “joint actors” all as defined in MI 61-101. This approval is in addition to the requirement that the Arrangement Resolution must be approved by at least 66 % of the votes cast on the Arrangement Resolution by the Shareholders present in person or represented by proxy at the Meeting and entitled to vote thereat.

A transaction such as the Arrangement constitutes a “business combination” for purposes of MI 61-101 if, at the time the Arrangement is agreed to, a “related party” of the Corporation, such as a director or senior officer (as defined in

54

MI 61-101) or a holder of 10% or more of the voting rights attached to the Abacus Shares, is entitled to receive, as a consequence of the transaction, a “collateral benefit” (as defined in MI 61-101).

A “collateral benefit” is broadly defined for purposes of MI 61-101 and means, subject to certain specified exclusions set out below, any benefit that a related party of the issuer is entitled to receive, directly or indirectly, as a consequence of the transaction, including, without limitation, an increase in salary, a lump sum payment, a payment for surrendering securities or other enhancement in benefits related to past or future services as an employee, director or consultant of the issuer or of another person, regardless of the existence of any offsetting costs to the related party or whether the benefit is provided, or agreed to, by the issuer or another party to the transaction. The definition of “collateral benefit” contains certain exclusions. In that regard, a benefit received by a related party of the Corporation is not considered to be a collateral benefit if the benefit is received solely in connection with the related party’s services as an employee, director or consultant of the Corporation or an affiliated entity and: (i) the benefit is not conferred for the purpose, in whole or in part, of increasing the value of the consideration paid to the related party for securities relinquished under the Arrangement; (ii) the conferring of the benefit is not, by its terms, conditional on the related party supporting the Arrangement in any manner; (iii) full particulars of the benefit are disclosed in this Information Circular; and (iv) either (A) at the time the Arrangement was agreed to, the related party and its associated entities beneficially own or exercise control or direction over less than 1% of each class of the outstanding Abacus Shares, or (B) (x) if the transaction is a “business combination”, the related party discloses to an independent committee of the Corporation the amount of consideration that the related party expects it will be beneficially entitled to receive, under the terms of the Arrangement, in exchange for equity securities beneficially owned by the related party, (y) the independent committee, acting in good faith, determines that the value of the benefit, net of any offsetting costs to the related party, is less than 5% of the value referred to in (x), and (z) the independent committee’s determination is disclosed in this Information Circular.

Concurrently with the entering into of the Arrangement Agreement, Charlotte’s Web has entered into the New Employment Agreement with Perry Antelman, the Chief Executive Officer of the Corporation. The increase in salary and other enhancement in benefits under the New Employment Agreement may be considered a “collateral benefit” received by Perry Antelman for the purposes of MI 61-101. As a result of the New Employment Agreement, the annual base salary of Perry Antelman will increase from US$280,000 to US$425,000, and he may be entitled to other enhancement in benefits, including a potential increase of his annual cash bonus and grant of equity-based awards.

Perry Antelman beneficially owns, or exercises control or direction over, more than 1% of the outstanding Proportionate Voting Shares (and more than 1% of the Subordinate Voting Shares assuming the conversion of all Proportionate Voting Shares). Since Perry Antelman is a “related party” of Abacus and is receiving a “collateral benefit”, the Arrangement constitutes a “business combination” for purposes of MI 61-101. Perry Antelman is also classified as an “interested party” for purposes of MI 61-101 and therefore, the Abacus Shares held by Mr. Antelman or under the control or direction of Mr. Antelman (including “related parties” and “joint actors” of Mr. Antelman, being his spouse, Tamara Kesselman (together with Mr. Antelman, the “Interested Parties”)) will not be counted for purposes of the tabulation of the “minority approval” of the Arrangement Resolution.

To the knowledge of Abacus, other than Perry Antelman, no related party of Abacus, within the meaning of MI 61 101, together with its associated entities, beneficially owns or exercises control or direction over 1% or more of the outstanding Subordinate Voting Shares or Proportionate Voting Shares, except for related parties who will not receive a “collateral benefit”, within the meaning of MI 61 101, as a consequence of the transactions contemplated by the Arrangement Agreement.

Minority Approval Requirements

As a result of the foregoing analysis, the “minority approval” requirements of MI 61-101 will apply in connection with the Arrangement and, in addition to obtaining approval of the Arrangement Resolution of at least 66 % of the votes cast by Shareholders present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting as a single class, approval will also be sought by a simple majority of the votes cast by the holders of Subordinate Voting Shares and Proportionate Voting Shares present in person or virtually or represented by proxy and entitled to vote at the Meeting, voting together as a single class, excluding the votes of the “interested parties”, “related parties of interested parties” and their “joint actors” whose votes may not be included in determining “minority approval” of a “business combination” under MI 61-101. The table below sets forth the votes of Interested Parties (or related parties of Interested Parties and joint actors) excluded for purposes of determining “minority approval” in

55

accordance with MI 61-101, which represent in aggregate 8.4% of the voting rights attached to the Abacus Shares as of the Record Date.

Abacus Shares Excluded from Voting

Name Subordinate Voting Shares Proportionate Voting Shares

Perry Antelman, Chair of the Board and Chief Executive Officer of the Corporation

– 9,292.97

Tamara Kesselman, spouse of Perry Antelman – 8,865.83

Pursuant to an application made to the Ontario Securities Commission, as principal regulator, Abacus obtained an order from the Ontario Securities Commission dated April 27, 2020 exempting Abacus from the requirements in subsection 8.1(1) of MI 61-101 to obtain minority approval for the Arrangement from the holders of every class of affected securities of Abacus voting separately as a class, and requiring instead that minority approval be obtained from all holders of Abacus Shares, excluding the votes attached to Abacus Shares beneficially owned, or over which control or direction is exercised, by any party specified in subsection 8.1(2) of MI 61-101, voting together as a single class. Accordingly, the holders of Subordinate Voting Shares and Proportionate Voting Shares will vote together as a single class.

Formal Valuation Exemption

The securities of Abacus are not listed or quoted on a specified market for purposes of MI 61-101. Section 4.4(1)(a) of MI 61-101 provides for an exemption from the formal valuation requirement of MI 61-101 where an issuer’s securities are not listed or quoted on a specified market.

To the knowledge of the directors and officers of Abacus, after reasonable enquiry, there have been no prior valuations (as defined in MI 61-101) prepared in respect of Abacus within the 24 months preceding the date of this Information Circular.

Disclosure is also required for any bona fide prior offer for the Abacus Shares during the 24 months before entry into the Arrangement Agreement. There has not been any such offer during such 24 month period.

Certain U.S. Securities Law Matters

The following discussion is only a general overview of certain requirements of U.S. securities Laws that may be applicable to Shareholders, holders of Abacus Options, holders of Abacus SARs and holders of Abacus Warrants. All holders of such securities are urged to obtain legal advice to ensure that the resale or exercise, as applicable, of such securities complies with applicable U.S. securities Laws and to determine the U.S. conditions and restrictions applicable to trades in the Charlotte’s Web Common Shares issuable pursuant to the Arrangement or upon exercise of the Replacement Options and Replacement Warrants. Further information applicable to the holders of such securities resident in the United States is disclosed in this Information Circular under the heading “Notice to Shareholders in the United States”.

Exemption from 1933 Securities Act Registration

The Charlotte’s Web Common Shares, Replacement Options, Replacement SARs and Replacement Warrants to be issued to Shareholders, holders of Abacus Options, holders of Abacus SARs and holders of Abacus Warrants, respectively, under the Plan of Arrangement have not been and are not expected to be registered under the 1933 Securities Act or the securities Laws of any state of the United States and will be issued in reliance upon the Section 3(a)(10) Exemption and exemptions under applicable state securities laws in states in which U.S. Holders reside. The Section 3(a)(10) Exemption exempts from registration a security that is issued in exchange for outstanding securities, claims and other property interests where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all Persons to whom it is proposed to issue securities

56

in such exchange have the right to appear, by a court or by a governmental authority expressly authorized by Law to grant such approval. The Court issued the Interim Order on April 30, 2020, and, subject to the approval of the Arrangement by the Shareholders, a hearing for a Final Order approving the Arrangement is currently expected to take place on June 8, 2020 at 10:00 a.m. (EDT) in Toronto, Ontario. All Shareholders, holders of Abacus Options, holders of Abacus SARs and holders of Abacus Warrants are entitled to appear and be heard at this hearing, provided that they satisfy the applicable conditions set forth in the Interim Order. The Final Order of the Court will, if granted, constitute the basis for the Section 3(a)(10) Exemption with respect to the securities to be issued by Charlotte’s Web under the Arrangement.

The Section 3(a)(10) Exemption will not be available for the Charlotte’s Web Common Shares that are issuable upon exercise of the Replacement Options and the Replacement Warrants. Therefore, the Charlotte’s Web Common Shares issuable upon the exercise of the Replacement Options and Replacement Warrants will be “restricted securities” within the meaning of Rule 144 under the 1933 Securities Act, and may be issued only pursuant to an exemption from the registration requirements of the 1933 Securities Act and applicable state securities Laws or following registration under such Laws. Charlotte’s Web has no present intention to file a registration statement relating to the issuance of Charlotte’s Web Common Shares issuable upon exercise of the Replacement Options and Replacement Warrants and no assurance can be made that Charlotte’s Web will file or have taken effective steps to file, such registration statements in the future.

The Charlotte’s Web Common Shares to be issued under the Arrangement will be freely transferable under the 1933 Securities Act, except that the 1933 Securities Act imposes restrictions on the resale of Charlotte’s Web Common Shares received under the Arrangement by Persons who are, become after consummation of the Arrangement or within 90 days of the Effective Time have been, “affiliates” of Charlotte’s Web. As defined in Rule 144 under the 1933 Securities Act, an “affiliate” of an issuer is a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such issuer and may include certain officers and directors of such issuer as well as principal shareholders of such issuer. “Control” means the possession, direct or indirect, of the power to direct or cause direction of the management and policies of an issuer, whether through the ownership of voting securities, by contract or otherwise.

An “affiliate” of Charlotte’s Web is a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, Charlotte’s Web and may include certain executive officers and directors of Charlotte’s Web, as well as principal shareholders of Charlotte’s Web, directors or executive officers of Abacus who become directors or executive officers of Charlotte’s Web after the Arrangement, and any Person deemed to be an affiliate of Charlotte’s Web within 90 days before the closing of the Arrangement.

Any Shareholder who, after consummation of the Arrangement is an “affiliate” (as defined in Rule 144 under the 1933 Securities Act) of Charlotte’s Web or was, at any time during the 90 days immediately before the resale of any Charlotte’s Web Common Shares received under the Arrangement, an “affiliate” of Charlotte’s Web, may not resell such Charlotte’s Web Common Shares, unless such shares are registered under the 1933 Securities Act or an exemption from registration, such as the exemptions contained in Rule 144 and Rule 904 of Regulation S under the 1933 Securities Act, is available. This Information Circular does not cover resales of any Charlotte’s Web Common Shares received by any Person upon completion of the Arrangement, and no Person is authorized to make any use of this Information Circular in connection with any resale.

Affiliates – Rule 144

In general, under Rule 144, Persons that are affiliates of Charlotte’s Web after consummation of the Arrangement or were affiliates of Charlotte’s Web within the 90 days immediately before the resale of the Charlotte’s Web Common Shares received under the Arrangement will be entitled to sell such shares that they receive under the Arrangement in the United States, provided that the number of such shares sold, together with all other shares of the same class sold for their account during any three-month period, does not exceed the greater of one percent of the then outstanding securities of such class or, if such shares are listed on a U.S. securities exchange and/or reported through the automated quotation system of a U.S. registered securities association, the average weekly trading volume of such shares during the four calendar week period preceding the date of sale, subject to aggregation rules, specified restrictions on manner of sale, reporting requirements, and the availability of current public information about the relevant issuer. Persons that are affiliates of Charlotte’s Web after the closing of the Arrangement will continue to be subject to the resale

57

restrictions described in this paragraph for so long as they continue to be affiliates of Charlotte’s Web, and for 90 days thereafter.

Affiliates – Regulation S

In general, pursuant to Rule 904 of Regulation S under the 1933 Securities Act, Persons who are affiliates of Charlotte’s Web solely by virtue of their status as an officer or director of such company may sell Charlotte’s Web Common Shares outside the United States in an “offshore transaction” (which would include a sale through the TSX, if applicable) if neither the seller nor any Person acting on its behalf engages in “directed selling efforts” in the United States and no selling commission, fee or other remuneration is paid in connection with such sale other than a usual and customary broker’s commission. For purposes of Regulation S, “directed selling efforts” means, “any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for any of the securities being offered” in the sale transaction. Pursuant to Rule 903 of Regulation S, certain additional restrictions are applicable to a holder of Charlotte’s Web Common Shares who is an affiliate of Charlotte’s Web after the Arrangement other than solely by virtue of his or her status as an officer or director of Charlotte’s Web.

Exercise of Replacement Options and Replacement Warrants, Vesting of Replacement SARs

The Section 3(a)(10) Exemption will not apply to the exercise in the U.S. of the Replacement Options and Replacement Warrants, or the vesting of the Replacement SARs, or the resale of any Charlotte’s Web Common Shares issuable thereunder. Any such exercises, vesting or resales must be made pursuant to another available exemption under the 1933 Securities Act and applicable state securities laws.

Summary of Arrangement Agreement

General

The Arrangement will be effected pursuant to the Arrangement Agreement. The Arrangement Agreement contains, among other things, covenants, representations and warranties of and from each of the Corporation and Charlotte’s Web and various conditions precedent, both mutual and with respect to the Corporation and Charlotte’s Web. Unless all of such conditions are satisfied or waived by the Party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Arrangement will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all.

The following description of certain provisions of the Arrangement Agreement is a summary only, is not comprehensive and is qualified in its entirety by reference to the full text of the Arrangement Agreement, which is available under the Corporation’s profile on SEDAR at www.sedar.com.

Conditions Precedent to the Arrangement

Mutual Conditions Precedent

The obligations of the Parties to complete the Arrangement are subject to the fulfilment of each of the following conditions precedent on or before the Effective Time, each of which may only be waived with the mutual consent of the Parties: (a) the Arrangement Resolution will have been approved and adopted by the Shareholders entitled to vote thereon at the Meeting in accordance with the Interim Order; (b) the Interim Order and the Final Order will have each been obtained on terms consistent with the Arrangement Agreement and have not been set aside or modified in a manner unacceptable to either the Corporation or Charlotte’s Web, each acting reasonably, on appeal or otherwise; (c) no court or other Governmental Entity of competent jurisdiction will have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the Arrangement; (d) Consideration Shares, Replacement Options, Replacement SARs and Replacement Warrants to be issued pursuant to the Arrangement shall be exempt from the registration requirements of the 1933 Securities Act pursuant to section 3(a)(10) thereof and pursuant to exemptions from applicable state securities laws; and (e) each of the Required Regulatory Approvals will have been obtained or received on terms that are reasonably satisfactory to Charlotte’s Web and the Corporation, each acting reasonably, and each such Required Regulatory Approvals shall be in force.

58

Conditions Precedent to the Obligations of the Corporation

The Corporation is not required to complete the Arrangement unless each of the following conditions is satisfied or waived by the Corporation on or prior to the Effective Time:

(a) The representations and warranties of Charlotte’s Web set forth in: Section (1) (Organization, Good Standing and Qualification), Section (2) (Capital Structure), Section 3 (Corporate Authority; Approval) and Section (4) (Issuance of Consideration Shares under the Arrangement) of Schedule D to the Arrangement Agreement shall be true and correct as of the Effective Time, in all material respects (except for de minimis inaccuracies), and all other representations and warranties of Charlotte’s Web set forth in the Arrangement Agreement shall be true and correct as of the Effective Time in all respects, except where any failure or failures of such representations and warranties to be true and correct at such time would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect in respect of Charlotte’s Web (disregarding any materiality or Material Adverse Effect qualification contained in any such representation and warranty for the purpose of determining whether any such failure or failures would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect in respect of Charlotte’s Web), in each case as though made on and as of such date and time (except to the extent that any of such representations and warranties expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), and Charlotte’s Web shall have delivered a certificate confirming same to the Corporation, executed by two officers or directors of Charlotte’s Web (in each case without personal liability), dated the Effective Date.

(b) Charlotte’s Web shall have complied with Section 2.9 (Payment of Consideration) of the Arrangement Agreement and shall have fulfilled or complied with all other covenants in all material respects contained in the Arrangement Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and Charlotte’s Web shall have delivered a certificate confirming same to the Corporation, executed by two officers or directors of Charlotte’s Web (in each case without personal liability), dated the Effective Date.

(c) Since March 22, 2020, there shall not have occurred a Material Adverse Effect in respect of Charlotte’s Web that is continuing.

Conditions Precedent to the Obligations of Charlotte’s Web

Charlotte’s Web is not required to complete the Arrangement unless each of the following conditions is satisfied or waived by Charlotte’s Web on or prior to the Effective Time:

(a) The representations and warranties of the Corporation set forth in: Section (1) (Organization, Good Standing and Qualification), Section (2) (Capital Structure) and Section (3) (Corporate Authority; Approval) of Schedule C to the Arrangement Agreement shall be true and correct as of the Effective Time, in all respects (except for de minimis inaccuracies), and all other representations and warranties of the Corporation set forth in the Arrangement Agreement shall be true and correct as of the Effective Time in all respects, except where any failure or failures of such representations and warranties to be true and correct at such time would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect in respect of the Corporation (disregarding any materiality or Material Adverse Effect qualification contained in any such representation and warranty for the purpose of determining whether any such failure or failures would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect in respect of the Corporation), in each case as though made on and as of such date and time (except to the extent that any of such representations and warranties expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), and the Corporation shall have delivered a certificate confirming same to Charlotte’s Web, executed by two officers or directors of the Corporation (in each case without personal liability), dated the Effective Date.

(b) The Corporation shall have fulfilled or complied in all material respects with all of the covenants of the Corporation contained in the Arrangement Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and the Corporation shall have delivered a certificate confirming same to Charlotte’s Web, executed by two officers or directors of the Corporation (in each case without personal liability), dated the Effective Date.

59

(c) Dissent Rights shall not have been exercised with respect to Abacus Shares representing in aggregate more than 5% of votes attached to the issued and outstanding Abacus Shares.

(d) There shall not have been any action or proceeding commenced by any Person (including any Governmental Entity) in any jurisdiction seeking to prohibit or restrict the Arrangement or the ownership or operation by Charlotte’s Web of the business or assets of the Corporation or any of its Subsidiaries, or which seeks to compel Charlotte’s Web to dispose of any material portion of the business or assets of Charlotte’s Web, the Corporation or any of its Subsidiaries as a result of the Arrangement.

(e) Charlotte’s Web shall have received resignations from each director of the Corporation and its Subsidiaries as of the Effective Date, against receipt by such Persons of commercially reasonable releases from the Corporation and acceptable to Charlotte’s Web, acting reasonably.

(f) Since March 22, 2020, there shall not have occurred a Material Adverse Effect in respect of the Corporation that is continuing.

(g) Perry Antelman shall have resigned or otherwise ceased to be an officer (including an executive chair), employee or consultant, either directly or indirectly, of Aidance Scientific, Inc. and any Subsidiary thereof prior to the Effective Time. For greater certainty, Perry Antelman shall not be required to resign as a director or a chair of the board of directors of Aidance Scientific, Inc.

(h) The New Employment Agreement shall not have been amended, modified, altered or replaced in any respect, and no commitment shall have been made to do any of the foregoing, and Perry Antelman shall until the New Employment Agreement becomes effective as of the Effective Time continue to be employed by Abacus U.S. on the same terms as his existing employment agreement dated January 31, 2019.

(i) The Aidance Agreements shall have remained in full force and effect as of the Effective Time, and such Aidance Agreements shall not have been amended, modified, altered or replaced in any respect, and no commitment shall have been made to do any of the foregoing.

Representations and Warranties

The Arrangement Agreement contains customary representations and warranties made by each of the Corporation and Charlotte’s Web. The statements included in those representations and warranties are solely for the purposes of the Arrangement Agreement and do not survive the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which the Arrangement Agreement is terminated in accordance with its terms. Certain representations and warranties may not be accurate or complete as of any specified date because they are qualified by certain disclosure provided by the Corporation to Charlotte’s Web or are subject to a standard of materiality or are qualified by a reference to Material Adverse Effect. Therefore, Shareholders should not rely on the representations and warranties as statements of fact.

The Arrangement Agreement contains customary representations and warranties of the Corporation relating to: (a) organization, good standing and qualification; (b) capital structure; (c) corporate authority and approval; (d) Required Regulatory Approvals; (e) governmental filings and no violations; (f) securities Laws; (g) U.S. securities Laws; (h) public disclosure record; (i) financial statements; (j) suppliers and distributors; (k) restrictions on business activities; (l) absence of certain changes; (m) litigation and liabilities; (n) employees; (o) employee benefits; (p) labour matters; (q) compliance with Laws and licenses; (r) privacy Laws; (s) products and inventories; (t) material contracts; (u) real and personal property; (v) leased property; (w) sufficiency of assets; (x) no hedging; (y) environmental matters; (z) taxes; (aa) insurance, (bb) intellectual property; (cc) related party transactions; (dd) brokers and finders; (ee) opinion of Greenhill; (ff) anti-corruption; and (gg) minute books.

Additionally, the Arrangement Agreement also contains customary representations and warranties of Charlotte’s Web relating to: (a) organization, good standing and qualification; (b) capital structure; (c) corporate authority and approval; (d) issuance of Consideration Shares under the Arrangement; (e) governmental filings and no violations; (f) securities Laws; (g) U.S. securities Laws; (h) Charlotte’s Web public record; (i) financial statements; (j) internal controls and financial reporting; (k) compliance with Laws; (l) litigation; (m) restrictions on business activities; (n) brokers and finders; and (o) taxes.

60

Covenants in Respect of the Conduct of Business

Conduct of Business by the Corporation

The Corporation has agreed to certain customary negative and affirmative covenants relating to the operation of its business (including the business of its Subsidiaries) during the period from the date of the Arrangement Agreement until the earlier of the Effective Time and the time that the Arrangement Agreement is terminated in accordance with its terms, including that the Corporation shall, and shall cause each of its Subsidiaries to, conduct its and their respective businesses only in, and maintain their respective facilities in, the Ordinary Course and use commercially reasonable efforts to preserve intact its and their respective business organizations, assets, properties, rights, goodwill and business relationships and keep available the services of its and their respective officers and employees as a group.

Shareholders should refer to the Arrangement Agreement for details regarding the additional negative and affirmative covenants given by the Corporation in relation to the conduct of its business prior to the Effective Time.

Conduct of Business by Charlotte’s Web

Charlotte’s Web has agreed to certain customary negative and affirmative covenants relating to the operation of its business (including the business of its Subsidiaries) during the period from the date of the Arrangement Agreement until the earlier of the Effective Time and the time that the Arrangement Agreement is terminated in accordance with its terms, including that Charlotte’s Web shall, and shall cause each of its Subsidiaries to, conduct its and their respective businesses only in the Ordinary Course and use commercially reasonable efforts to preserve intact its and their respective business organizations, assets, properties, rights, goodwill and business relationships and keep available the services of its and their respective officers and employees as a group.

Shareholders should refer to the Arrangement Agreement for details regarding the additional negative and affirmative covenants given by Charlotte’s Web in relation to the conduct of its business prior to the Effective Time.

Non-Solicitation

Under the Arrangement Agreement, the Corporation has agreed to: (i) immediately cease and cause to be terminated any activities, discussions or negotiations that may be ongoing with respect to an Acquisition Proposal, including terminating all access to documents and information regarding the Corporation and/or its Subsidiaries, including through a data room; (ii) promptly request each Person that has executed a confidentiality agreement in connection with its consideration of acquiring all or part of the Corporation, any of its Subsidiaries or a portion of their respective assets other than in the Ordinary Course sale of inventory, return or destroy all non-public information heretofore furnished to such Person by or on behalf of it or any of its Subsidiaries; and (iii) enforce and not waive (and cause its Subsidiaries to enforce and not waive) the terms of any such confidentiality agreement and any standstill agreement to which it (or any of its Subsidiaries) is a party relating to an actual or potential Acquisition Proposal. Except as permitted under the Arrangement Agreement, until the Effective Time or, if earlier, the termination of the Arrangement Agreement, the Corporation will not, and the Corporation will cause its Representatives, its Subsidiaries and its Subsidiaries’ respective Representatives not to, directly or indirectly:

(a) solicit, initiate, knowingly encourage or otherwise facilitate (including by way of furnishing any non-public information) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;

(b) engage or participate in any discussions or negotiations with any Person (other than Charlotte’s Web) regarding any Acquisition Proposal; provided however, that the Corporation may ascertain facts from the Person making such Acquisition Proposal for the sole purpose of the Board informing itself about such Acquisition Proposal and the Person that made it;

(c) (i) withhold, withdraw, modify or qualify, or publicly propose to withhold, withdraw, modify or qualify, the Board Recommendation; (ii) make, or permit any Representative of the Corporation or any of its Subsidiaries to make, any public statement in connection with the Meeting by or on behalf of the Board that would reasonably be expected to have the same effect; or (iii) accept, approve, endorse or recommend, or publicly

61

propose to accept, approve, endorse or recommend, any Acquisition Proposal (the actions in this clause (c), an “Adverse Recommendation Change”);

(d) accept, approve, endorse, recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain neutral with respect to, any publicly disclosed or publicly announced Acquisition Proposal (it being understood that taking no position with respect to a publicly disclosed or publicly announced Acquisition Proposal for a period of no more than five (5) Business Days following the formal announcement of such Acquisition Proposal will not be considered to be in violation of the Arrangement Agreement provided the Board has rejected such Acquisition Proposal and affirmed the Board Recommendation before the end of such five (5) Business Day period); or

(e) accept, approve, endorse, recommend or enter into or publicly propose to accept approve, endorse, recommend or enter into, any agreement, any letter of intent, understanding, agreement or arrangement (other than a confidentiality agreement entered into in compliance with the terms of the Arrangement Agreement) relating to an Acquisition Proposal (an “Alternative Transaction Agreement”).

Responding to an Acquisition Proposal

If at any time prior to obtaining the approval of the Arrangement Resolution, the Corporation receives from a Person a bona fide written Acquisition Proposal that was not, directly or indirectly, solicited, initiated, knowingly encouraged or otherwise facilitated in violation of the Arrangement Agreement, the Corporation may, in response to such Acquisition Proposal: (i) furnish information with respect to the Corporation in response to a request therefor by such Person; and (ii) engage in or participate in discussions or negotiations with such Person regarding such Acquisition Proposal, if and only if:

(a) the Corporation notifies Charlotte’s Web of such Acquisition Proposal;

(b) prior to the taking of any such action, the Board determines in good faith, after consultation with its financial advisors and its outside legal counsel, that such Acquisition Proposal constitutes or could reasonably be expected to lead to a Superior Proposal; and

(c) prior to providing any such information, the Corporation enters into a confidentiality agreement with such Person that will include a customary standstill provision, and that is otherwise on terms and conditions no less onerous or more beneficial to such Person than those set forth in the Confidentiality Agreement (including for the purpose of the standstill provision in the letter of intent), provided that such agreement need not prohibit the making or amendment of any Acquisition Proposal and may not include provisions granting such Person an exclusive right to negotiate with the Corporation.

Adverse Recommendation Change and Alternative Transaction Agreement

At any time prior to obtaining the approval of the Arrangement Resolution, the Board may, in response to a bona fide written Acquisition Proposal that was not directly or indirectly, solicited, initiated, knowingly encouraged or otherwise facilitated in violation of the Arrangement Agreement, effect an Adverse Recommendation Change or enter into an Alternative Transaction Agreement, if and only if:

(a) the Corporation has complied in all material respects with its obligations under the Arrangement Agreement;

(b) the Board determines in good faith, after consultation with its financial advisors and its outside legal counsel, that such Acquisition Proposal is a Superior Proposal;

(c) the Corporation provides Charlotte’s Web with written notice of its intention to take such action (a “Superior Proposal Notice”) (it being agreed that the delivery of a Superior Proposal Notice will not constitute an Adverse Recommendation Change unless and until the Corporation will have failed at or prior to the end of the Matching Period to publicly announce that it: (A) is recommending the Arrangement and that Shareholders vote for the Arrangement; and (B) has determined that such other Acquisition Proposal (taking into account: (x) any modifications or adjustments made to the Arrangement and the Arrangement Agreement

62

agreed to by Charlotte’s Web in writing; and (y) any modifications or adjustments made to such other Acquisition Proposal) is not a Superior Proposal and has publicly rejected such Acquisition Proposal);

(d) during the Matching Period, the Board and the Corporation’s Representatives have negotiated in good faith with Charlotte’s Web (to the extent Charlotte’s Web desires to negotiate) regarding any revisions to the terms of the Arrangement and the Arrangement Agreement proposed by Charlotte’s Web in response to such Acquisition Proposal;

(e) at the end of the Matching Period, the Board determines in good faith, after consultation with its financial advisors and its outside legal counsel (and taking into account any amendment or modification to the terms of the Arrangement Agreement or the Arrangement that Charlotte’s Web has agreed in writing to make), that such Acquisition Proposal constitutes a Superior Proposal, and that the failure to take such action would be inconsistent with its fiduciary duties under Law; and

(f) prior to or concurrently with taking any such action, the Corporation terminates the Arrangement Agreement.

During the Matching Period, Charlotte’s Web will have the opportunity, but not the obligation, to offer to amend the terms of the Arrangement and the Arrangement Agreement, and the Corporation will cooperate with Charlotte’s Web with respect thereto, including meeting and negotiating in good faith with Charlotte’s Web to enable Charlotte’s Web to make such adjustments to the terms and conditions of the Arrangement Agreement and the Arrangement as Charlotte’s Web deems appropriate and as would permit Charlotte’s Web to proceed with the Arrangement and any related transactions on such adjusted terms. The Board will review any such offer by Charlotte’s Web to amend the terms of the Arrangement and the Arrangement Agreement in order to determine, after consultation with its outside legal counsel and financial advisors, whether Charlotte’s Web’s offer to amend the Arrangement and the Arrangement Agreement, upon its acceptance, would result in the applicable Acquisition Proposal ceasing to be a Superior Proposal when assessed against the Arrangement as it is proposed to be amended as at the termination of the Matching Period. If the Board so determines that the applicable Acquisition Proposal would cease to be a Superior Proposal when assessed against the Arrangement as it is proposed to be amended as at the termination of the Matching Period, Charlotte’s Web will amend the terms of the Arrangement and the Corporation and Charlotte’s Web will enter into an amendment to the Arrangement Agreement reflecting the offer by Charlotte’s Web to amend the terms of the Arrangement and the Arrangement Agreement, and will take and cause to be taken all such actions as are necessary to give effect to the foregoing.

The Board will promptly reaffirm its Board Recommendation by press release after: (i) any Acquisition Proposal is publicly announced or made and the Board determines it is not a Superior Proposal; (ii) the Board determines that a proposed amendment to the terms of the Arrangement would result in an Acquisition Proposal not being a Superior Proposal when assessed against the Arrangement as it is proposed to be amended as at the termination of the Matching Period, and Charlotte’s Web has so amended the terms of the Arrangement; or (iii) Charlotte’s Web, acting reasonably, requests reaffirmation of such Board Recommendation by the Board. Charlotte’s Web will be given a reasonable opportunity to review and comment on the form and content of any such press release.

Any material amendment or modification to any such Acquisition Proposal will require a new Superior Proposal Notice and Charlotte’s Web will be afforded a new Matching Period (except that references to the five (5) Business Day period in the definition of Matching Period will be deemed to be references to a three (3) Business Day period; provided however, that such new Matching Period will in no event shorten the original Matching Period).

Notification of Acquisition Proposals; Certain Disclosure; Subsidiaries and Representatives

If the Corporation or any of its Subsidiaries or any of their respective Representatives receives or otherwise becomes aware of any inquiry, proposal or offer that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal, or any request for non-public information relating to the Corporation or any Subsidiary (other than requests for information in the Ordinary Course consistent with past practice and unrelated to an Acquisition Proposal) or for discussions or negotiations regarding any Acquisition Proposal, the Corporation will promptly (and in any event within 48 hours) notify Charlotte’s Web orally and in writing of such Acquisition Proposal, inquiry, proposal, offer or request, and the identity of all Persons making the Acquisition Proposal, inquiry, proposal, offer or request, and will provide to Charlotte’s Web a reasonably detailed written description thereof. The Corporation will keep Charlotte’s Web reasonably informed (orally and in writing) on a current basis (and in any event at Charlotte’s Web’s request and

63

otherwise no later than 24 hours after the occurrence of any modifications, developments, discussions and negotiations) of the status of any such Acquisition Proposal, inquiry, proposal, offer or request (including the terms and conditions thereof and any modification thereto), and any developments, discussions and negotiations with respect thereto, including furnishing copies of all correspondence and reasonably detailed written summaries of any material inquiries or discussions.

Nothing contained in the Arrangement Agreement will prevent the Board from: (i) complying with Section 2.17 of National Instrument 62-104 – Takeover Bids and Issuer Bids and similar provisions under applicable Canadian securities Laws relating to the provision of a directors’ circular in respect of an Acquisition Proposal; (ii) making any disclosure to the Securityholders, if the Board determines in good faith, after consultation with its outside legal counsel, that the failure to make such disclosure would be inconsistent with its duties to Securityholders under applicable Law (for the avoidance of doubt, it being agreed that the issuance by the Corporation of a “stop, look and listen” statement pending disclosure of its position shall not constitute an Adverse Recommendation Change), or would violate applicable Laws; or (iii) making accurate disclosure to the Securityholders of factual information regarding the business, financial condition or results of operations of the Corporation; or (iv) making any other statements by or on behalf of the Board which would not reasonably be expected to have a similar effect as an Adverse Recommendation Change.

Termination and Amendment of Arrangement Agreement

Termination

The Arrangement Agreement may be terminated prior to the Effective Time by:

(a) the mutual written agreement of the Parties;

(b) either the Corporation or Charlotte’s Web, if:

(i) the Arrangement Resolution is not approved by the Shareholders entitled to vote thereon at the Meeting in accordance with the Interim Order; provided however, that a Party may not terminate the Arrangement Agreement if the failure of such approval to be obtained was primarily caused by, or is a result of, a breach by such Party of any of its obligations under the Arrangement Agreement;

(ii) any court or other Governmental Entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered any final and non-appealable Order; provided however, that a Party may not terminate the Arrangement Agreement if such Order was primarily caused by, or is a result of, a breach by such Party of any of its obligations under the Arrangement Agreement;

(iii) the Effective Time does not occur on or prior to the Outside Date; provided however, that a Party may not terminate the Arrangement Agreement if the failure of the Effective Time to so occur was primarily caused by, or is a result of, a breach by such Party of any of its obligations under the Arrangement Agreement; or

(iv) (A) prior to the approval of the Arrangement Resolution at the Meeting, the Board has effected an Adverse Recommendation Change, or (B) the Corporation has breached Article 5 of the Arrangement Agreement in any material respect and such breach is a consequence of an act undertaken by the breaching party with the actual knowledge that the taking of such act would be reasonably expected to cause a breach of the Arrangement Agreement;

(c) by the Corporation, if:

(i) Charlotte’s Web will have breached any representation or warranty or failed to perform any covenant or other agreement in the Arrangement Agreement, which breach or failure to perform: (A) is incapable of being cured by Charlotte’s Web prior to the Outside Date or otherwise is not cured by the earlier of (x) twenty (20) Business Days following written notice by the Corporation to Charlotte’s Web of such breach, and (y) the Outside Date; and (B) would cause any condition in Section 6.3(1) (Representations and Warranties) or Section 6.3(2) (Performance of Covenants) of the Arrangement Agreement not to be satisfied; provided however, that the Corporation is not then

64

in breach of the Arrangement Agreement or has not failed to perform any covenant or other agreement in the Arrangement Agreement so as to cause any condition in Section 6.2(1) (Representations and Warranties) or Section 6.2(2) (Performance of Covenants) of the Arrangement Agreement not to be satisfied;

(ii) prior to the approval of the Arrangement Resolution, in order to enter into an Alternative Transaction Agreement with respect to a Superior Proposal; provided however, that the Corporation has complied with its obligations under Article 5 of the Arrangement Agreement and the Corporation pays the Termination Fee; or

(iii) there has occurred a Material Adverse Effect with respect to Charlotte’s Web;

(d) by Charlotte’s Web, if:

(i) the Corporation will have breached any representation or warranty or failed to perform any covenant or agreement in the Arrangement Agreement, which breach or failure to perform: (A) is incapable of being cured by the Corporation prior the Outside Date or otherwise is not cured by the earlier of (x) twenty (20) Business Days following written notice by the Corporation to Charlotte’s Web of such breach, and (y) the Outside Date; and (B) would cause any condition in Section 6.2(1) (Representations and Warranties) or Section 6.2(2) (Performance of Covenants) of the Arrangement Agreement not to be satisfied; provided however, that Charlotte’s Web is not then in breach of the Arrangement Agreement or has not failed to perform any covenant or other agreement in the Arrangement Agreement so as to cause any condition in Section 6.3(1) (Representations and Warranties) or Section 6.3(2) (Performance of Covenants) of the Arrangement Agreement not to be satisfied; or

(ii) there has occurred a Material Adverse Effect with respect to the Corporation.

Amendment

The Arrangement Agreement and the Plan of Arrangement may, at any time and from time to time before or after the holding of the Meeting but not later than the Effective Time, be modified or amended by mutual written agreement, executed and delivered by duly authorized officers of the respective Parties, without further notice to or authorization on the part of the Shareholders, and any such modification or amendment may, subject to the Interim Order, Final Order and Law, without limitation:

(a) change the time for performance of any of the obligations or acts of the Parties;

(b) modify any representation or warranty contained in the Arrangement Agreement or in any document delivered pursuant to the Arrangement Agreement;

(c) modify any of the covenants contained in the Arrangement Agreement and modify performance of any of the obligations of the Parties; and/or

(d) modify any mutual conditions contained in the Arrangement Agreement,

provided that such modification or amendment does not invalidate the approval of the Arrangement Resolution by the Shareholders.

Termination Fees

Despite any other provision in the Arrangement Agreement relating to the payment of fees and expenses, including the payment of brokerage fees, if a Termination Fee Event (as defined below) occurs, the Corporation will pay Charlotte’s Web the Termination Fee, as liquidated damages. For the avoidance of doubt, the Corporation shall not be required to pay the Termination Fee more than once.

65

The Termination Fee is payable by the Corporation to Charlotte’s Web in the event that:

(a) the Arrangement Agreement is terminated by the applicable Party if: (i) prior to the approval of the Arrangement Resolution at the Meeting, for the reason that the Board has effected an Adverse Recommendation Change, or (ii) the Corporation has breached the non-solicitation covenants set out in the Arrangement Agreement in any material respect and such breach is a consequence of an act undertaken by the Corporation with the actual knowledge that the taking of such act would be reasonably expected to cause a breach of the Arrangement Agreement;

(b) the Arrangement Agreement is terminated by the Corporation prior to the approval of the Arrangement Resolution, in order to enter into an Alternative Transaction Agreement with respect to a Superior Proposal;

(c) the Arrangement Agreement is terminated by the applicable Party for the reason that (i) the Arrangement Resolution is not approved by the Shareholders entitled to vote thereon at the Meeting in accordance with the Interim Order; (ii) the Effective Time does not occur on or prior to the Outside Date; (iii) the Corporation will have breached any representation or warranty or failed to perform any covenant or agreement in the Arrangement Agreement, which breach or failure to perform: (1) is incapable of being cured by the Corporation prior the Outside Date or otherwise is not cured by the earlier of (A) twenty (20) Business Days following written notice by the Corporation to Charlotte’s Web of such breach, and (B) the Outside Date; and (2) would cause certain representations and warranties of Charlotte’s Web or certain of its covenants not to be satisfied, if:

(i) prior to the date of termination, an Acquisition Proposal has been publicly announced or otherwise communicated to the Board, the Corporation, any of its Subsidiaries or their respective Representatives; and

(ii) within 12 months following the date of such termination: (A) a transaction in respect of any Acquisition Proposal is consummated or effected; or (B) the Corporation or any of its Subsidiaries enters into a definitive agreement in respect of any Acquisition Proposal and such Acquisition Proposal is later consummated or effected;

(collectively, the “Termination Fee Events”)

If a Termination Fee Event occurs, the Termination Fee will be paid prior to or concurrently with such Termination Fee Event.

Any Termination Fee will be paid by the Corporation to Charlotte’s Web, by wire transfer in immediately available funds to an account designated by Charlotte’s Web.

The payment of the Termination Fee in the manner provided in the Arrangement Agreement, if applicable, is the sole remedy of Charlotte’s Web in respect of the termination of the Arrangement Agreement as a result of a Termination Fee Event.

Expenses

All costs, expenses and fees (including out-of-pocket third party transaction expenses) incurred in connection with the Arrangement Agreement, the Plan of Arrangement and the Arrangement, including all costs, expenses and fees of the Corporation incurred prior to or after the Effective Time in connection with, or incidental to, the Plan of Arrangement, will be paid by the Party incurring such costs, expenses and fees whether or not the Arrangement is consummated.

If the Arrangement Agreement is terminated by Charlotte’s Web as a result of a breach by the Corporation of any representation or warranty which entitles Charlotte’s Web to terminate the Arrangement Agreement, or as a result of a breach by the Corporation of a covenant which entitles Charlotte’s Web to terminate the Arrangement Agreement, and subject to certain conditions, the Corporation shall, within two (2) Business Days of such termination, pay or cause to be paid to Charlotte’s Web the Expense Reimbursement Fee.

66

If the Arrangement Agreement is terminated by the Corporation as a result of a breach by Charlotte’s Web of any representation or warranty which entitles the Corporation to terminate the Arrangement Agreement, or as a result of a breach by Charlotte’s Web of a covenant which entitles the Corporation to terminate the Arrangement Agreement, and subject to certain conditions, Charlotte’s Web shall, within two (2) Business Days of such termination, pay or cause to be paid to the Corporation the Expense Reimbursement Fee.

Covenants

The Arrangement Agreement contains customary covenants of the Corporation and Charlotte’s Web.

Covenants of the Corporation relating to the Arrangement

The Corporation will perform, and will cause its Subsidiaries to perform, all obligations required to be performed by each of them under the Arrangement Agreement, cooperate with Charlotte’s Web in connection therewith, and will do all such other commercially reasonable acts and things as may be necessary in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated in the Arrangement Agreement and, without limiting the generality of the foregoing, the Corporation will and, where appropriate, will cause its Subsidiaries to:

(a) promptly advise Charlotte’s Web in writing of any event, change or development that has resulted in, or that to the Corporation’s knowledge would have, a Material Adverse Effect in respect of the Corporation;

(b) promptly advise Charlotte’s Web in writing of any material Action commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Corporation, its Subsidiaries or its or their respective assets;

(c) use commercially reasonable efforts to obtain all other third Person consents, waivers, Permits, Licenses, exemptions, orders, approvals, agreements, amendments and modifications to Contracts that are necessary to permit or otherwise required in connection with the consummation of the Arrangement; and

(d) use commercially reasonable efforts to, on prior written approval of Charlotte’s Web, oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or the Arrangement Agreement.

Covenants of Charlotte’s Web relating to the Arrangement

Charlotte’s Web will perform, and will cause its Subsidiaries to perform, all obligations required to be performed by each of them under the Arrangement Agreement, cooperate with the Corporation in connection therewith and do all such other commercially reasonable acts and things as may be necessary in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by the Arrangement Agreement and, without limiting the generality of the foregoing, Charlotte’s Web will and, where appropriate, will cause its Subsidiaries to:

(a) promptly advise the Corporation in writing of any event, change or development that has resulted in, or that to Charlotte’s Web’s knowledge would have, a Material Adverse Effect in respect of Charlotte’s Web;

(b) promptly advise the Corporation in writing of any material Action commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting Charlotte’s Web, its Subsidiaries or its or their respective assets;

(c) obtain any necessary approvals for the listing of the Consideration Shares and Charlotte’s Web Common Shares to be issued upon exercise of the Replacement Options and Replacement Warrants forming part of the Consideration following the Effective Date on the TSX;

(d) at or prior to the Effective Time, allot and reserve for issuance a sufficient number of Consideration Shares, and Charlotte’s Web Common Shares to be issued upon exercise of the Replacement Options and Replacement Warrants, to meet its obligations under the Plan of Arrangement; and

67

(e) oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or the Arrangement Agreement.

Covenants relating to Regulatory Approvals

The Parties will cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions and do or cause to be done all things reasonably necessary, proper or advisable on their part under the Arrangement Agreement and Law to consummate and make effective the Arrangement as soon as practicable, including, concurrently with the execution of the Arrangement Agreement or as soon as reasonably practicable thereafter, making such applications and submissions as may be required in order to obtain and maintain the Required Regulatory Approvals and such other Regulatory Approvals reasonably deemed by Charlotte’s Web to be necessary, acting reasonable, or otherwise advisable in connection with the Arrangement and the Arrangement Agreement.

The Parties will cooperate with one another in connection with obtaining the Regulatory Approvals (including the Required Regulatory Approvals) including by providing or submitting on a timely basis, and as promptly as practicable, all documentation and information that is required in connection with obtaining the Regulatory Approvals (including the Required Regulatory Approvals) and use their reasonable commercial efforts to ensure that such information does not contain a Misrepresentation; provided however, a Party will not be required to provide information that is not in its possession or not otherwise reasonably available to it.

The Parties will: (i) cooperate with and keep one another fully informed as to the status of and the processes and proceedings relating to obtaining the Regulatory Approvals (including the Required Regulatory Approvals) and will promptly notify each other of any communication from any Governmental Entity in respect of the Arrangement or the Arrangement Agreement; and (ii) respond, as soon as reasonably practicable, to any requests for information from a Governmental Entity in connection with obtaining the Required Regulatory Approvals.

Each Party will promptly notify the other Party if it becomes aware that any: (i) application, filing, document or other submission for the Required Regulatory Approvals contains a Misrepresentation; or (ii) Required Regulatory Approval contains, reflects or was obtained following the submission of any application, filing, document or other submission containing a Misrepresentation, such that an amendment or supplement may be necessary or advisable. In such case, the Parties will cooperate in the preparation, filing and dissemination, as applicable, of any such amendment or supplement.

The Parties will request that the Required Regulatory Approvals be processed by the applicable Governmental Entity on an expedited basis where possible and, to the extent that a public hearing is held, the Parties will request the earliest possible hearing date for the consideration of the Required Regulatory Approvals.

If any objections are asserted with respect to the Arrangement contemplated by the Arrangement Agreement under any Law, or if any proceeding is instituted or threatened by any Governmental Entity challenging or which could lead to a challenge of any of the Arrangement contemplated by the Arrangement Agreement as not in compliance with Law or as not satisfying any applicable legal text under a Law necessary to obtain the Required Regulatory Approvals, the Parties will use their reasonable commercial efforts consistent with the terms of the Arrangement Agreement to resolve such proceeding so as to allow the Effective Time to occur on or prior to the Outside Date.

Notwithstanding the foregoing, the Corporation will use its commercially reasonable efforts to obtain and maintain the Required Regulatory Approvals and will make or agree to any undertaking, agreement, or action required to obtain and maintain such Required Regulatory Approvals; provided however, that the Corporation will not be required to make or agree to any undertaking, agreement or action where such undertaking, agreement or action would have a substantial negative impact on, or impose a substantial negative burden on, the Corporation and its Subsidiaries, considered as a whole.

The Corporation will be responsible for and will pay or cause to be paid by the applicable Subsidiary any and all filing fees and applicable taxes payable to a Governmental Entity by any of the Corporation or its Subsidiaries in connection with any application, notification or filing in respect of any of the Regulatory Approvals to be obtained by the

68

Corporation or one of its Subsidiaries, provided however that Charlotte’s Web shall pay all filing fees and applicable taxes payable in respect of any Required Regulatory Approvals.

Covenants relating to Notice and Cure Provisions

Each Party shall promptly notify the other Party of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would, or would be reasonably likely to result in the failure to comply with or satisfy any closing condition to be complied with or satisfied by such Party under the Arrangement Agreement.

Notification provided under notice and cure provisions of the Arrangement Agreement will not affect the representations, warranties, covenants, agreements or obligations of the Parties (or remedies with respect thereto) or the conditions to the obligations of the Parties under the Arrangement Agreement.

Charlotte’s Web may not elect to exercise its right to terminate the Arrangement Agreement and the Corporation may not elect to exercise its right to terminate the Arrangement Agreement, unless the Party seeking to terminate the Arrangement Agreement (the “Terminating Party”) has delivered a written notice (“Termination Notice”) to the other Party (the “Breaching Party”) specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Terminating Party asserts as the basis for termination. After delivering a Termination Notice, provided the Breaching Party is proceeding diligently to cure such matter and such matter is capable of being cured prior to the Outside Date (with any intentional breach being deemed to be incurable), the Terminating Party may not exercise such termination right until the earlier of (a) the Outside Date, and (b) if such matter has not been cured by the date that is twenty (20) Business Days following receipt of such Termination Notice by the Breaching Party, such date. If the Terminating Party delivers a Termination Notice prior to the date of the Meeting, unless the Parties agree otherwise, the Corporation shall postpone or adjourn the Meeting to the earlier of (a) five (5) Business Days prior to the Outside Date and (b) the date that is ten (10) Business Days following receipt of such Termination Notice by the Breaching Party.

Covenants relating to Insurance and Indemnification

Under the Arrangement Agreement, the Corporation and Charlotte’s Web agreed that all rights to indemnification or exculpation now existing in favour of the present and former directors and officers of the Corporation or of any of its Subsidiaries or who acts as a fiduciary under any Abacus Plan (each such present or former director or officer of the Corporation or of any of its Subsidiaries or fiduciary being herein referred to as an “Indemnified Party” and such Persons collectively being referred to as the “Indemnified Parties”) as provided in the constating documents of the Corporation or any of its Subsidiaries in effect as of the date of the Arrangement Agreement or any Contract by which the Corporation or any of its Subsidiaries is bound and which is in effect as of the date hereof (including provisions relating to the advancement of expenses incurred in the defense of any action or suit), copies of which have been delivered to Charlotte’s Web, will survive the completion of the Plan of Arrangement and continue in full force and effect and without modification for a period of not less than six years from the Effective Time, with respect to actions or omissions of the Indemnified Parties occurring prior to the Effective Time.

Charlotte’s Web will, or will cause the Corporation and its Subsidiaries to, maintain in effect for six (6) years from the Effective Date customary “tail” policies of directors’ and officers’ liability insurance providing protection no less favourable to the protection provided by the policies maintained by the Corporation and its Subsidiaries which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date; provided, however, that Charlotte’s Web acknowledges and agrees that prior to the Effective Time, notwithstanding any other provision hereof, the Corporation may, at its option, purchase prepaid run-off directors’ and officers’ liability insurance on terms substantially similar to the directors’ and officers’ liability policies currently maintained by the Corporation, but providing coverage for a period of six (6) years from the Effective Date with respect to claims arising from or related to facts or events which occurred on or prior to the Effective Date; provided further, that the premiums for any such policies, including any policy Charlotte’s Web puts in place, shall not exceed 300% of the current premium paid by the Corporation and its Subsidiaries (it being understood and agreed that in the event such directors’ and officers’ liability insurance cannot be obtained for 300% of such last annual premium or less, in the aggregate, Charlotte’s Web shall only remain obligated to provide the greatest directors’ and officers’ liability insurance coverage as may be obtained for such amount).

69

If Charlotte’s Web, the Corporation or any of its Subsidiaries or any of their respective successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, Charlotte’s Web shall ensure that any such successor or assign (including, as applicable, any acquirer of substantially all of the properties and assets of the Corporation or any of its Subsidiaries) assumes all of the obligations set forth in the insurance and indemnification provisions of the Arrangement Agreement.

Arrangement Mechanics

The following description is qualified in its entirety by reference to the full text of the Plan of Arrangement, attached as Appendix B to this Information Circular.

Summary of the Arrangement

Commencing at the Effective Time, each of the events set out below shall occur and be deemed to occur in the following sequence, in each case without any further authorization, act or formality on the part of any person:

(a) at the Effective Time:

(i) each Abacus Option, to the extent it has not been exercised as of the Effective Date, will be exchanged by the holder thereof, without any further act or formality and free and clear of all Liens, for a stock option (a “Replacement Option”) to purchase a number of Charlotte’s Web Common Shares equal to the product of the Exchange Ratio multiplied by the number of Abacus Shares issuable on exercise of such Abacus Option immediately prior to the Effective Time (rounded down to the next whole number of Charlotte’s Web Common Shares) for an exercise price per Charlotte’s Web Common Shares (rounded up to the nearest whole cent) equal to the exercise price per share of such Abacus Option immediately prior to the Effective Time divided by the Exchange Ratio, and the Abacus Options shall thereupon be cancelled. The term to expiry, conditions to and manner of exercise and other terms and conditions of each of the Replacement Options shall be the same as the terms and conditions of the Abacus Option for which it is exchanged except that such Replacement Options shall be governed by the terms and conditions of the Charlotte’s Web LTIP and, in the event of any inconsistency or conflict, the Charlotte’s Web LTIP shall govern. Any document previously evidencing the Abacus Option shall thereafter evidence and be deemed to evidence such Replacement Option and no certificates evidencing the Replacement Options shall be issued;

(ii) each Abacus SAR, to the extent it has not been exercised as of the Effective Date, will be exchanged by the holder thereof, without any further act or formality and free and clear of all Liens, for an award of stock appreciation rights granted by Charlotte’s Web (a “Replacement SAR”) in respect of a number of Charlotte’s Web Common Shares equal to the product of the Exchange Ratio multiplied by the number of Abacus Shares underlying such Abacus SAR immediately prior to the Effective Time (rounded down to the next whole number of Charlotte’s Web Common Shares), with a base price (rounded up to the nearest whole cent) equal to the base price applicable to such Abacus SAR immediately prior to the Effective Time divided by the Exchange Ratio, and the Abacus SARs shall thereupon be cancelled. The term to expiry, conditions to and manner of receipt and other terms and conditions of each of the Replacement SAR shall be the same as the terms and conditions of the Abacus SAR for which it is exchanged except that such Replacement shall be governed by the terms and conditions of the Charlotte’s Web LTIP and, in the event of any inconsistency or conflict the Charlotte’s Web LTIP shall govern. Any document previously evidencing the Abacus SAR shall thereafter evidence and be deemed to evidence such Replacement SAR and no certificates evidencing the Replacement SAR shall be issued;

(iii) each Abacus Warrant, to the extent it has not been exercised as of the Effective Date, will be exchanged by the holder thereof, without any further act or formality and free and clear of all Liens, for a warrant (a “Replacement Warrant”) to purchase a number of Charlotte’s Web Common Shares equal to the product of the Exchange Ratio multiplied by the number of Abacus Shares issuable on exercise of such Abacus Warrant immediately prior to the Effective Time for an exercise

70

price per Charlotte’s Web Common Share equal to the exercise price per share of such Abacus Warrant immediately prior to the Effective Time divided by the Exchange Ratio and rounded up to the nearest whole cent (provided that, if the foregoing calculation results in a Replacement Warrant being exercisable for a fraction of a Charlotte’s Web Common Share, then the number of Charlotte’s Web Common Shares subject to such Replacement Warrant shall be rounded down to the next whole number of Charlotte’s Web Common Shares) and the Abacus Warrants shall thereupon be cancelled. The term to expiry, conditions to and manner of exercise and other terms and conditions of each of the Replacement Warrants shall be the same as the terms and conditions of the Abacus Warrant for which it is exchanged. Any document previously evidencing an Abacus Warrant shall thereafter evidence and be deemed to evidence such Replacement Warrant and no certificates evidencing the Replacement Warrants shall be issued; and

(iv) the Long-Term Incentive Plan, the Abacus Legacy Plan and the Abacus Warrant Indenture shall be terminated and, for greater certainty, all rights to receive any securities of the Corporation formerly held by Securityholders shall be extinguished;

(b) immediately after the steps outlined in subsection (a) above occur:

(i) each Dissent Share held by a Dissenting Shareholder who is ultimately determined to be entitled to be paid the fair value of the Dissent Shares in respect of which such Dissenting Shareholder has exercised Dissent Rights shall be, and shall be deemed to be, transferred by the holder thereof, without any further act or formality on its part, to the Corporation (free and clear of any Liens) and such Dissenting Shareholder will cease to be the holder thereof or to have any rights as a holder in respect of such Dissent Share other than the right to be paid the fair value of such Dissent Share; and

(ii) at the same time, such Dissent Shares shall be automatically cancelled as of the Effective Date;

(c) at the same time as the steps outlined in subsection (b) occur:

(i) each Abacus Share outstanding immediately prior to the Effective Time, and after the Mandatory Conversion, (other than Dissent Shares held by Dissenting Shareholders who are ultimately determined to be entitled to be paid the fair value of their Dissent Shares), shall be, and shall be deemed to be, transferred by the holder thereof to Charlotte’s Web (free and clear of any Liens) in exchange for issuance of the Consideration; and

(ii) holders of each Abacus Share transferred to Charlotte’s Web shall cease to be the holders thereof, or to have any rights as holders thereof other than the right to receive the Consideration issuable in respect of each Abacus Share held, and legal and beneficial title to each such Abacus Share will vest in Charlotte’s Web and Charlotte’s Web will be and be deemed to be the transferee and legal and beneficial owner of such Abacus Share (free and clear of any Liens) and will be entered in the central securities register of the Corporation as the sole holder thereof;

(d) holders of Abacus Shares, Abacus Options, Abacus SARs or Abacus Warrants outstanding immediately prior to the Effective Time, with respect to each step set out above applicable to such holders, shall be deemed, at the time such step occurs, to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer all Abacus Shares, Abacus Options, Abacus SARs or Abacus Warrants held by such holders in accordance with such step.

All Charlotte’s Web Common Shares issued pursuant to the Arrangement shall be deemed to be validly issued and outstanding as fully paid and non-assessable shares for all purposes of the BCBCA. Following the Effective Time, Charlotte’s Web has agreed to cause the vesting of each unvested Replacement Option and Replacement SAR held by an Abacus employee that is terminated without “cause” (or the equivalent) within two years following the Effective Date to accelerate to the date of termination, provided that the Board has discretion under the terms of the Replacement Option and Replacement SAR to do so.

71

Share Exchange Mechanics – Registered Shareholders

Letter of Transmittal

The Corporation and Charlotte’s Web have retained the Depositary to receive and hold on behalf of the Corporation and Charlotte’s Web all certificates representing Abacus Shares and the Letters of Transmittal for such Abacus Shares that may be deposited with the Depositary by Shareholders, in accordance with the terms and conditions of the Arrangement. The Depositary will receive its standard and customary compensation for its services in connection with processing the Letters of Transmittal and delivering Charlotte’s Web Common Shares. In addition, the Depositary will be reimbursed for its reasonable out-of-pocket expenses and will be indemnified against certain liabilities, including liabilities under Canadian securities Laws and expenses in connection therewith.

Enclosed with this Information Circular is a Letter of Transmittal which is being delivered to all registered Shareholders. The Letter of Transmittal, when validly completed and duly executed and returned by a registered Shareholder to the Depositary with the certificate(s) representing the Shareholder’s Abacus Shares (if applicable) and any other required documents, will enable such Shareholders to receive the Consideration to which they are entitled pursuant to the Plan of Arrangement.

For greater certainty, the Depositary will not arrange for delivery of the Consideration until the certificate(s) representing Abacus Shares (if any), Letter of Transmittal and all required documents, certificates and instruments are received by the Depositary, unless the Depositary is otherwise instructed in writing by Charlotte’s Web or the Corporation. See “Arrangement Mechanics – Share Exchange Mechanics – Registered Shareholders – Delivery of Consideration”.

In the event that any registered Shareholder fails to submit the Letter of Transmittal in accordance with the instructions set out therein (“Non Claiming Shareholder”) they will not be eligible to receive their Charlotte’s Web Common Shares pursuant to the Arrangement until such time as a duly completed Letter of Transmittal is submitted. Until such time, the Charlotte’s Web Common Shares to which such Non Claiming Shareholder would otherwise be entitled will be held by the Depositary as agent for the Non Claiming Shareholder. See “Arrangement Mechanics – Share Exchange Mechanics – Registered Shareholders – Delivery of Consideration – Extinction of Rights”.

Delivery of Consideration

Upon return to the Depositary of a properly completed Letter of Transmittal by a registered former Shareholder together with certificate(s), if any, that immediately before the Effective Time represented one or more outstanding Abacus Shares that were exchanged for the Consideration and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such holder following the Effective Time, certificates or book-entry advice statements representing the Charlotte’s Web Common Shares that such holder is entitled to receive.

After the Effective Time and until surrendered for cancellation, each certificate, if any, that immediately prior to the Effective Time represented one or more Abacus Shares shall be deemed at all times to represent only the right to receive in exchange therefor the Consideration that the holder of such certificate, if any, is entitled to receive.

Dividends and Distributions

No dividends or other distributions declared or made after the Effective Time with respect to Charlotte’s Web Common Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered certificate which immediately prior to the Effective Time represented outstanding Abacus Shares that were exchanged, unless and until the holder of record of such certificate shall surrender such certificate (or affidavit). Subject to applicable Law, at the time of such surrender of any such certificate (or in the case of clause (B) below, at the appropriate payment date), there shall be paid to the holder of record of the certificates formerly representing whole Abacus Shares, without interest, (A) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole Charlotte’s Web Common Share, and (B) on the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such whole Charlotte’s Web Common Share.

72

Fractional Shares

A holder of Abacus Shares will in no event be entitled to a fractional Charlotte’s Web Common Share. Where the aggregate number of Charlotte’s Web Common Shares to be issued to a holder of Abacus Shares as consideration under this Arrangement would result in a fraction of a Charlotte’s Web Common Share being issuable, the number of Charlotte’s Web Common Shares to be received by such holder shall be rounded down to the nearest whole Charlotte’s Web Common Share.

Loss of Certificates

In the event any certificate which immediately prior to the Effective Time represented any outstanding Abacus Shares that were acquired by Charlotte’s Web has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the former holder of such Abacus Shares and obtaining an indemnity bond, the Depositary will, in exchange for such lost, stolen or destroyed certificate, deliver to such former holder of Abacus Shares, or make available for pick up at its offices, the Charlotte’s Web Common Shares such former holder is entitled to receive in respect of such Abacus Shares together with any distributions or dividends which such holder is entitled to receive and less, in each case, any amounts withheld. When authorizing such delivery in relation to any lost, stolen or destroyed certificate, the former holder of such Abacus Shares will, as a condition precedent to the delivery of Charlotte’s Web Common Shares, give a declaration of loss and an indemnity bond satisfactory to Charlotte’s Web and the Depositary (acting reasonably) in such sum as Charlotte’s Web and the Depositary may direct.

Extinction of Rights

Any certificate or book-entry advice statements which immediately prior to the Effective Time represented one or more outstanding Abacus Shares that were acquired by Charlotte’s Web which is not deposited with the Depositary on or before the sixth (6th) anniversary of the Effective Date shall, on the sixth (6th) anniversary of the Effective Date, cease to represent a claim or interest of any kind or nature whatsoever, whether as a securityholder or otherwise and whether against the Corporation, Charlotte’s Web, the Depositary or any other person. On such date, the Consideration such former holder of Abacus Shares would otherwise have been entitled to receive, together with any distributions or dividends such holder would otherwise have been entitled to receive, shall be deemed to have been surrendered for no consideration to Charlotte’s Web. Neither the Corporation nor Charlotte’s Web will be liable to any person in respect of any cash or securities (including any cash or securities previously held by the Depositary as agent for any such former holder) which is forfeited to Charlotte’s Web or delivered to any public official pursuant to any applicable abandoned property, escheat or similar law.

Withholding Rights

The Corporation, Charlotte’s Web and the Depositary shall be entitled to deduct and withhold from (A) any Charlotte’s Web Common Shares or other consideration otherwise issuable or payable pursuant to the Plan of Arrangement to any Securityholder, or (B) any dividend or consideration otherwise payable to any Securityholder or holder of Charlotte’s Web Common Shares such amounts as the Corporation, Charlotte’s Web or the Depositary, respectively, is required to deduct and withhold with respect to such issuance or payment, as the case may be, under the Tax Act, the Code or any provision of provincial, state, local or foreign tax law, in each case as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the former Securityholder in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority.

U.S. Securities Laws Exemption

The Plan of Arrangement will be carried out with the intention that all Charlotte’s Web Common Shares, Replacement Options, Replacement SARs and Replacement Warrants to be issued by Charlotte’s Web to Shareholders, holders of Abacus Options, holders of Abacus SARs, and holders of Abacus Warrants, respectively, in exchange for their Abacus Shares, Abacus Options, Abacus SARs and Abacus Warrants, respectively, pursuant to the Plan of Arrangement will be issued and exchanged in reliance on the exemption from the registration requirements of the 1933 Securities Act as provided by Section 3(a)(10) thereof and applicable state securities laws, and pursuant to the terms, conditions and procedures set forth in the Arrangement Agreement.

73

Share Exchange Mechanics – Non-Registered Shareholders

Shareholders whose Abacus Shares are registered in the name of a broker, investment dealer or other intermediary should contact that broker, investment dealer or other intermediary for instructions and assistance in depositing their Abacus Shares with the Depositary. Non-registered Shareholders do not need to return a Letter of Transmittal.

NON-REGISTERED SHAREHOLDERS SHOULD CONTACT THEIR BROKER, INVESTMENT DEALER OR OTHER INTERMEDIARY TO CONFIRM THAT THEIR BROKER, INVESTMENT DEALER OR OTHER INTERMEDIARY HAS MADE ARRANGEMENTS TO RECEIVE THE NUMBER OF CHARLOTTE’S WEB COMMON SHARES REQUIRED TO SATISFY THE CONSIDERATION PAYABLE TO SUCH NON-REGISTERED SHAREHOLDER PURSUANT TO THE PLAN OF ARRANGEMENT. THE DEPOSITARY WILL NOT BE INVOLVED IN FACILITATING THIS PROCESS.

The Depositary will not be involved in facilitating this process. Failure to provide accurate information to the Depositary or providing incomplete or inaccurate information will result in delays in the receipt of Charlotte’s Web Common Shares by such non-registered Shareholders.

Information Concerning the Corporation

See Appendix G attached to this Information Circular for detailed information concerning the Corporation.

Information Concerning Charlotte’s Web

See Appendix H attached to this Information Circular for detailed information concerning Charlotte’s Web.

Information Concerning Charlotte’s Web Following Completion of the Arrangement

See Appendix I attached to this Information Circular for detailed information concerning Charlotte’s Web following completion of the Arrangement.

Risk Factors

Shareholders voting in favour of the Arrangement Resolution will be choosing to combine the businesses of the Corporation and Charlotte’s Web and to invest in Charlotte’s Web Common Shares. The completion of the Arrangement and investment in Charlotte’s Web Common Shares involves risks. Shareholders should carefully consider the following risk factors in evaluating whether to approve the Arrangement Resolution. Readers are cautioned that such risk factors are not exhaustive. These risk factors should be considered in conjunction with the other information included in this Information Circular, including the documents incorporated by reference herein and documents filed by the Corporation and Charlotte’s Web pursuant to applicable Laws from time to time.

Risk Factors Relating to the Arrangement

Arrangement is Subject to Conditions

The Arrangement is subject to certain conditions, including, among other things, the approval of a special resolution by Shareholders of the Corporation to approve the Arrangement, Dissent Rights of the Shareholders of the Corporation not being exercised with respect to more than 5% of the issued and outstanding Abacus Shares, receipt of the Final Order and receipt of the Required Regulatory Approvals. The regulatory approval processes may take a significant amount of time to complete, which could delay completion of the Arrangement. It is also a condition of completing the Arrangement that the Charlotte’s Web Common Shares issuable under the Arrangement be conditionally accepted for listing on the TSX. In addition, the completion of the Arrangement by each of the Corporation and Charlotte’s Web is conditional on, among other things, no action or circumstance occurring that would result in a Material Adverse Effect in respect of the other party.

Certain of the conditions are outside of the Corporation’s control such as pandemics, general changes to political conditions, changes to the global economy, or changes that affect the pharmaceutical and CBD hemp industry in

74

general. There can be no certainty, nor can the Corporation provide any assurance, that all conditions precedent to the Arrangement will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the Arrangement may not be completed. If, for any reason, the Arrangement is not completed or its completion is materially delayed and/or the Arrangement Agreement is terminated, the market price of the Subordinate Voting Shares may be materially adversely affected and may decline to the extent that the current market price reflects a market assumption that the Arrangement will be completed. In any such event, the Corporation’s business, financial condition or results of operations could also be subject to various material adverse consequences, including that the Corporation would remain liable for its costs relating to the Arrangement.

Level of Shareholder Approval Required

Since the Arrangement constitutes a “business combination” under MI 61-101, to be effective, the Arrangement Resolution must be approved by a majority of votes cast by holders of Subordinate Voting Shares and Proportionate Voting Shares entitled to vote at the Meeting, voting together as a single class, excluding all Abacus Shares held by Interested Parties. This approval is in addition to the requirement that the Arrangement be approved by not less than 662/3% of the votes cast by holders of Abacus Shares, voting together as a single class, present in person or by proxy at the Meeting. Although certain Shareholders who hold approximately 20% of the outstanding Abacus Shares have executed Voting Support Agreements, and have agreed, subject to certain conditions, to vote their Abacus Shares in favour of the Arrangement Resolution, there can be no certainty, nor can the Corporation provide any assurance that the requisite Shareholder approval of the Arrangement Resolution will be obtained. If such approval is not obtained, the market price of the Abacus Shares may decline to the extent that the current market price reflects an assumption that the Arrangement will be completed. If the Arrangement is not completed and the Corporation wishes to seek another merger or arrangement, there can be no assurance that it will be able to find another party willing to pay an equivalent or more attractive price than the Consideration to be paid by Charlotte’s Web pursuant to the Arrangement.

Application of Interim Period Operating Covenants

The Arrangement Agreement restricts the Corporation from taking specified actions including (a) soliciting any alternative Acquisition Proposals; (b) subject to certain exceptions, engaging in any discussions or entering into any agreements concerning an alternative Acquisition Proposal; or (c) subject to certain exceptions, the Board making an Adverse Recommendation Change. In addition, the Arrangement Agreement restricts the Corporation from taking specified actions until the Arrangement is completed without Charlotte’s Web’s consent. These restrictions may prevent the Corporation from pursuing attractive business opportunities that may arise prior to the completion of the Arrangement. As completion of the Arrangement is dependent upon satisfaction of certain conditions, the completion of the Arrangement is uncertain. If the Arrangement is not completed for any reason, the announcement of the Arrangement, the Corporation’s dedication of resources to the completion thereof and the restrictions that were imposed on the Corporation under the Arrangement Agreement may have an adverse effect on the future operations, financial condition and prospects of the Corporation as a standalone entity.

No Solicitation of Other Potential Parties to a Transaction

The Corporation did not solicit expressions of interest prior to entering into the Arrangement Agreement. The Board concluded that the risks of soliciting expressions of interest to complete a transaction from other arm’s length parties outweighed the benefits of doing so. There can be no assurance that if the Corporation solicited expressions of interest from other potential arm’s length investors or acquirors, that one or more would not have been willing to complete a transaction on more favourable terms than Charlotte’s Web.

Fluctuation of Value of Arrangement Consideration

The Exchange Ratio for the Consideration is fixed and will not increase or decrease due to fluctuations in the market price of Charlotte’s Web Common Shares or Subordinate Voting Shares of the Corporation. The market price of Charlotte’s Web Common Shares or Subordinate Voting Shares of the Corporation could each fluctuate significantly prior to the Effective Date in response to various factors and events, including, without limitation, the differences between Charlotte’s Web’s and the Corporation’s actual financial or operating results and those expected by investors and analysts, changes in analysts’ projections or recommendations, changes in general economic or market conditions, and broad market fluctuations. As a result of such fluctuations, historical market prices are not indicative of future market prices or the market value of the Charlotte’s Web Common Shares that Shareholders may receive on the Effective Date. There can be no assurance that the market value of the Consideration that Shareholders receive on the

75

Effective Date will equal or exceed the market value of the Subordinate Voting Shares held by such Shareholders after the date hereof and prior to the Effective Date. There can also be no assurance that the trading price of the Charlotte’s Web Common Shares will not decline following the completion of the Arrangement.

“Market Overhang” for Charlotte’s Web Common Shares

On completion of the Arrangement, a significant number of additional Charlotte’s Web Common Shares will be issued and available for trading in the public market. The increase in the number of Charlotte’s Web Common Shares may lead to sales of such shares or the perception that such sales may occur (commonly referred to as “market overhang”), either of which may adversely affect the market for, and the market price of, the Charlotte’s Web Common Shares.

Termination Rights of the Arrangement Agreement

In addition to termination rights relating to the failure to satisfy the conditions of the Arrangement Agreement, each of the Corporation and Charlotte’s Web has the right, in certain circumstances, to terminate the Arrangement Agreement and the Arrangement. Accordingly, there is no certainty, nor can the Corporation provide any assurance, that the Arrangement Agreement will not be terminated by either the Corporation or Charlotte’s Web before the completion of the Arrangement. Failure to complete the Arrangement could negatively impact the trading price of the Subordinate Voting Shares or otherwise adversely affect the Corporation’s business. See “Summary of Arrangement Agreement – Termination and Amendment of Arrangement Agreement”.

Negative Impact of the Termination of the Arrangement Agreement on the Corporation

In addition to termination rights relating to the failure to satisfy the conditions of the Arrangement Agreement, each of the Corporation and Charlotte’s Web has the right, in certain circumstances, to terminate the Arrangement Agreement and the Arrangement. For instance, the Arrangement Agreement provides that either the Corporation or Charlotte’s Web may terminate the Arrangement Agreement if the Arrangement has not been completed by August 17, 2020. Accordingly, there is no certainty, nor can the Corporation provide any assurance, that the Arrangement Agreement will not be terminated by either the Corporation or Charlotte’s Web before the completion of the Arrangement. Failure to complete the Arrangement could negatively impact the trading price of the Subordinate Voting Shares or otherwise adversely affect the Corporation’s business.

Furthermore, if the Arrangement is not completed as a result of certain prescribed events, the Corporation will be required to pay the Termination Fee, or the Expense Reimbursement Fee, to Charlotte’s Web in connection with the termination of the Arrangement Agreement. If the Termination Fee or the Expense Reimbursement Fee is ultimately required to be paid to Charlotte’s Web, the payment of such fee may have an adverse impact on the Corporation’s financial results. The Termination Fee may discourage other parties from attempting to acquire Subordinate Voting Shares or otherwise make an Acquisition Proposal, even if those parties would otherwise be willing to offer greater value to Shareholders than that offered by Charlotte’s Web under the Arrangement.

Potential Claims

Charlotte’s Web and the Corporation may be the targets of legal claims, securities class actions, derivative lawsuits and other claims. Any such claims may delay or prevent the Arrangement from being completed. Charlotte’s Web and the Corporation may be the target of securities class actions and derivative lawsuits which could result in substantial costs and may delay or prevent the Arrangement from being completed. Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into an agreement to acquire a public company or to be acquired. Third parties may also attempt to bring claims against Charlotte’s Web and the Corporation seeking to restrain the Arrangement or seeking monetary compensation or other remedies. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the Arrangement, then that injunction may delay or prevent the Arrangement from being completed.

In addition, political and public attitudes towards the Arrangement could result in negative press coverage and other adverse public statements affecting Charlotte’s Web and the Corporation. Adverse press coverage and other adverse statements could lead to investigations by regulators, legislators and law enforcement officials or in legal claims or otherwise negatively impact the ability of the combined business after completion of the Arrangement to take

76

advantage of various business and market opportunities. The direct and indirect effects of negative publicity, and the demands of responding to and addressing it, may have a Material Adverse Effect on the Corporation’s business, financial condition and results of operations.

Substantial Transaction Fees

The Corporation has incurred and expects to incur additional material non recurring expenses in connection with the Arrangement and completion of the transactions contemplated by the Arrangement Agreement, including costs relating to obtaining required shareholder approval. If the Arrangement is not completed, the Corporation will need to pay certain costs relating to the Arrangement incurred prior to the date the Arrangement was abandoned, such as legal, accounting, financial advisory, proxy solicitation and printing fees, and in certain circumstances will be required to pay the Expense Reimbursement Fee to Charlotte’s Web. Such costs may be significant and could have an adverse effect on the Corporation’s future results of operations, cash flows and financial condition.

Diverging Interests of Directors and Officers of the Corporation

In considering the unanimous recommendation of the Board to vote in favour of the Arrangement Resolution, Shareholders should be aware that certain members of the Corporation’s executive leadership team and the Board have certain interests in connection with the Arrangement that differ from, or are in addition to, those of Shareholders generally and may present them with actual or potential conflicts of interest in connection with the Arrangement. See “Principal Legal Matters - Certain Canadian Securities Law Matters”.

Diversion of Attention

Prior to the Effective Date, the Arrangement may divert the attention of the Corporation’s management, and any such diversion could have an adverse effect on the Corporation’s business. The pending Arrangement could cause the attention of the Corporation’s management to be diverted from the day to day operations of the Corporation. These disruptions could be exacerbated by a delay in the completion of the Arrangement and could result in lost opportunities or negative impacts on performance, which could have a Material Adverse Effect on the Corporation’s business, financial condition and results of operations or prospects if the Arrangement is not completed.

Successful Integration of the Corporation and Charlotte’s Web

If approved, the Arrangement will involve the integration of companies that previously operated independently. As a result, the Arrangement will present challenges to management, including the integration of operations, systems and personnel of the two companies, and special risks, including possible unanticipated liabilities, unanticipated costs, diversification of management’s attention and loss of key employees. The difficulties management encounters in the transition and integration process could have an adverse effect on the revenues, level of expenses and operating results of the combined company. As a result of these factors, it is possible that benefits expected from the Arrangement will not be realized.

Accuracy of Financial Projections Prepared by the Corporation’s Management

The Board considered, among other things, certain projections, prepared by the Corporation’s management, with respect to each of Charlotte’s Web (the “Charlotte’s Web Projections”), the Corporation (the “Abacus Projections”) and Charlotte’s Web following the completion of the Arrangement (together with the Charlotte’s Web Projections and Abacus Projections, the “Projections”). All such Projections are based on assumptions and information available at the time such projections were prepared. The Corporation does not know whether the assumptions made will be realized.

Such information can be adversely affected by known or unknown risks and uncertainties, many of which are beyond the Corporation’s and Charlotte’s Web’s control. Further, financial forecasts of this type are based on estimates and assumptions that are inherently subject to risks and other factors such as company performance, geological uncertainties, industry performance, general business, economic, regulatory, market and financial conditions, as well as changes to the business, financial condition or results of operations of the Corporation and Charlotte’s Web, including the factors described in this “Risk Factors” section and under “Caution Regarding Forward-Looking Statements”, which factors and changes may impact such forecasts or the underlying assumptions. As a result of these contingencies, there can be no assurance that the financial and other Projections will be realized or that actual results

77

will not be significantly higher or lower than projected. In view of these uncertainties, the references to the Projections in this Information Circular should not be regarded as an indication that the Corporation, the Board, or any of its advisors or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results.

The Projections were prepared by the Corporation’s management for internal use and to, among other things, assist the Corporation in evaluating the Arrangement. The Projections were not prepared with a view toward public disclosure or toward compliance with IFRS, published guidelines of applicable securities regulatory authorities or the guidelines established by the Chartered Professional Accountants for preparation and presentation of prospective financial information. The Corporation’s auditors have not examined, compiled or performed any procedures with respect to the Projections.

In addition, the Projections have not been updated or revised to reflect information or results after the date that such Projections were prepared by the Corporation’s management as of the date of this Information Circular. Except as required by applicable Canadian securities Laws, the Corporation does not intend to update or otherwise revise its financial and other forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

Retention of Customers, Suppliers and Personnel

The Arrangement is dependent upon satisfaction of various conditions, and as a result, its completion is subject to uncertainty. In response to this uncertainty, the Corporation’s customers and suppliers may delay or defer decisions concerning the Corporation. Any change, delay or deferral of those decisions by customers and suppliers could negatively impact the Corporation’s business, operations and prospects, regardless of whether the Arrangement is ultimately completed. Similarly, current and prospective employees of the Corporation may experience uncertainty regarding their future roles within the combined group until the combined group’s strategies with respect to such employees are determined and announced. This may adversely affect the Corporation’s ability to attract or retain key employees in the period until the Arrangement is completed or thereafter.

Volatility of Trading Price

Market assessments of the benefits of the Arrangement and the likelihood that the Arrangement will be consummated may impact the volatility of the market price of the Subordinate Voting Shares prior to the consummation of the Arrangement.

Limited Ownership of Shareholders in Charlotte’s Web Following Completion of the Arrangement

Shareholders currently have the right to vote in the election of the Board and on other matters affecting the Corporation. Upon completion of the Arrangement, each Shareholder who receives Charlotte’s Web Common Shares will become a shareholder of Charlotte’s Web with a percentage of ownership of Charlotte’s Web that is smaller than the shareholder’s previous percentage ownership of the Corporation. It is currently expected that Former Abacus Shareholders will receive shares in the Arrangement representing a Pro Forma Ownership of approximately 14.7% of the voting power of Charlotte’s Web. Because of this, Former Abacus Shareholders, as a group, will have less influence on the management and policies of the combined group than they now have on the management and policies of the Corporation.

Risk Factors Relating to the Corporation

Whether or not the Arrangement is completed, the Corporation will continue to face many or all of the risks that it currently faces with respect to its business and affairs. Certain of these risk factors have been disclosed, in the “Risks and Uncertainties” section of the Abacus Annual MD&A and in the “Risk Factors and Uncertainties” section of the Abacus AIF, both of which are incorporated by reference into this Information Circular.

Risk Factors Relating to Charlotte’s Web

See Appendix H attached to this Information Circular for additional risk factors with respect to the business and affairs of Charlotte’s Web.

78

Risk Factors Relating to Charlotte’s Web Following Competition of the Arrangement

See Appendix I attached to this Information Circular for additional risk factors with respect to the business and affairs of Charlotte’s Web following completion of the Arrangement.

You are urged to carefully read and consider the risk factors detailed above and in the appendices referenced and documents incorporated by reference herein in evaluating whether to approve the Arrangement Resolution.

Dissenting Shareholders’ Rights

Registered Shareholders may exercise rights of dissent with respect to their Abacus Shares in connection with the Arrangement pursuant to and in the manner set forth in Section 185 of the OBCA as modified by the Interim Order and the Arrangement Agreement (the “Dissent Rights”) provided that, notwithstanding subsection 185(6) of the OBCA, written notice setting forth such registered Shareholder’s objection to the Arrangement Resolution and exercise of Dissent Rights must be received by the Corporation not later than 4:00 p.m. (Toronto time) on the Business Day that is two Business Days preceding the date of the Meeting.

Shareholders who duly exercise their Dissent Rights and who are: (a) ultimately determined to be entitled to be paid by the Corporation, the fair value for their Abacus Shares, in respect of which they have exercised Dissent Rights, will be deemed to have irrevocably transferred such Abacus Shares to the Corporation in consideration of such fair value and will not be entitled to any other payment or consideration, including any payment that would be payable under the Arrangement had such holders not exercised their Dissent Rights in respect of such Abacus Shares; or (b) ultimately not entitled, for any reason, to be paid by the Corporation, the fair value for their Abacus Shares in respect of which they have exercised Dissent Rights, will be deemed to have participated in the Arrangement on the same basis as a Shareholder who has not exercised Dissent Rights and be entitled to receive only the consideration that such holder would have received if such holder had not exercised Dissent Rights.

In no case is the Corporation or Charlotte’s Web or any other Person required to recognize a Dissenting Shareholder as a holder of Abacus Shares in respect of which Dissent Rights have been validly exercised and each Dissenting Shareholder will cease to be entitled to the rights of a Shareholder in respect of the Abacus Shares in relation to which such Dissenting Shareholder has exercised Dissent Rights and the central securities register of the Corporation will be amended to reflect that such former holder is no longer the holder of such Abacus Shares as and from the Effective Time and that such Abacus Shares have been cancelled. For greater certainty, and in addition to any other restriction under Section 185 of the OBCA, a Shareholder who has voted, or instructed a proxyholder to vote, in favour of the Arrangement Resolution shall not be entitled to exercise Dissent Rights with respect to the Arrangement.

In addition to any other restrictions under Section 185 of the OBCA, for greater certainty, none of the following shall be entitled to exercise Dissent Rights: holders of Abacus Options, holders of Abacus SARs, holders of Abacus Warrants, and holders of Abacus Shares who vote or have instructed a proxyholder to vote his, her or its Abacus Shares in favour of the Arrangement Resolution.

Section 185 of the OBCA provides that a shareholder may only make a claim with respect to all the shares of a class held by him or her on behalf of any one beneficial owner and registered in that shareholder’s name. One consequence of this provision is that Shareholders may only exercise the right to dissent under Section 185 (as modified by the Plan of Arrangement and the Interim Order) in respect of Abacus Shares which are registered in their name. Shareholders whose shares are registered either: (i) in the name of an intermediary that the Shareholder deals with in respect of the shares (such as banks, trust companies, securities dealers and brokers, trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans, and their nominees); or (ii) in the name of a clearing agency (such as CDS) of which the intermediary is a participant, are non-registered Shareholders and are not entitled to exercise the right to dissent under Section 185 of the OBCA directly (unless the shares are re-registered in the non-registered Shareholder’s name). Non-registered Shareholders who wish to exercise their right to dissent should immediately contact their intermediary and either: (i) instruct the intermediary to exercise the right to dissent on their behalf (which, if the shares are registered in the name of a clearing agency, would require that the shares first be re-registered in the name of the intermediary); or (ii) instruct the intermediary to re-register the shares in the name of such non-registered Shareholder, in which case that Shareholder would acquire the right to dissent directly.

79

A registered Shareholder who wishes to dissent must provide a written objection to the Arrangement Resolution (the “Notice of Dissent”) to the Corporation c/o Osler, Hoskin & Harcourt LLP, 1000 De La Gauchetière Street West, Suite 2100, Montréal, Québec, Canada, H3B 4W5, Attention: Eric Levy, not later than 4:00 p.m. (Toronto time) on June 2, 2020 or, in the event that the Meeting is adjourned or postponed, no later than 48 hours (excluding Saturdays, Sundays and statutory holidays in Ontario) before the adjourned meeting is reconvened or the postponed meeting is convened, as the case may be. It is important that registered Shareholders strictly comply with this requirement, which is different from the statutory dissent provision of the OBCA.

The sending of a Notice of Dissent does not deprive a registered Shareholder of its right to vote on the Arrangement Resolution at the Meeting; however, the OBCA provides, in effect, that a registered Shareholder who has submitted a Notice of Dissent and who votes in favour of the Arrangement Resolution will no longer be considered a Dissenting Shareholder with respect to the Abacus Shares voted in favour of the Arrangement Resolution. A vote, whether in person, virtually or by proxy, against the Arrangement Resolution does not constitute a Notice of Dissent and is not required in order to dissent.

Within ten (10) days after the adoption of the Arrangement Resolution, the Corporation is required to notify each Dissenting Shareholder that the Arrangement Resolution has been adopted. Dissenting Shareholders must, within 20 days after receiving notice of adoption of the Arrangement Resolution or, if no such notice is received, within 20 days after such Dissenting Shareholder learns that the Arrangement Resolution has been adopted, send to the Corporation a written notice (the “Demand for Payment”) containing the Dissenting Shareholder’s name and address, the number of Abacus Shares in respect of which a dissent is made and a demand for payment of the fair value of such Abacus Shares. Within 30 days after sending the Demand for Payment, the Dissenting Shareholder must send the share certificate(s) representing the Abacus Shares in respect of which a dissent is made to the Corporation or its Transfer Agent. The Corporation or its transfer agent, Odyssey, will endorse on the share certificates a notice that the holder thereof is a Dissenting Shareholder under Section 185 of the OBCA and will forthwith return the share certificate(s).

Dissenting Shareholders that fail to send the Notice of Dissent, the Demand for Payment or the share certificate(s) within the applicable time periods have no right to make a claim under Section 185 of the OBCA or the Interim Order.

Under Section 185 of the OBCA and the Interim Order, after sending a Demand for Payment, Dissenting Shareholders cease to have any rights as a holder of the Abacus Shares in respect of which they have dissented, other than the right to be paid the fair value of such Abacus Shares as determined under Section 185 of the OBCA, unless: (i) the Demand for Payment is withdrawn before the Corporation makes a written offer to pay (the “Offer to Pay”); (ii) the Corporation fails to make a timely Offer to Pay to the Dissenting Shareholder and the Dissenting Shareholder withdraws its Demand for Payment; or (iii) the Board revokes the Arrangement Resolution relating to the Arrangement.

Not later than seven (7) days after the later of the Effective Date of the Arrangement and the day the Corporation receives the Demand for Payment, the Corporation shall send to each Dissenting Shareholder who has sent a Demand for Payment an Offer to Pay for the Abacus Shares in respect of which the Dissenting Shareholder has dissented in an amount considered by the Board to be the fair value thereof, accompanied by a statement showing how the fair value was determined or a notification that the Corporation is unable to lawfully pay for the Abacus Shares if the Corporation is, or after the payment would be, unable to pay its liabilities as they become due, or the realizable value of the Corporation’s assets would thereby be less than the aggregate of its liabilities. Every Offer to Pay made to Dissenting Shareholders for Abacus Shares will be on the same terms. The amount specified in an Offer to Pay which has been accepted by a Dissenting Shareholder will be paid by the Corporation within ten (10) days of the acceptance, but an Offer to Pay lapses if the Corporation has not received an acceptance thereof within 30 days after the Offer to Pay has been made.

If an Offer to Pay is not made by the Corporation or if a Dissenting Shareholder fails to accept an Offer to Pay, the Corporation may, within 50 days after the Effective Date of the Arrangement or within such further period as a court may allow, apply to the Court to fix a fair value for the Abacus Shares of any Dissenting Shareholder. If the Corporation fails to so apply to the Court, a Dissenting Shareholder may apply to the Court for the same purpose within a further period of 20 days or within such further period as the Court may allow. A Dissenting Shareholder is not required to give security for costs in any application to the Court.

80

Before making an application to the Court or not later than seven (7) days after receiving notice of an application to the Court by a Dissenting Shareholder, the Corporation will give to each Dissenting Shareholder who has sent a Demand for Payment and has not accepted an Offer to Pay, notice of the date, place and consequences of the application and of the Dissenting Shareholder’s right to appear and be heard in person or by counsel. A similar notice will be given to each Dissenting Shareholder who, after the date of the first mentioned notice and before termination of the proceedings commenced by the application, sends the Corporation a Demand for Payment and does not accept an Offer to Pay, such notice to be sent within three (3) days thereafter. All such Dissenting Shareholders will be joined as parties to any such application to the Court to fix a fair value and will be bound by the decision rendered by the Court in the proceedings commenced by such application. The Court is authorized to determine whether any other person is a Dissenting Shareholder who should be joined as a party to such application.

The Court will fix a fair value for the Abacus Shares of all Dissenting Shareholders and may, in its discretion, allow a reasonable rate of interest on the amount payable to each Dissenting Shareholder from the Effective Date of the Arrangement until the date of payment of the amount ordered by the Court. The fair value fixed by the Court may be more or less than the amount specified in an Offer to Pay. The final order of the Court in the proceedings commenced by an application by the Corporation or a Dissenting Shareholder will be rendered against the Corporation and in favour of each Dissenting Shareholder who, whether before or after the date of the order, sends the Corporation a Demand for Payment and does not accept an Offer to Pay. The cost of any application to a Court by the Corporation or a Dissenting Shareholder will be in the discretion of the Court. Where, however, the Corporation fails to make an Offer to Pay, the costs of the application by a Dissenting Shareholder are to be borne by the Corporation unless the Court orders otherwise.

Shareholders who are considering exercising Dissent Rights should be aware that there can be no assurance that the fair value of their Abacus Shares as determined under applicable provisions of the OBCA (as modified by the Plan of Arrangement and the Interim Order) will be more than or equal to the consideration under the Arrangement. In addition, any judicial determination of fair value will result in delay of receipt by a Dissenting Shareholder of consideration for such Dissenting Shareholder’s dissenting shares.

THE ABOVE IS ONLY A SUMMARY OF THE DISSENTING SHAREHOLDER PROVISIONS OF THE OBCA (AS MODIFIED BY THE PLAN OF ARRANGEMENT AND THE INTERIM ORDER), WHICH ARE TECHNICAL AND COMPLEX. THE FULL TEXT OF SECTION 185 OF THE OBCA IS ATTACHED AS APPENDIX D TO THIS INFORMATION CIRCULAR. REGISTERED SHAREHOLDERS WHO WISH TO EXERCISE THEIR DISSENT RIGHTS SHOULD SEEK LEGAL ADVICE, AS FAILURE TO COMPLY WITH THE STRICT REQUIREMENTS SET OUT IN SECTION 185 OF THE OBCA (AS MODIFIED BY THE PLAN OF ARRANGEMENT AND THE INTERIM ORDER (ATTACHED AS APPENDIX E TO THIS INFORMATION CIRCULAR)) WILL RESULT IN THE LOSS OR UNAVAILABILITY OF THE RIGHT TO DISSENT.

Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders

The following summary fairly describes the principal Canadian federal income tax considerations under the Tax Act generally applicable to a Shareholder who is the beneficial owner of Subordinate Voting Shares and who, for the purposes of the Tax Act and at all relevant times, holds Subordinate Voting Shares, and will hold any Charlotte’s Web Common Shares acquired pursuant to the Arrangement, as capital property, and who deals at arm’s length with, and is not affiliated with, Abacus or Charlotte’s Web (a “Holder”). Subordinate Voting Shares and Charlotte’s Web Common Shares will generally constitute capital property to a Holder unless the Holder holds such shares in the course of carrying on a business or has acquired such shares in a transaction or transactions considered to be an adventure or concern in the nature of trade. Certain Holders who are or are deemed to be resident in Canada and whose Subordinate Voting Shares might not otherwise qualify as capital property may be entitled to make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have such shares and every “Canadian security” (as such term is defined in the Tax Act) owned by such Holder in the taxation year of the election and in all subsequent taxation years deemed to be capital property. Shareholders contemplating making such an election should consult with their own tax advisors for advice with respect to whether an election under subsection 39(4) of the Tax Act is available or advisable in their particular circumstances.

81

This summary is not applicable to a Holder: (a) that is a “financial institution” (as such term is defined in the Tax Act) for purposes of the mark to market rules; (b) an interest in which is a “tax shelter investment” (as such term is defined in the Tax Act); (c) that reports its “Canadian tax results” in a currency other than Canadian currency; (d) that is a “specified financial institution” (as such term is defined in the Tax Act); (e) that has entered into or will enter into a “derivative forward agreement” (as such term is defined in the Tax Act) with respect to the Subordinate Voting Shares or Charlotte’s Web Common Shares; or (f) who acquired Subordinate Voting Shares on the exercise of an Abacus Option. In addition, this summary does not address the income tax considerations for holders of Abacus Options, Abacus SARs or Abacus Warrants. Such Shareholders and holders of Abacus Options, Abacus SARs and Abacus Warrants should consult their own tax advisors.

Additional considerations, not discussed herein, may be applicable to a Holder that is a corporation resident in Canada (or a corporation that does not deal at arm’s length for purposes of the Tax Act, with a corporation resident in Canada) that is, or becomes, as part of a transaction or event or series of transactions or events that includes the Arrangement, controlled by a non-resident person or group of non-resident persons for purposes of the “foreign affiliate dumping” rules in section 212.3 of the Tax Act. Such Holders should consult their own tax advisors.

This summary is based upon the current provisions of the Tax Act, all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”) and counsel’s understanding of the current published administrative practices and assessing policies of the CRA. No assurances can be given that the Tax Proposals will be enacted as proposed, if at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except for the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial decision or action, or any changes in the administrative practices or assessing policies of the CRA. This summary does not take into account tax legislation of any province, territory or foreign jurisdiction. Provisions of provincial income tax legislation vary from province to province in Canada and may differ from federal income tax legislation.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Shareholder. Accordingly, Shareholders should consult their own tax advisors for advice with respect to the income tax consequences to them of disposing of their Subordinate Voting Shares pursuant to the Arrangement, and holding and disposing of Charlotte’s Web Common Shares, having regard to their own particular circumstances.

Shareholders Resident in Canada

The following portion of this summary is applicable to a Holder who, at all relevant times, is or is deemed to be resident in Canada for the purposes of the Tax Act and any applicable income tax treaty or convention (a “Resident Holder”).

Exchange of Subordinate Voting Shares for Charlotte’s Web Common Shares

Pursuant to the Arrangement, a Resident Holder, other than a Dissenting Resident Holder, as defined below, will exchange the Resident Holder’s Subordinate Voting Shares for Charlotte’s Web Common Shares. Such Resident Holder will be deemed to have disposed of such Subordinate Voting Shares on a tax deferred basis under section 85.1 of the Tax Act, unless such Resident Holder includes any portion of the gain or loss, otherwise determined, in computing its income for the taxation year which includes the Arrangement. More specifically, the Resident Holder will be deemed to have disposed of the Subordinate Voting Shares for proceeds of disposition equal to the adjusted cost base of the Subordinate Voting Shares to such Resident Holder, determined immediately before the Effective Time, and the Resident Holder will be deemed to have acquired the Charlotte’s Web Common Shares at an aggregate cost equal to such adjusted cost base of the Subordinate Voting Shares. The cost of Charlotte’s Web Common Shares so acquired will be averaged with the adjusted cost base of any other Charlotte’s Web Common Shares held by the Resident Holder as capital property for the purpose of determining the adjusted cost base of each Charlotte’s Web Common Share held by the Resident Holder.

If a Resident Holder chooses to treat the exchange of Subordinate Voting Shares for Charlotte’s Web Common Shares as a taxable transaction by including any portion of the gain or loss in computing its income, the Resident Holder will realize a capital gain (or capital loss) to the extent that the fair market value of the Charlotte’s Web Common Shares received by the Resident Holder exceeds (or is less than) the adjusted cost base to the Resident Holder of the

82

Subordinate Voting Shares immediately before the exchange and any reasonable costs of disposition. In this event, the cost to the Resident Holder of the Charlotte’s Web Common Shares received will be equal to the fair market value of such Charlotte’s Web Common Shares determined at the Effective Time. This cost will be averaged with the adjusted cost base of all other Charlotte’s Web Common Shares held by the Resident Holder as capital property for the purpose of determining the adjusted cost base of such Charlotte’s Web Common Shares. See “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders - Shareholders Resident in Canada – Taxation of Capital Gain or Capital Loss” for further details.

Taxation of Capital Gain or Capital Loss

Generally, one-half of any capital gain (a “taxable capital gain”) realized by a Resident Holder in a taxation year must be included in computing the income of that Resident Holder for that year, and one-half of any capital loss (an “allowable capital loss”) realized by a Resident Holder in a taxation year must be applied to reduce taxable capital gains realized by the Resident Holder in that year. Allowable capital losses for the year in excess of taxable capital gains realized for that year generally may be applied by the Resident Holder to reduce net taxable capital gains realized in any of the three preceding years or in any subsequent year, to the extent and under the circumstances described in the Tax Act.

Capital gains realized by a Resident Holder who is an individual or trust, other than certain trusts, may increase the Resident Holder’s liability for alternative minimum tax under the Tax Act.

In the case of a Resident Holder that is a corporation, the amount of any capital loss arising on a disposition, or deemed disposition, of any share may be reduced by the amount of dividends received, or deemed to have been received, by such Resident Holder on such share (or another share where the share has been acquired in exchange for such other share), to the extent and under the circumstances described in the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust, or where a trust or partnership of which a corporation is a beneficiary or a member is a member of a partnership or a beneficiary of a trust that owns any such share.

Dividends on Charlotte’s Web Common Shares

Dividends received or deemed to be received by a Resident Holder on Charlotte’s Web Common Shares will be required to be included in such Resident Holder’s income for the purposes of the Tax Act for the taxation year in which the dividends are received or deemed to be received. Such dividends received by a Resident Holder who is an individual will be subject to the gross up and dividend tax credit rules normally applicable to dividends received from taxable Canadian corporations. In the case of a Resident Holder that is a corporation, such dividends or deemed dividends will be included in income and generally will be deductible in computing taxable income. “Private corporations” and “subject corporations” (as defined in the Tax Act) may be liable for additional refundable Part IV tax on any dividend received or deemed to have been received, to the extent such dividends are deductible in computing the Resident Holder’s taxable income for the year. However, in certain circumstances, the amount of any such taxable dividend received or deemed to have been received by a Resident Holder that is a corporation may be treated as proceeds of disposition or as a capital gain and not as a dividend under subsection 55(2) of the Tax Act. Resident Holders that are corporations should consult their own tax advisors in this regard.

A Resident Holder may be subject to United States withholding tax on dividends received on the Charlotte’s Web Shares (see “Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders”). A Resident Holder may not be entitled to claim a foreign tax credit for any United States withholding tax paid by or on behalf of such Resident Holder in respect of dividends received on the Charlotte’s Web Common Shares, unless such Resident Holder has U.S.-source income that is not bearing full tax, although he, she or it may be entitled to claim a deduction for such United States withholding tax in computing income if certain conditions are met. Generally, a foreign tax credit in respect of a tax paid to a particular foreign country is limited to the Canadian tax otherwise payable in respect of income sourced in that country. Dividends received on the Charlotte’s Web Common Shares by a Resident Holder may not be treated as income sourced in the United States for these purposes. Resident Holders should consult their own tax advisors with respect to the availability of any foreign tax credits or deductions under the Tax Act in respect of any United States withholding tax applicable to dividends on the Charlotte’s Web Common Shares.

83

Additional Refundable Tax

A Resident Holder that is a Canadian controlled private corporation (as such term is defined in the Tax Act) may be liable to pay, in addition to tax otherwise payable under the Tax Act, a refundable tax on its aggregate investment income, including taxable capital gains realized on the disposition (or deemed disposition) of Subordinate Voting Shares or Charlotte’s Web Common Shares and dividends received or deemed to be received in respect of such shares.

Disposition of Charlotte’s Web Common Shares

Generally, on a disposition or deemed disposition of Charlotte’s Web Common Shares, a Resident Holder will realize a capital gain (or a capital loss) equal to the amount, if any, by which the proceeds of disposition exceed (or are less than) the aggregate of the adjusted cost base to the Resident Holder of such Charlotte’s Web Common Shares immediately before the disposition or deemed disposition and any reasonable costs of disposition. See “Certain Canadian Federal Income Tax Considerations for the Corporation’s Shareholders - Shareholders Resident in Canada – Taxation of Capital Gain or Capital Loss” for further details.

Dissenting Resident Holders

A Resident Holder who exercises Dissent Rights (a “Dissenting Resident Holder”) will be deemed under the Arrangement to have transferred such Dissenting Resident Holder’s Subordinate Voting Shares to Abacus and will be entitled to be paid the fair value of the Dissenting Resident Holder’s Subordinate Voting Shares. The Dissenting Resident Holder will be deemed to have received a taxable dividend equal to the amount by which the amount received for the Subordinate Voting Shares (less an amount in respect of interest, if any, awarded by the Court) exceeds the paid-up capital for purposes of the Tax Act of such shares (as determined under the Tax Act).

Where a Dissenting Resident Holder is an individual, any deemed dividend will be included in computing that Dissenting Resident Holder’s income and will be subject to the gross-up and dividend tax credit rules normally applicable to dividends received from taxable Canadian corporations. In the case of a Dissenting Resident Holder that is a corporation, any deemed dividend will be included in income and generally will be deductible in computing taxable income. However, in some circumstances, the amount of any such deemed dividend realized by a corporation may be treated as proceeds of disposition or as a capital gain and not as a dividend under subsection 55(2) of the Tax Act. Dissenting Resident Holders that are corporations should consult their own tax advisors in this regard.

“Private corporations” and “subject corporations” (as defined in the Tax Act) may be liable for additional refundable Part IV tax on any dividend deemed to have been received to the extent such dividends are deductible in computing the Dissenting Resident Holder’s taxable income for the year.

A Dissenting Resident Holder will also be considered to have disposed of such Dissenting Resident Holder’s Subordinate Voting Shares for proceeds of disposition equal to the amount paid to such Dissenting Resident Holder less an amount in respect of interest, if any, awarded by the Court and the amount of any deemed dividend. A Dissenting Resident Holder may realize a capital gain (or sustain a capital loss) to the extent that such proceeds of disposition exceed (or are less than) the aggregate of the adjusted cost base of the Subordinate Voting Shares to the Dissenting Resident Holder and reasonable costs of disposition. See “Shareholders Resident in Canada – Taxation of Capital Gain or Capital Loss” for further details.

Any interest awarded by the Court to a Dissenting Resident Holder will be included in such Resident Holder’s income for the purposes of the Tax Act.

Shareholders not Resident in Canada

The following portion of the summary is applicable to Holders who, at all relevant times, for purposes of the Tax Act and any applicable income tax treaty or convention, are not, and are not deemed to be, resident in Canada and who do not use or hold, and are not deemed to use or hold, Subordinate Voting Shares or Charlotte’s Web Common Shares in carrying on a business in Canada (a “Non-Resident Holder”). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer carrying on business in Canada and elsewhere or an “authorized foreign bank” (as such term is defined in the Tax Act).

84

Exchange of Subordinate Voting Shares for Charlotte’s Web Common Shares

A Non-Resident Holder will not be subject to capital gains tax under the Tax Act on the disposition of Subordinate Voting Shares unless the Subordinate Voting Shares constitute “taxable Canadian property” of the Non-Resident Holder for purposes of the Tax Act.

Generally, Subordinate Voting Shares will not constitute taxable Canadian property of a Non-Resident Holder at a particular time provided that such shares are listed at that time on a designated stock exchange (which currently includes the TSX and the CSE), unless at any particular time during the 60 month period that ends at that time, (A) the Subordinate Voting Shares derived more than 50% of their fair market value, directly or indirectly, from one or any combination of: (a) real or immoveable properties situated in Canada, (b) “timber resource property” (as such term is defined in the Tax Act), (c) “Canadian resource property” (as such term is defined in the Tax Act) or (d) options in respect of, or interests in, or for civil law, rights in, any of the foregoing property, whether or not the property exists, and (B) 25% or more of the issued shares of any class or series of the capital stock of Abacus were owned by one or any combination of (i) the Non-Resident Holder, (ii) persons with whom the Non-Resident Holder does not deal at arm’s length, or (iii) partnerships in which the Non-Resident Holder or a person referred to in (ii) holds a membership interest directly or indirectly through one or more partnerships. Notwithstanding the foregoing, in certain circumstances set out in the Tax Act, Subordinate Voting Shares could be deemed to be taxable Canadian property.

In the event that the Subordinate Voting Shares constitute or are deemed to constitute taxable Canadian property to any Non-Resident Holder, such Non-Resident Holder may be entitled to relief under the provisions of an applicable income tax treaty or convention if the Subordinate Voting Shares are “treaty protected property” to the Non-Resident Holder. Shares owned by a Non-Resident Holder will generally be treaty protected property if the gain from the disposition of such shares would, because of an applicable income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident, be exempt from tax under Part I of the Tax Act.

If the Subordinate Voting Shares are considered to be taxable Canadian property but not treaty protected property to the Non-Resident Holder at the time of disposition, such Non-Resident Holder will generally be subject to the same income tax considerations as those discussed above with respect to Resident Holders under “- Holders Resident in Canada – Exchange of Subordinate Voting Shares for Charlotte’s Web Common Shares”, including the potential for the deferral of any capital gain or loss that would otherwise be realized on the disposition of Subordinate Voting Shares in exchange for Charlotte’s Web Common Shares under the provisions of section 85.1 of the Tax Act.

In addition, if the Subordinate Voting Shares are taxable Canadian property of the Non-Resident Holder, the Charlotte’s Web Common Shares acquired by the Non-Resident Holder in exchange for such Subordinate Voting Shares pursuant to the Arrangement will be deemed to be, at any time that is within 60 months after such exchange, taxable Canadian property of the Non-Resident Holder.

Disposition of Charlotte’s Web Common Shares

Any capital gain realized by a Non-Resident Holder on the disposition or deemed disposition of Charlotte’s Web Common Shares acquired pursuant to the Arrangement will not be subject to tax under the Tax Act unless such shares constitute “taxable Canadian property” (as described above) and are not “treaty protected property” (as described above) of the Non-Resident Holder at the time of the disposition.

If the Charlotte’s Web Common Shares are considered to be taxable Canadian property but not treaty protected property to the Non-Resident Holder, such Non-Resident Holder will generally be subject to the same income tax considerations as those discussed with respect to Resident Holders under “Shareholders Resident in Canada – Taxation of Capital Gain or Capital Loss”.

Dividends on Charlotte’s Web Common Shares

Dividends paid or credited, or deemed to be paid or credited, on Charlotte’s Web Common Shares to a Non-Resident Holder will be subject to withholding tax under the Tax Act at a rate of 25% of the gross amount of the dividends unless the rate is reduced by an applicable income tax treaty or convention. For example, under the Canada-United States Income Tax Convention (1980), as amended, where dividends are paid to or derived by a Non-Resident Holder

85

that is a U.S. resident for the purposes of, and that is entitled to the benefits in accordance with the provisions of, such convention, and that is the beneficial owner of such dividends, the applicable rate of Canadian withholding tax generally is reduced to 15%.

Dissenting Non-Resident Holders

A Non-Resident Holder who exercises Dissent Rights under the Arrangement (a “Dissenting Non-Resident Holder”) will be deemed to have transferred such Dissenting Non-Resident Holder’s Subordinate Voting Shares to Abacus and will be entitled to be paid the fair value of the Dissenting Non-Resident Holder’s Subordinate Voting Shares. The Dissenting Non-Resident Holder will be deemed to have received a taxable dividend equal to the amount by which the amount paid to the Dissenting Non-Resident Holder for the Subordinate Voting Shares (less an amount in respect of interest, if any, awarded by the Court) exceeds the paid-up capital of such shares (as determined under the Tax Act). The amount of the deemed dividend will be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividend unless the rate is reduced under the provisions of an applicable income tax treaty or convention between Canada and the Dissenting Non-Resident Holder’s country of residence.

A Dissenting Non-Resident Holder will also be considered to have disposed of the Subordinate Voting Shares for proceeds of disposition equal to the amount paid to such Dissenting Non-Resident Holder less an amount in respect of interest, if any, awarded by the Court and the amount of any deemed dividend, and will be subject to tax under the Tax Act on any gain realized if such shares constitute “taxable Canadian property” as described under the above heading “Exchange of Subordinate Voting Shares for Charlotte’s Web Common Shares” unless relief is provided under an income tax treaty or convention between Canada and the Dissenting Non-Resident Holder’s country of residence.

Where a Dissenting Non-Resident Holder receives interest in connection with the exercise of Dissent Rights, such amount will not be subject to Canadian withholding tax.

Eligibility for Investment in Canada

Charlotte’s Web Common Shares

Provided the Charlotte’s Web Common Shares are listed on a designated stock exchange (which currently includes the TSX) at the Effective Time, the Charlotte’s Web Common Shares would, on the date of issuance under the Arrangement, be qualified investments on such date under the Tax Act for trusts governed by registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs”), registered education savings plans (“RESPs”), deferred profit sharing plans (“DPSPs”), registered disability savings plans (“RDSPs”) and tax free savings accounts (“TFSAs”).

Notwithstanding the foregoing, if the Charlotte’s Web Common Shares are a “prohibited investment” for a TFSA, a RESP, a RDSP, a RRSP or a RRIF, the holder, subscriber or annuitant of such plan, as the case may be, will be subject to a penalty tax as set out in the Tax Act. The Charlotte’s Web Common Shares will generally not be a prohibited investment for a TFSA, a RESP, a RDSP, a RRSP or a RRIF provided the holder, subscriber, or annuitant thereof, as the case may be, deals at arm’s length with Charlotte’s Web, for purposes of the Tax Act, and does not have a “significant interest” (as defined in the Tax Act) in Charlotte’s Web. The Charlotte’s Web Common Shares also will not be a prohibited investment if they are “excluded property” as defined in the Tax Act. A holder, subscriber or annuitant of a TFSA, a RESP, a RDSP, a RRSP or a RRIF, as the case may be, who intends to hold Charlotte’s Web Common Shares in such a plan is advised to consult its own tax advisors.

Subordinate Voting Shares

Nothing in the Arrangement prior to the disposition of the Subordinate Voting Shares will, in and of itself, cause the Subordinate Voting Shares to cease to be a qualified investment under the Tax Act for trusts governed by RRSPs, RRIFs, RESPs, DPSPs, RDSPs and TFSAs.

86

Certain U.S. Federal Income Tax Considerations for the Corporation’s Shareholders

The following is a discussion of certain material U.S. federal income tax considerations applicable to the exchange of Subordinate Voting Shares for Charlotte’s Web Common Shares pursuant to the Arrangement and the ownership and disposition of Charlotte’s Web Common Shares following the Arrangement.

This discussion is based on the Code and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations (“Treasury Regulations”) as of the date hereof, changes to any of which after the date of this Information Circular may affect the tax consequences described herein. Neither Abacus nor Charlotte’s Web has requested, or intends to request, a ruling from the Internal Revenue Service (the “IRS”) or an opinion of tax counsel with respect to any of the U.S. federal income tax consequences described below and, as a result, there can be no assurance that the IRS will not disagree with or challenge any of the conclusions described herein. This discussion does not address any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes).

This discussion applies only to securities that are held as capital assets for U.S. federal income tax purposes. In addition, this discussion does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including the alternative minimum tax or the Medicare net investment income tax, and the different consequences that may apply if you are subject to special rules that apply to certain types of investors, such as:

financial institutions;

regulated investment companies;

real estate investment trusts;

insurance companies;

dealers or traders subject to a mark to market method of accounting with respect to their securities;

persons holding Subordinate Voting Shares or Charlotte’s Web Common Shares as part of a “straddle”, hedge, integrated transaction or similar transaction;

persons who acquired our securities through the exercise or cancellation of employee stock options or otherwise as compensation for their services;

U.S. Holders whose functional currency is not the U.S. dollar;

U.S. expatriates;

partnerships or other pass through entities for U.S. federal income tax purposes;

U.S. Holders that own, directly, indirectly or by attribution, 5% or more (by vote or value) of the Subordinate Voting Shares (or, following the completion of the Arrangement, Charlotte’s Web Common Shares);

persons that are subject to “applicable financial statement rules” under Section 451(b) of the Code; and

tax exempt entities.

If you are a partnership or other pass through entity (or other entity or arrangement treated as a partnership or pass through entity) for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners or other owners will generally depend on the status of the partners (or other owners) and your activities. If you are a partner (or other owner) of a partnership or other pass through entity that holds Subordinate Voting Shares (or, after the Arrangement, Charlotte’s Web Common Shares), you are urged to consult your tax advisor regarding the tax consequences of participating in the Arrangement and of owning and disposing of Charlotte’s Web Common Shares.

87

SHAREHOLDERS SHOULD NOTE THAT EACH OF ABACUS AND CHARLOTTE’S WEB ARE TREATED FOR U.S. FEDERAL INCOME TAX PURPOSES AS A U.S. CORPORATION FOR ALL PURPOSES OF THE CODE, PURSUANT TO SECTION 7874 OF THE CODE, NOTWITHSTANDING THAT EACH IS ORGANIZED UNDER THE LAWS OF CANADA.

THE FOLLOWING SUMMARY IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF U.S. FEDERAL TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION.

U.S. Holders

This section applies to you if you are a “U.S. Holder.” For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of Subordinate Voting Shares (or, after the Arrangement, Charlotte’s Web Common Shares) that is for U.S. federal income tax purposes: (i) a U.S. citizen or U.S. resident alien, (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes), that was created or organized under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source, or (iv) a trust that either is subject to the supervision of a court within the United States and has one or more U.S. persons with authority to control all of its substantial decisions or has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

Certain U.S. Federal Income Tax Consequences of the Arrangement

Pursuant to the Arrangement, the Shareholders (other than those who validly exercise Dissent Rights) will exchange their Subordinate Voting Shares solely for Charlotte’s Web Common Shares. Abacus and Charlotte’s Web each intend that the Arrangement will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. However, neither Abacus nor Charlotte’s Web has requested, or intends to request, a ruling from the IRS or an opinion of tax counsel with respect to whether the Arrangement will qualify as a reorganization and, therefore, no assurance can be given as to whether the Arrangement will qualify as a reorganization. Shareholders are urged to consult their tax advisors regarding the tax consequences of the Arrangement to them in their particular circumstances.

If the Arrangement Qualifies as a Reorganization. If the Arrangement qualifies as a reorganization:

no gain or loss will be recognized by U.S. Holders as a result of the receipt of Charlotte’s Web Common Shares in exchange for Subordinate Voting Shares pursuant to the Arrangement;

the aggregate tax basis of Charlotte’s Web Common Shares received in the Arrangement will equal the aggregate tax basis of Subordinate Voting Shares surrendered in the Arrangement; and

the holding period for Charlotte’s Web Common Shares received in exchange for Subordinate Voting Shares pursuant to the Arrangement will include the period during which such Subordinate Voting Shares were held.

U.S. Holders who own, immediately before the exchange, 5% or more by vote or value of all Subordinate Voting Shares are subject to certain additional requirements and are urged to consult their own tax advisors with respect to such requirements.

If the Arrangement Fails to Qualify as a Reorganization. If the Arrangement fails to qualify as a reorganization, the Arrangement will be treated, for U.S. federal income tax purposes, as a taxable sale by U.S. Holders of their Subordinate Voting Shares in exchange for Charlotte’s Web Common Shares. In such case, U.S. Holders will recognize capital gain or loss in an amount equal to the difference, if any, between the fair market value of the Charlotte’s Web Common Shares received in the Arrangement and the adjusted tax basis of Subordinate Voting Shares exchanged for those shares. Such gain or loss will be capital gain or loss and will be long term capital gain or loss provided that at the time of completion of the Arrangement, the Subordinate Voting Shares surrendered by U.S. Holders were held for more than one year. Gain or loss must be determined separately for blocks of Subordinate Voting Shares acquired at different times or at different prices. Any such gain or loss generally will be treated as U.S.

88

source income. Non-corporate U.S. Holders (including individuals) generally are subject to U.S. federal income tax on long term capital gains at preferential rates. The deductibility of a capital loss may be subject to limitations.

U.S. Holders Exercising Dissent Rights

For U.S. federal income tax purposes, U.S. Holders that receive payment for their Subordinate Voting Shares from Abacus pursuant to the exercise of Dissent Rights generally will be treated as recognizing capital gain or loss in an amount equal to the difference, if any, between (i) the amount received in respect of their Subordinate Voting Shares (other than amounts, if any, that are deemed to be interest for U.S. federal income tax purposes, which amounts will be taxed as ordinary income), and (ii) the adjusted tax basis of such Subordinate Voting Shares. Such gain or loss will be capital gain or loss and will be long term capital gain or loss provided that at the time of completion of the Arrangement, the Subordinate Voting Shares surrendered by U.S. Holders were held for more than one year. Gain or loss must be determined separately for blocks of Subordinate Voting Shares acquired at different times or at different prices. Any such gain or loss will be treated as U.S. source income. Non-corporate U.S. Holders (including individuals) generally are subject to U.S. federal income tax on long term capital gains at preferential rates. The deductibility of a capital loss may be subject to limitations. It is possible that the IRS may take the position that some portion of the amounts received by a U.S. Holder exercising Dissent Rights should be treated as interest or as otherwise being subject to taxation as ordinary income. U.S. Holders that intend to exercise Dissent Rights are urged to consult their own tax advisors regarding the U.S. federal income tax consequences to such holder of exercising such rights prior to exercising such rights and having due regard to such U.S. Holder’s particular circumstances.

In certain situations where a U.S. Holder of Subordinate Voting Shares who exercises Dissent Rights is treated as owning the Subordinate Voting Shares of other Shareholders for U.S. federal income tax purposes, the amount received from Abacus in respect of their Subordinate Voting Shares could be treated as a distribution in respect of their Subordinate Voting Shares, rather than a sale of their Subordinate Voting Shares. U.S. Holders are urged to consult their tax advisors regarding the tax consequences of their exercise of Dissent Rights.

Ownership and Disposition of Charlotte’s Web Common Shares

Distributions Received by U.S. Holders. Any distributions by Charlotte’s Web with respect to Charlotte’s Web Common Shares will be taxable as dividend income to a U.S. Holder when paid to the extent of Charlotte’s Web’s current or accumulated earnings and profits as determined for U.S. federal income tax purposes. To the extent that the amount of a distribution with respect to Charlotte’s Web Common Shares exceeds its current and accumulated earnings and profits, such distribution will be treated first as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in the Charlotte’s Web Common Shares, and thereafter as a capital gain which will be a long-term capital gain if the U.S. Holder’s holding period for the shares exceeds one year at the time of the distribution. Distributions on Charlotte’s Web Common Shares constituting dividend income paid to U.S. Holders that are individuals may qualify for the reduced rates applicable to qualified dividend income.

Disposition of Charlotte’s Web Common Shares by U.S. Holders. A U.S. Holder will generally recognize capital gain or loss on a sale, exchange, redemption (other than a redemption that is treated as a distribution) or other disposition of Charlotte’s Web Common Shares equal to the difference between the amount realized upon the disposition and the U.S. Holder’s adjusted tax basis in the shares so disposed. Such capital gain or loss will be a long-term capital gain or loss if the U.S. Holder’s holding period for the shares disposed of exceeds one year at the time of disposition. Long-term capital gains of non-corporate taxpayers are generally taxed at a lower maximum marginal tax rate than the maximum marginal tax rate applicable to ordinary income. The deductibility of net capital losses by individuals and corporations is subject to limitations.

Foreign Tax Credit Limitations. Because Charlotte’s Web is a Canadian corporation that is treated as a U.S. corporation for U.S. federal income tax purposes, a U.S. Holder may pay, through withholding, Canadian tax, as well as U.S. federal income tax, with respect to dividends paid on its Charlotte’s Web Common Shares. For U.S. federal income tax purposes, a U.S. Holder may elect for any taxable year to receive either a credit or a deduction for all foreign income taxes paid by the holder during the year. Complex limitations apply to the foreign tax credit, including a general limitation that the credit cannot exceed the proportionate share of a taxpayer’s U.S. federal income tax that the taxpayer’s foreign source taxable income bears to the taxpayer’s worldwide taxable income. In applying this limitation, items of income and deduction must be classified, under complex rules, as either foreign source or U.S. source. The status of Charlotte’s Web as a U.S. domestic corporation for U.S. federal income tax purposes will cause

89

dividends paid by Charlotte’s Web to be treated as U.S. source rather than foreign source income for this purpose. As a result, a foreign tax credit may be unavailable for any Canadian tax paid on dividends received from Charlotte’s Web. Similarly, to the extent a sale or disposition of Charlotte’s Web Common Shares by a U.S. Holder results in Canadian tax payable by the U.S. Holder, a U.S. foreign tax credit may be unavailable to the U.S. Holder for such Canadian tax. In each case, however, the U.S. Holder should be able to take a deduction for the U.S. Holder's Canadian tax paid, provided that the U.S. Holder has not elected to credit other foreign taxes during the same taxable year. The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding these rules.

Foreign Currency. The amount of any distribution paid to a U.S. Holder in foreign currency, or the amount of proceeds paid in foreign currency on the sale, exchange or other taxable disposition of Charlotte’s Web Common Shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). A U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own tax advisors.

Non-U.S. Holders

This section applies to you if you are a “Non-U.S. Holder.” For purposes of this discussion, a “Non-U.S. Holder” means a beneficial owner of Subordinate Voting Shares (or, after the Arrangement, Charlotte’s Web Common Shares) that is neither a U.S. Holder nor an entity or arrangement treated as a partnership or other pass through entity for U.S. federal income tax purposes.

Certain U.S. Federal Income Tax Consequences of the Arrangement

If the Arrangement Qualifies as a Reorganization. Abacus does not believe it is or has been a U.S. real property holding corporation (“USRPHC”) for U.S. federal income tax purposes at any time during the five-year period ending on the date of disposition of Subordinate Voting Shares. In such case, the Arrangement is not expected to result in any material U.S. federal income tax consequences to Non-U.S. Holders provided that such Non-U.S. Holder (i) has not been engaged in the conduct of a trade or business within the United States (or, if required by an applicable income tax treaty, such Non-U.S. Holder has not maintained a permanent establishment within the United States), and (ii) is not a non-resident alien individual treated as present in the United States for 183 days or more during the taxable year of the Arrangement and certain other requirements are met.

If the Arrangement Fails to Qualify as a Reorganization. If the Arrangement fails to qualify as a reorganization, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain resulting from the disposition of Subordinate Voting Shares unless (a) Abacus is or has been a USRPHC for U.S. federal income tax purposes at any time during the shorter of the Non-U.S. Holder’s holding period or the five-year period ending on the date of disposition of Subordinate Voting Shares, (b) such gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the Non-U.S. Holder maintains in the United States) or (c) the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year in which such disposition occurs and meets certain other requirements. If a Non-U.S. Holder is engaged in a U.S. trade or business and the disposition of Subordinate Voting Shares is deemed to be effectively connected to that trade or business, the Non-U.S. Holder generally will be subject to U.S. federal income tax on the resulting gain in the same manner as if it were a U.S. Holder (and, if such Non-U.S. Holder is a corporation, it may be subject to an additional branch profits tax). If a Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year in which such disposition occurs, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a flat rate of 30%.

Non-U.S. Holders Exercising Dissent Rights

For U.S. federal income tax purposes, Non-U.S. Holders that receive payment for their Subordinate Voting Shares from Abacus pursuant to the exercise of Dissent Rights generally will not be subject to U.S. federal income tax on any gain resulting from the disposition of Subordinate Voting Shares unless (a) Abacus is or has been a USRPHC for U.S.

90

federal income tax purposes at any time during the shorter of the Non-U.S. Holder’s holding period or the five-year period ending on the date of disposition of Subordinate Voting Shares, (b) such gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the Non-U.S. Holder maintains in the United States) or (c) the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year in which such disposition occurs and meets certain other requirements. If a Non-U.S. Holder is engaged in a U.S. trade or business and the disposition of Subordinate Voting Shares is deemed to be effectively connected to that trade or business, the Non-U.S. Holder generally will be subject to U.S. federal income tax on the resulting gain in the same manner as if it were a U.S. Holder (and, if a corporation, may be subject to an additional branch profits tax). It is possible, however, that the IRS may take the position that some portion of the amounts received by a Non-U.S. Holder exercising Dissent Rights should be treated as U.S. source interest or other U.S. source income. In such case, such portion may be subject to U.S. withholding tax at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty or other exception and, in either case, provides proper certification of its eligibility. If a Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year in which such disposition occurs, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a flat rate of 30%. Non-U.S. Holders that intend to exercise Dissent Rights are urged to consult their own tax advisors regarding the U.S. federal income tax consequences to such holder of exercising such rights prior to exercising such rights and having due regard to such Non-U.S. Holder’s particular circumstances.

Ownership and Disposition of Charlotte’s Web Common Shares

Distributions Received by Non-U.S. Holders. In general, any distributions made to a Non-U.S. Holder on Charlotte’s Web Common Shares, to the extent paid out of Charlotte’s Web’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States, will be subject to withholding tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty and the procedures for claiming such benefits. To the extent that the amount of the distribution exceeds Charlotte’s Web’s current and accumulated earnings and profits, such excess will be treated first as a tax-free return of the Non-U.S. Holder’s tax basis in the Charlotte’s Web Common Shares, and then, to the extent such excess amount exceeds the Non-U.S. Holder’s tax basis in such stock, as capital gain.

Dividends paid by Charlotte’s Web to a Non-U.S. Holder that are effectively connected with such Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment that the Non-U.S. Holder maintains in the United States) will generally not be subject to U.S. withholding tax, provided such Non-U.S. Holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends generally will be subject to U.S. federal income tax at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

Non-U.S. Holders of Charlotte’s Web Common Shares are urged to consult with their own tax advisors regarding eligibility for benefits under any applicable income tax treaty with respect to dividends paid by Charlotte’s Web and the proper manner for claiming such benefits (including proper certification on an applicable IRS Form W-8).

Disposition of Charlotte’s Web Common Shares by Non-U.S. Holders. Non-U.S. Holders generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of Charlotte’s Web Common Shares unless:

the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, such gain is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States);

the Non-U.S. Holder is a non-resident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or

91

Charlotte’s Web is or has been a USRPHC at any time within the five-year period preceding the disposition or the Non-U.S. Holder’s holding period, whichever period is shorter, and either (i) Charlotte’s Web Common Shares have ceased to be regularly traded on an established securities market or (ii) the Non-U.S. Holder has owned or is deemed to have owned, at any time within the five-year period preceding the disposition or the Non-U.S. Holder’s holding period, whichever period is shorter, more than 5% of the Charlotte’s Web Common Shares.

Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at regular graduated tax rates, generally in the same manner as if such Non-U.S. Holder were a United States person. A Non-U.S. Holder that is a corporation may also be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.

Gain described in the second bullet point above generally would be subject to a flat 30% U.S. federal income tax.

If the third bullet point above applies to a Non-U.S. Holder, gain recognized by such holder on the sale, exchange or other disposition of Charlotte’s Web Common Shares would be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of such stock from a Non-U.S. Holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. Charlotte’s Web would generally be classified as a USRPHC if the fair market value of its “United States real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. Charlotte’s Web believes it currently is not, and does not anticipate becoming, a USRPHC in the foreseeable future. Because the determination of whether Charlotte’s Web is a USRPHC depends, however, on the fair market value of Charlotte’s Web’s United States real property interests relative to the fair market value of Charlotte’s Web’s non-U.S. real property interests and other business assets, there can be no assurance Charlotte’s Web currently is not a USRPHC or will not become one in the future.

Information Reporting and Backup Withholding

In general, non-corporate U.S. Holders may be subject to information reporting in connection with the Arrangement and the ownership and disposition of Charlotte’s Web Common Shares. The receipt of Charlotte’s Web Common Shares, amounts received pursuant to the exercise of Dissent Rights, distributions with respect to, and the proceeds from the sale or other dispositions of Charlotte’s Web Common Shares also may be subject to backup withholding if the non-corporate U.S. Holder:

fails to timely provide an accurate taxpayer identification number;

is notified by the IRS that it has failed to report all interest or distributions required to be shown on its U.S. federal income tax returns; or

in certain circumstances, fails to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding on payments made to them within the United States, or through a U.S. payor, by certifying their status on IRS Form W-8BEN, W-8BEN E, W-8ECI or W-8IMY, as applicable. Backup withholding is not an additional tax. Rather, U.S. Holders and Non-U.S. Holders generally may obtain a credit for any amount withheld against its liability for U.S. federal income tax (and obtain a refund of any amounts withheld in excess of such liability) by accurately completing and timely filing a U.S. federal income tax return with the IRS.

Additional Withholding Tax on Payments Made to Foreign Accounts

Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred to as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding at a rate of 30% in certain circumstances with respect to “withholdable payments” which are held by or through certain non-U.S. financial institutions (including investment funds), as a beneficial owner or as an intermediary, unless any such institution (i) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold

92

on certain payments, or (ii) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. For this purpose, “withholdable payments” generally include payments of dividends in addition to certain other passive income type amounts. Under proposed regulations promulgated by the Treasury Department on December 13, 2018, on which taxpayers may rely until final regulations are issued, withholdable payments do not include gross proceeds from any sale or other disposition of securities. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Accordingly, the entity through which Charlotte’s Web Common Shares are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of Charlotte’s Web Common Shares held by an investor that is a non-financial non-U.S. entity (as a beneficial owner or as an intermediary) that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (i) certifies to the applicable withholding agent that such entity does not have any “substantial United States owners” or (ii) provides certain information regarding the entity’s “substantial United States owners”, which will in turn be provided to the U.S. Department of Treasury. All holders should consult their tax advisors regarding the possible implications of FATCA on their investment in Charlotte’s Web Common Shares.

Comparison of Shareholders’ Rights

The rights of Shareholders are currently governed by the OBCA and by the Corporation’s articles of incorporation and by-laws. Shareholders receiving Charlotte’s Web Common Shares pursuant to the Arrangement will become shareholders of Charlotte’s Web, which is governed by the BCBCA and the articles of Charlotte’s Web. Although the rights and privileges of shareholders under the OBCA are in many instances comparable to those under the BCBCA, there are several differences. See “Appendix J - Summary Comparison of Rights of Holders of Charlotte’s Web Common Shares and Abacus Shares” for a comparison of certain of these rights. This summary is not intended to be exhaustive and Shareholders should consult their legal advisors regarding all of the implications of the effects of the Arrangement on such Shareholders’ rights.

Interest of Informed Persons in Material Transactions

Other than as set forth herein, no informed person of the Corporation, or any associate or affiliate of any informed person of the Corporation has any material interest, direct or indirect, in any transaction within the Corporation’s three most recently completed financial years or in any proposed transaction which has materially affected or would materially affect the Corporation. An “informed person” means (i) a director or executive officer of a reporting issuer; (ii) a director or executive officer of a person or company that is itself an informed person or Subsidiary of a reporting issuer; any person or company who beneficially owns, directly or indirectly, voting shares of a reporting issuer or who exercises control or direction over shares of the reporting issuer or a combination of both carrying more than 10% of the voting rights attached to all outstanding voting securities of the reporting issuer; and (iii) a reporting issuer that has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities.

See “The Arrangement – Interest of Certain Persons in the Arrangement” and “Certain Canadian Securities Law Matters”.

Interest of Experts of the Corporation and Charlotte’s Web

The auditor of the Corporation is Richter LLP. Richter LLP is independent with respect to the Corporation within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulation.

Greenhill is named as having prepared or certified a report, statement or opinion in this Information Circular, specifically its Fairness Opinion. See “The Arrangement – Fairness Opinion”. Except as disclosed herein, including the fees to be paid to Greenhill, a substantial portion of which is contingent on completion of the Arrangement or certain alternative transactions, to the knowledge of the Corporation, none of the Greenhill financial advisors, the directors, officers, employees and partners, as applicable, or their respective associates or affiliates, beneficially owns, directly or indirectly, 1% or more of the securities of the Corporation or any of its associates or affiliates, has received or will receive any direct or indirect interests in the property of the Corporation or any of its associates or affiliates,

93

or is expected to be elected, appointed or employed as a director, officer or employee of the Corporation or any associate or affiliate thereof.

Additional Information

Additional information relating to the Corporation is available on SEDAR at www.sedar.com under the Corporation’s profile. Copies of the Corporation’s latest consolidated audited financial statements and any interim consolidated financial statements as well as any management’s discussion and analysis thereon are also available on request from the Secretary of the Corporation.

In addition to press releases, securities filings and public conference calls and webcasts, the Corporation intends to use its investor relations page on its website at www.abacushp.com as a means of disclosing material information to its investors and others and for complying with its disclosure obligations under applicable Canadian securities Laws. Accordingly, investors and others should monitor the website in addition to following the Corporation’s press releases, securities filings and public conference calls and webcasts. This list may be updated from time to time.

Approval of the Information Circular

The content and transmission of this Information Circular have been approved by the Board.

Toronto, Ontario, May 4, 2020.

/s/ Perry Antelman

Chair of the Board

94

Consent of Greenhill & Co. Canada Ltd.

We hereby consent to the references to our firm name and our Fairness Opinion dated March 22, 2020 contained in the Notice of Special Meeting of Shareholders and Management Information Circular of the Corporation dated May 4, 2020, under the headings “Summary of the Arrangement – Reasons for the Recommendation”, “The Arrangement – Background to the Arrangement”, “The Arrangement – Recommendation of the Board”, “The Arrangement – Fairness Opinion” and “Interest of Experts of the Corporation and Charlotte’s Web” and to the inclusion of the text of our Fairness Opinion in Appendix C to the Notice of Special Meeting of Shareholders and Management Information Circular of the Corporation dated May 4, 2020. Our Fairness Opinion was given as at March 22, 2020 subject to the assumptions, limitations and qualifications contained therein. In providing such consent, we do not intend or permit that any person other than the board of directors of the Corporation shall be entitled to rely upon our opinion.

(signed) Greenhill & Co. Canada Ltd. Toronto, Ontario May 4, 2020

A-1

ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

1. The arrangement (the “Arrangement”) under the Business Corporations Act (Ontario) (the “OBCA”) involving Abacus Health Products, Inc. (the “Company”), pursuant to the arrangement agreement among the Company and Charlotte’s Web Holdings, Inc. (the “Purchaser”) dated March 22, 2020, as it may be modified, supplemented or amended from time to time in accordance with its terms (the “Arrangement Agreement”), all as more particularly described and set forth in the management information circular of the Company dated May 4, 2020 (the “Circular”) accompanying the notice of this meeting, is hereby authorized, approved and adopted.

2. The plan of arrangement, as it has been or may be modified, supplemented or amended in accordance with the Arrangement Agreement and its terms, involving the Company (the “Plan of Arrangement”), the full text of which is set out as Schedule A to the Arrangement Agreement, is hereby authorized, approved and adopted.

3. The Arrangement Agreement and all the transactions contemplated therein, the actions of the directors of the Company in approving the Arrangement and the actions of the directors and officers of the Company in executing and delivering the Arrangement Agreement and any modifications, supplements or amendments thereto are hereby ratified and approved.

4. Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the Company Shareholders (as defined in the Arrangement Agreement) or that the Arrangement has been approved by the Superior Court of Justice of Ontario (the “Court”), the directors of the Company are hereby authorized and empowered, at their discretion, without further notice to or approval of the Company Shareholders: (i) to amend or modify the Arrangement Agreement or the Plan of Arrangement to the extent permitted by their terms; and (ii) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement and any related transactions.

5. Any officer or director of the Company is hereby authorized and directed, for and on behalf of the Company, to make an application to the Court for an order approving the Arrangement and to execute, under the corporate seal of the Company or otherwise, and to deliver or cause to be delivered, for filing with the Director under the OBCA, articles of arrangement and such other documents as are necessary or desirable to give effect to the Arrangement and the Plan of Arrangement in accordance with the Arrangement Agreement, such determination to be conclusively evidenced by the execution and delivery of such articles of arrangement and any such other documents.

6. Any officer or director of the Company is hereby authorized and directed, for and on behalf of the Company, to execute or cause to be executed and to deliver or cause to be delivered, all such other documents and instruments and to perform or cause to be performed all such other acts and things as, in such person’s opinion, may be necessary or desirable to give full force and effect to the foregoing resolutions and the matters authorized thereby, such determination to be conclusively evidenced by the execution and delivery of such other document or instrument or the doing of any other such act or thing.

B-1

PLAN OF ARRANGEMENT

(see attached)

B-2

C-1

FAIRNESS OPINION

(see attached)

March 22, 2020

Board of DirectorsAbacus Health Products, Inc.10 Wanless Avenue, Suite 201Toronto, ON M4N 1V6

Members of the Board of Directors:

We understand that Abacus Health Products, Inc. (“Abacus” or the “Corporation”) isproposing to enter into an arrangement agreement (the “Arrangement Agreement”) with Charlotte’s Web Holdings, Inc. (“Charlotte’s Web”), providing for the conversion of all of the issued outstanding proportionate voting shares of Abacus (“Proportionate Voting Shares”) into subordinate voting shares of Abacus (“Abacus Shares”) and the acquisition by Charlotte’s Web of all the issued and outstanding Abacus Shares (the “Arrangement”)pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Business Corporations Act (Ontario) (the “OBCA”). Under the Arrangement Agreement, each issued and outstanding Abacus Share (other than any Abacus Shares in respect of which their holders shall have validly exercised their dissent and appraisal rights under the OBCA) shall be exchanged for 0.85 (the “Exchange Ratio”) of a common share (“Common Share”) in the share capital of Charlotte’s Web (the “Consideration”).

We also understand that all of the material facts concerning the Arrangement, as well as the associated risks and the terms and conditions of the Arrangement Agreement, will be described in a management information circular (the “Circular”) being prepared by the Corporation in connection with a special meeting (the “Special Meeting”) of holders of the Abacus Shares (the “Shareholders”) at which Shareholders will be asked to pass a resolution (the “Arrangement Resolution”) approving the Arrangement.

In addition, we understand that all of the directors and officers of the Corporation, as well as certain other Shareholders (the “Locked-up Shareholders”) representing approximately 20% in the aggregate of the Abacus Shares as at March 22, 2020, will enter into voting support and lock-up agreements (the “Voting Support and Lock-Up Agreements”) with

C-2

2

Charlotte’s Web in connection with the Arrangement. Pursuant to the Voting Support andLock-Up Agreements, the Locked-up Shareholders will agree, among other things and subject to certain conditions, to vote their Abacus Shares, in favour of the Arrangement Resolution at the Special Meeting.

Engagement of Greenhill

On December 5, 2019, the Corporation orally engaged Greenhill & Co. Canada Ltd., a subsidiary of Greenhill & Co., Inc. (collectively, “Greenhill”), as its financial advisor in connection with the Corporation’s consideration of a non-binding proposal received from Charlotte’s Web on November 26, 2019. Subsequently, the Corporation confirmed the terms of Greenhill’s engagement pursuant to a letter agreement dated January 9, 2020 (the “Engagement Agreement”), which formally confirmed the Corporation’s engagement ofGreenhill to act as exclusive financial advisor to the Corporation and its board of directors (the “Board of Directors”) in connection with any material transaction involvingCharlotte’s Web.

Pursuant to the Engagement Agreement, the Board of Directors has asked for our written opinion (the “Opinion”) as to whether, as of the date hereof, the Consideration to be received by the Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Shareholders. We have not been requested to opine as to, and our opinion does not in any manner address, the underlying business decision to proceed with or effect the Arrangement, or the relative merits of the Arrangement as compared to other potential strategies or transactions that maybe available to the Corporation.

Greenhill will be paid a fee upon delivery of this Opinion, which is not contingent upon completion of the Arrangement or any other transaction. The Corporation has also agreed to pay us an additional fee upon completion of the Arrangement or any other transaction, whether with Charlotte’s Web or any third party, involving a change of control, merger or sale of all or substantially all of the Corporation’s assets. In addition, the Corporation as agreed to reimburse Greenhill for its reasonable expenses (including the fees, disbursements and taxes of our external counsel, McCarthy Tétrault LLP) and to indemnify Greenhill and its representatives in respect of certain liabilities that might arise out of ourengagement.

Greenhill understands that, subject to providing our separate written consent, this Opinion will be referred to in the Circular and a copy of this Opinion will be attached to the Circular.

Relationship with Interested Parties

Greenhill is not an insider, associate or affiliate (as each such term is defined in the Securities Act (Ontario)) of either the Corporation or Charlotte’s Web or any of their respective subsidiaries, associates or affiliates (collectively, the “Interested Parties”), noris it a financial advisor to any Interested Party or any other person in connection with the Arrangement, except for acting as exclusive financial advisor to the Board of Directors in connection with the Arrangement. Without limiting the generality of the preceding sentence, Greenhill has not provided any financial advice to any of the Locked-up

C-3

3

Shareholders in connection with their entering into the Voting Support and Lock-UpAgreements.

As the Corporation has been advised, except for the Engagement Agreement, during the two years preceding the date of this Opinion we have not been engaged by, performed any services for or received any compensation from the Corporation, Charlotte’s Web or any of their respective affiliates.

Except as set forth in the Engagement Agreement, there are no other understandings, agreements or commitments between Greenhill and any of the Interested Parties with respect to any current or future business dealings which would be material to this Opinion. Greenhill may, in the ordinary course of business, provide financial advisory, investment banking, or other financial services to one or more of the Interested Parties from time to time.

Credentials of Greenhill

Greenhill is a leading independent investment bank that provides financial advice on significant mergers and acquisitions, divestitures, restructurings, financings, capital raisings and other transactions to a diverse client base, including corporations, partnerships, institutions and governments around the world. Greenhill & Co., Inc. is an independent firm and its common stock is listed on the New York Stock Exchange. Greenhill focuses exclusively on advisory services, and has no research, trading, lending, underwriting, investment management or related activities. Greenhill has provided advisory services in the Canadian market since 2006.

The opinion expressed in this Opinion has been approved by a committee of our managing directors and legal counsel, each of whom is experienced in merger, acquisition, divestiture, valuation, fairness opinions and investment banking advisory matters.

Scope of Review

For purposes of this Opinion, we have reviewed or relied upon:

1. a draft dated March 22, 2020 of the Arrangement Agreement, including the Planof Arrangement;

2. a draft dated March 22, 2020 of the Voting Support and Lock-up Agreement;

3. the Corporation’s annual information form dated April 12, 2019 for the fiscalyear ended June 30, 2018;

4. the Corporation’s final short form prospectus dated May 3, 2019 relating to thedistribution of 2,143,000 units of the Corporation;

5. the Corporation’s interim unaudited financial statements and management’sdiscussion analysis for the fiscal quarter ended September 30, 2019;

C-4

4

6. the audited financial statements of the Corporation (previously existing asWorld Wide Inc. (“World Wide”)) prior to the Corporation’s reverse take-overtransaction, together with the notes thereto and the auditor’s report thereon forthe years ended June 30, 2018 and June 30, 2017 (as refiled on May 2, 2019);

7. management’s discussion and analysis of the Corporation (previously existingas World Wide) for the year ended June 30, 2018;

8. the Corporation’s Listing Statement – Form 2A dated January 29, 2019;

9. Charlotte’s Web’s annual information form of for the fiscal year endedDecember 31, 2018;

10. Charlotte’s Web’s comparative audited financial statements for the fiscal yearsended December 31, 2018 and 2017 and management’s discussion and analysisfor the fiscal year ended December 31, 2018;

11. Charlotte’s Web’s interim unaudited financial statements and management’sdiscussion and analysis for the fiscal quarter ended September 30, 2019;

12. Charlotte’s Web’s prospectus supplement dated November 27, 2019, to theshort form base shelf prospectus dated April 8, 2019, relating to the distributionof 5,000,000 units of Charlotte’s Web;

13. Charlotte’s Web’s long-form prospectus dated August 22, 2018, relating to theinitial public and secondary offering of 14,300,000 Common Shares;

14. certain other publicly available business, operating and financial informationrelating to each of the Corporation and Charlotte’s Web that we deemedrelevant;

15. certain information, including financial forecasts and other financial andoperating data, concerning each of the Corporation and Charlotte’s Websupplied to or discussed with us by management of the Corporation, includingthe financial forecasts for the Corporation (“Corporation Forecast”) andCharlotte’s Web (“Charlotte’s Web Forecast”) (collectively, the “Forecasts”)prepared by the management of the Corporation;

16. discussions with the Corporation’s and Charlotte’s Web’s respectivemanagement regarding the past and present operations and financial condition,and the prospects of each the Corporation and Charlotte’s Web;

17. the historical market prices and trading activity for the Abacus Shares andCommon Shares and the publicly-traded equity securities of other companiesthat we deemed relevant;

C-5

5

18. a certificate addressed to Greenhill from certain senior officers of theCorporation regarding the Corporation and Charlotte’s Web Forecasts and otherinformation relied upon by us in the preparation of this Opinion; and

19. such other information, analyses and investigations and as we consideredappropriate in the circumstances.

In addition, we have participated in discussions with Osler, Hoskin & Harcourt LLP,external counsel to the Corporation and with our external counsel, McCarthy Tétrault LLPas well as in discussions with Charlotte’s Web and their legal counsel, DLA Piper LLP,regarding their business and operations.

In preparing this Opinion, to the best of our knowledge, the Corporation did not deny accessto any information requested by us.

Assumptions and Limitations

With your permission, we have assumed and relied upon, without independent verification, the accuracy, completeness and fair presentation of all financial and other information, data,advice, opinions and representations obtained by us from publicly available sources, or supplied or otherwise made available to us by the Corporation, including the information and discussions referred to above under the heading “Scope of Review”. Greenhill did not meet with the Corporation’s auditors or any other third party to verify any such information.

With respect to the Forecasts, we have assumed that they were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of the management of the Corporation. We express no opinion with respect to the Forecasts or the assumptions upon which they are based, although we note that the preparation of any future-oriented financial information involves the application of management’s subjective judgements about future conditions and is inherently subject to uncertainty. Actual results will likely be different from the results implied by the Forecasts and any such differences could be material. We have not made any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Corporation or Charlotte’s Web, nor have we been furnished with any such evaluation or appraisal.

We have assumed that the Arrangement will be consummated in accordance with the terms to be set forth in a final, executed agreement, which we have further assumed will be identical in all material respects to the latest draft thereof that we have reviewed, and without waiver or modification of any terms or conditions the effect of which would be in any way meaningful to our financial analysis. We have also assumed, without independent verification, that all of the Corporation’s and Charlotte’s Web’s representations and warranties in the Arrangement Agreement are true and correct in all material respects.

We have further assumed that all shareholder, governmental, regulatory, stock exchangeand other consents and approvals necessary for the consummation of the Arrangement willbe obtained without any effect on the Corporation or Charlotte’s Web, the Arrangement or

C-6

6

the contemplated benefits of the Arrangement that would be in any way meaningful to our financial analysis.

We are not legal, regulatory, accounting or tax experts and have relied on the assessments made by the Corporation and Charlotte’s Web and their respective advisors with respect to all such matters.

The Corporation has represented to us, in a certificate of two senior officers of the Corporation dated the date hereof, that (i) the financial and other information, data, advice, opinions, representations and other material provided to us orally by, or in the presence of, an officer or employee of the Corporation, or in writing by the Corporation or any of its subsidiaries (as defined in National Instrument 45-106 – Prospectus Exemptions) or any of its or their representatives in connection with our engagement (collectively, the “Information”), (A) in respect of the Corporation or any of its subsidiaries, to the best of their knowledge after due inquiry, was, at the date the Information was provided to us, and is as of the date hereof, complete, true and correct in all material respects, and did not and does not contain a misrepresentation (as defined in the Securities Act (Ontario) (the “Act”)), and (B) in respect of Charlotte’s Web or any of its subsidiaries, to the best of their actual knowledge, was, at the date the Information was provided to us, and is as of the date hereof, complete, true and correct in all material respects, and did not and does not contain a misrepresentation, (ii) since the dates on which the Information was provided to us, except as has been disclosed in writing to us, (A) to the best of their knowledge after due inquiry, there has been no material change, financial or otherwise, in the financial condition, assets, liabilities (contingent or otherwise), business, operations or prospects of the Corporationand its subsidiaries, taken as a whole, and (B) to the best of their actual knowledge, there has been no material change, financial or otherwise, in the financial condition, assets, liabilities (contingent or otherwise), business, operations or prospects of Charlotte’s Weband its subsidiaries, taken as a whole, and (iii) based on their understanding of the assumptions used, procedures adopted and scope of the review undertaken, they have no actual knowledge of any facts not contained in or referred to in the Information that could reasonably be expected to affect the Opinion, including the assumptions used, the procedures adopted, the scope of the review undertaken or the conclusion reached by us.

Our Opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It should be understood that subsequent developments may affect this Opinion, and we do not have any obligation to update, revise, or reaffirm this Opinion. Without limiting the generality of the foregoing, the ongoing coronavirus-19 pandemic and other recent unanticipated and significant macroeconomic factors have together contributed to extraordinary equity market volatility, which have affected the market prices of the Abacus Shares and the Common Shares. If those factors persist, they could also affect the values of the Abacus Shares and Common Shares, and the impact could differ significantly between the Corporation and Charlotte’s Web.

This Opinion addresses only the fairness to the Shareholders, from a financial point of view,of the Consideration to be received by all Shareholders pursuant to the Arrangement. We are not expressing any view or opinion as to any other terms or aspect of the Arrangement,

C-

7

including the form, terms or conditions of the Arrangement Agreement, the Voting Support and Lock-up Agreement, or any other agreement or instrument entered into or amended in connection with the Arrangement. Our Opinion does not address the relative merits of the Arrangement as compared to other business strategies or potential transaction opportunities that may be available to the Corporation or the Shareholders. We are also not expressing any view or opinion as to the impact of the Arrangement on the solvency or the viability of the Corporation or Charlotte’s Web or their respective ability to pay their obligations when they come due. We also express no view or opinion regarding any legal, regulatory, accounting, insurance, tax, environmental, executive compensation, corporate governance or other matters that may be relevant to any evaluation of the Arrangement.

Our Opinion has been provided to the Board of Directors for its exclusive use only in considering the Arrangement and may not be published, disclosed to or relied upon any other person, or used for any other purpose, without our prior written consent. Our Opinion is not intended to be and does not constitute a recommendation to the Board of Directors as to whether they should approve the Arrangement Agreement, nor as a recommendation to any Shareholder as to how to vote at the Special Meeting, nor as an opinion concerning the trading price or value of any securities of Charlotte’s Web following the announcement or completion of the Arrangement.

Although we reserve the right to change or withdraw our Opinion if we learn that any of the information that we relied upon in preparing the Opinion was inaccurate, incomplete or misleading in any material respect, we disclaim any obligation to change or withdraw the Opinion, to advise any person of any change that may come to our attention or to update the Opinion after the date of this Opinion.

Approaches to Financial Fairness

In considering the fairness, from a financial point of view, of the Consideration to be received by the Shareholders pursuant to the Plan of Arrangement, Greenhill principally considered and relied upon the following business valuation methodologies for both the Corporation and Charlotte’s Web: (i) an analysis of the financial multiples of selected comparable companies whose securities are publicly traded; (ii) an analysis of the financial multiples, to the extent publicly available, of selected precedent transactions in the cannabis, over-the-counter (“OTC”) pharmaceuticals and consumer products (disruptive products and brands) industries; and (iii) a discounted cash flow analysis. For the purposes hereof, the “implied Exchange Ratio” (see below) has been calculated as the quotient ofthe Abacus’ implied equity value, assuming the conversion of the Proportionate Voting Shares to Abacus Shares, and Charlotte’s Web’s implied equity value, assuming the conversion of Charlotte’s Web’s issued and outstanding proportionate voting shares to Common Shares. All financial analyses were conducted with information available as of market close on March 20, 2020.

Greenhill believes that our financial analyses must be considered as a whole and that selecting portions of our analyses or the factors considered by us, without considering all analyses and factors together, could create a misleading view of the process underlying this

C-

8

Opinion. Greenhill notes that the selection of comparable companies and comparable transactions involves considerable subjectivity.

Comparable Companies Approach

Greenhill identified North American and global cannabis-focused peers that were segmented into three categories: Cannabidiol (“CBD”)-Focused, Canadian Licensed Producers and U.S. Multi-State Operators. Selected peers for the Corporation includeCBD-Focused Companies. Selected peers for Charlotte’s Web include Canadian Licensed Producers and U.S. Multi-State Operators.

For each of the selected companies, Greenhill considered the multiple of enterprise value (“EV”) (defined as fully-diluted equity value, less cash and cash equivalents, plus total debt which included mortgages, term loans and finance leases, and minority interests) to estimated revenue and EBITDA (defined as earnings before interest, taxes, depreciationand amortization) based on consensus research analyst estimates (“Consensus Estimates”).We used revenue multiples for the fiscal years ending December 2020, 2021 and 2022 and EBITDA multiples for fiscal year 2022 because both companies had non-meaningful EBITDA estimated for fiscal years 2020 and 2021. The multiples were based on the selected companies’ closing share prices on March 20, 2020 and on other publicly available information. Greenhill then calculated the equity value for both the Corporation and Charlotte’s Web using the range of multiples derived from the selected peers and calculated the implied Exchange Ratios for each metric.

While Greenhill did not consider any of the companies reviewed to be directly comparable to the Corporation or Charlotte’s Web, Greenhill believed that they shared certain business, financial, and/or operational characteristics with those of the Corporation and Charlotte’sWeb and we used our professional judgement in selecting the most appropriate trading multiples.

Precedent Transaction Approach

Greenhill examined selected precedent public market M&A transactions involving companies in the cannabis, OTC pharmaceuticals and consumer products (disruptive products and brands) industries. While Greenhill considered cannabis-related transactions that were of a similar size to the Arrangement, Greenhill noted that these transactions occurred during a high growth market environment; as a consequence, Greenhill focused more on the OTC pharmaceutical and consumer product transactions. While the selected companies exhibit similar characteristics as the Corporation and/or Charlotte’s Web, wenote that none of them are identical to the Corporation or Charlotte’s Web.

For the OTC pharmaceutical and consumer products transactions, Greenhill considered the ratio of the target company’s EV, implied by the transaction value, to the last twelve months (“LTM”) of historical revenue prior to the announcement of the transaction, where publicly available. Greenhill then calculated the equity value for both the Corporation and Charlotte’s Web using the range of multiples derived from the selected precedent transactions and calculated the implied Exchange Ratios.

C-2

C-

9

Based on the results of this analysis and other factors that Greenhill considered appropriate, Greenhill selected multiple reference ranges based on its professional judgement. Greenhill placed an emphasis on transactions that were consummated in the last 10 years in the OTC pharmaceutical and consumer products industries.

Based on Greenhill’s professional judgement, no company or transaction utilized in the precedent transaction analysis may be considered directly comparable to the Corporationor Charlotte’s Web.

Discounted Cash Flow ( DCF ) Approach

In this approach, unlevered free cash flows are discounted at a specific rate to determine the present value. The present value of a terminal value, representing the value of unlevered free cash flows beyond the end of the forecast period, is added to arrive at a total aggregate value. Outstanding debt is subtracted and outstanding cash is added to arrive at an equity value. The equity value is then divided by the in the money fully diluted share count in order to arrive at an implied price per share.

The DCF approach requires that certain assumptions be made by Greenhill regarding, among other things, terminal values and discount rates. In performing this analysis on the Corporation, we reviewed and relied upon the Corporation Forecast, including Abacus management’s assumptions therein.

In its DCF analysis, Greenhill used the forecasted unlevered free cash flows (defined as earnings before interest and taxes; less taxes, capital expenditures and change in net non-cash working capital; plus depreciation and amortization) for the Corporation through the fiscal year ending December 31, 2025, as provided to Greenhill by the Corporation.

In performing this analysis on Charlotte’s Web, Greenhill used the forecasted unlevered free cash flows for Charlotte’s Web through the fiscal year ending December 31, 2025, as provided to Greenhill by the Corporation’s management.

Greenhill calculated a range of terminal values of the Corporation by applying a terminal value multiple range deemed by us as relevant and reasonable for such purpose to the estimated fiscal year 2025 EBITDA from the Corporation Forecast. This terminal value multiple range was selected by Greenhill in its professional judgment with due consideration given to the long-term growth profile of the Corporation based on Greenhill’sdiscussions with the management of the Corporation. The unlevered free cash flows and the range of terminal values were then discounted to present values as at June 30, 2020, the expected closing date of the transaction, using a range of discount rates deemed by us as relevant and reasonable for such purpose. The discount rates were derived by Greenhill based upon an analysis of the weighted average cost of capital of the Corporation. The present value of the unlevered free cash flows and the range of terminal values were then adjusted for the estimated net cash position (total debt less cash and cash equivalents) asof June 30, 2020 from the Corporation Forecast.

Greenhill applied a similar methodology of applying a terminal value multiple rangedeemed by us as relevant and reasonable for such purpose to the estimated fiscal year 2025

C-10

10

EBITDA from Charlotte’s Web Forecast to calculate a range of terminal values of Charlotte’s Web. This terminal value multiple range was selected by Greenhill in its professional judgment with due consideration given to the long-term growth profile of Charlotte’s Web based on Greenhill’s discussions with the management of the Corporation.The unlevered free cash flows and the range of terminal values were then discounted to present values as at June 30, 2020, the expected closing date of the transaction, using a range of discount rates deemed by us as relevant and reasonable for such purpose. The discount rates were derived by Greenhill based upon an analysis of the weighted average cost of capital of Charlotte’s Web. The present value of the unlevered free cash flows and the range of terminal values were then adjusted for the estimated net cash position (total debt less cash and cash equivalents) as of June 30, 2020 from Charlotte’s Web Forecast.

Conclusion

Based upon and subject to the foregoing, including the assumptions, limitations and qualifications set forth therein and such other matters as Greenhill considered relevant,Greenhill is of the opinion that, as of the date hereof, the Consideration to be received by the Shareholders pursuant to the Arrangement is fair, from a financial point of view, to theShareholders.

Very best regards,

GREENHILL & CO. CANADA LTD.

C-11

D-1

DISSENT RIGHTS (SECTION 185 OF THE OBCA)

Rights of dissenting shareholders

185 (1) Subject to subsection (3) and to sections 186 and 248, if a corporation resolves to,

(a) amend its articles under section 168 to add, remove or change restrictions on the issue, transfer or ownership of shares of a class or series of the shares of the corporation;

(b) amend its articles under section 168 to add, remove or change any restriction upon the business or businesses that the corporation may carry on or upon the powers that the corporation may exercise;

(c) amalgamate with another corporation under sections 175 and 176;

(d) be continued under the laws of another jurisdiction under section 181; or

Note: On a day to be named by proclamation of the Lieutenant Governor, subsection 185 (1) of the Act is amended by striking out “or” at the end of clause (d) and by adding the following clauses: (See: 2017, c. 20, Sched. 6, s. 24)

(d.1) be continued under the Co-operative Corporations Act under section 181.1;

(d.2) be continued under the Not-for-Profit Corporations Act, 2010 under section 181.2; or

(e) sell, lease or exchange all or substantially all its property under subsection 184 (3),

a holder of shares of any class or series entitled to vote on the resolution may dissent. R.S.O. 1990, c. B.16, s. 185 (1).

Idem

(2) If a corporation resolves to amend its articles in a manner referred to in subsection 170 (1), a holder of shares of any class or series entitled to vote on the amendment under section 168 or 170 may dissent, except in respect of an amendment referred to in,

(a) clause 170 (1) (a), (b) or (e) where the articles provide that the holders of shares of such class or series are not entitled to dissent; or

(b) subsection 170 (5) or (6). R.S.O. 1990, c. B.16, s. 185 (2).

One class of shares

(2.1) The right to dissent described in subsection (2) applies even if there is only one class of shares. 2006, c. 34, Sched. B, s. 35.

Exception

(3) A shareholder of a corporation incorporated before the 29th day of July, 1983 is not entitled to dissent under this section in respect of an amendment of the articles of the corporation to the extent that the amendment,

(a) amends the express terms of any provision of the articles of the corporation to conform to the terms of the provision as deemed to be amended by section 277; or

(b) deletes from the articles of the corporation all of the objects of the corporation set out in its articles, provided that the deletion is made by the 29th day of July, 1986. R.S.O. 1990, c. B.16, s. 185 (3).

D-2

Shareholder’s right to be paid fair value

(4) In addition to any other right the shareholder may have, but subject to subsection (30), a shareholder who complies with this section is entitled, when the action approved by the resolution from which the shareholder dissents becomes effective, to be paid by the corporation the fair value of the shares held by the shareholder in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted. R.S.O. 1990, c. B.16, s. 185 (4).

No partial dissent

(5) A dissenting shareholder may only claim under this section with respect to all the shares of a class held by the dissenting shareholder on behalf of any one beneficial owner and registered in the name of the dissenting shareholder. R.S.O. 1990, c. B.16, s. 185 (5).

Objection

(6) A dissenting shareholder shall send to the corporation, at or before any meeting of shareholders at which a resolution referred to in subsection (1) or (2) is to be voted on, a written objection to the resolution, unless the corporation did not give notice to the shareholder of the purpose of the meeting or of the shareholder’s right to dissent. R.S.O. 1990, c. B.16, s. 185 (6).

Idem

(7) The execution or exercise of a proxy does not constitute a written objection for purposes of subsection (6). R.S.O. 1990, c. B.16, s. 185 (7).

Notice of adoption of resolution

(8) The corporation shall, within ten days after the shareholders adopt the resolution, send to each shareholder who has filed the objection referred to in subsection (6) notice that the resolution has been adopted, but such notice is not required to be sent to any shareholder who voted for the resolution or who has withdrawn the objection. R.S.O. 1990, c. B.16, s. 185 (8).

Idem

(9) A notice sent under subsection (8) shall set out the rights of the dissenting shareholder and the procedures to be followed to exercise those rights. R.S.O. 1990, c. B.16, s. 185 (9).

Demand for payment of fair value

(10) A dissenting shareholder entitled to receive notice under subsection (8) shall, within twenty days after receiving such notice, or, if the shareholder does not receive such notice, within twenty days after learning that the resolution has been adopted, send to the corporation a written notice containing,

(a) the shareholder’s name and address;

(b) the number and class of shares in respect of which the shareholder dissents; and

(c) a demand for payment of the fair value of such shares. R.S.O. 1990, c. B.16, s. 185 (10).

Certificates to be sent in

(11) Not later than the thirtieth day after the sending of a notice under subsection (10), a dissenting shareholder shall send the certificates, if any, representing the shares in respect of which the shareholder dissents to the corporation or its transfer agent. R.S.O. 1990, c. B.16, s. 185 (11); 2011, c. 1, Sched. 2, s. 1 (9).

D-3

Idem

(12) A dissenting shareholder who fails to comply with subsections (6), (10) and (11) has no right to make a claim under this section. R.S.O. 1990, c. B.16, s. 185 (12).

Endorsement on certificate

(13) A corporation or its transfer agent shall endorse on any share certificate received under subsection (11) a notice that the holder is a dissenting shareholder under this section and shall return forthwith the share certificates to the dissenting shareholder. R.S.O. 1990, c. B.16, s. 185 (13).

Rights of dissenting shareholder

(14) On sending a notice under subsection (10), a dissenting shareholder ceases to have any rights as a shareholder other than the right to be paid the fair value of the shares as determined under this section except where,

(a) the dissenting shareholder withdraws notice before the corporation makes an offer under subsection (15);

(b) the corporation fails to make an offer in accordance with subsection (15) and the dissenting shareholder withdraws notice; or

(c) the directors revoke a resolution to amend the articles under subsection 168 (3), terminate an amalgamation agreement under subsection 176 (5) or an application for continuance under subsection 181 (5), or abandon a sale, lease or exchange under subsection 184 (8),

in which case the dissenting shareholder’s rights are reinstated as of the date the dissenting shareholder sent the notice referred to in subsection (10). R.S.O. 1990, c. B.16, s. 185 (14); 2011, c. 1, Sched. 2, s. 1 (10).

Same

(14.1) A dissenting shareholder whose rights are reinstated under subsection (14) is entitled, upon presentation and surrender to the corporation or its transfer agent of any share certificate that has been endorsed in accordance with subsection (13),

(a) to be issued, without payment of any fee, a new certificate representing the same number, class and series of shares as the certificate so surrendered; or

(b) if a resolution is passed by the directors under subsection 54 (2) with respect to that class and series of shares,

(i) to be issued the same number, class and series of uncertificated shares as represented by the certificate so surrendered, and

(ii) to be sent the notice referred to in subsection 54 (3). 2011, c. 1, Sched. 2, s. 1 (11).

Same

(14.2) A dissenting shareholder whose rights are reinstated under subsection (14) and who held uncertificated shares at the time of sending a notice to the corporation under subsection (10) is entitled,

(a) to be issued the same number, class and series of uncertificated shares as those held by the dissenting shareholder at the time of sending the notice under subsection (10); and

(b) to be sent the notice referred to in subsection 54 (3). 2011, c. 1, Sched. 2, s. 1 (11).

D-4

Offer to pay

(15) A corporation shall, not later than seven days after the later of the day on which the action approved by the resolution is effective or the day the corporation received the notice referred to in subsection (10), send to each dissenting shareholder who has sent such notice,

(a) a written offer to pay for the dissenting shareholder’s shares in an amount considered by the directors of the corporation to be the fair value thereof, accompanied by a statement showing how the fair value was determined; or

(b) if subsection (30) applies, a notification that it is unable lawfully to pay dissenting shareholders for their shares. R.S.O. 1990, c. B.16, s. 185 (15).

Idem

(16) Every offer made under subsection (15) for shares of the same class or series shall be on the same terms. R.S.O. 1990, c. B.16, s. 185 (16).

Idem

(17) Subject to subsection (30), a corporation shall pay for the shares of a dissenting shareholder within ten days after an offer made under subsection (15) has been accepted, but any such offer lapses if the corporation does not receive an acceptance thereof within thirty days after the offer has been made. R.S.O. 1990, c. B.16, s. 185 (17).

Application to court to fix fair value

(18) Where a corporation fails to make an offer under subsection (15) or if a dissenting shareholder fails to accept an offer, the corporation may, within fifty days after the action approved by the resolution is effective or within such further period as the court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder. R.S.O. 1990, c. B.16, s. 185 (18).

Idem

(19) If a corporation fails to apply to the court under subsection (18), a dissenting shareholder may apply to the court for the same purpose within a further period of twenty days or within such further period as the court may allow. R.S.O. 1990, c. B.16, s. 185 (19).

Idem

(20) A dissenting shareholder is not required to give security for costs in an application made under subsection (18) or (19). R.S.O. 1990, c. B.16, s. 185 (20).

Costs

(21) If a corporation fails to comply with subsection (15), then the costs of a shareholder application under subsection (19) are to be borne by the corporation unless the court otherwise orders. R.S.O. 1990, c. B.16, s. 185 (21).

Notice to shareholders

(22) Before making application to the court under subsection (18) or not later than seven days after receiving notice of an application to the court under subsection (19), as the case may be, a corporation shall give notice to each dissenting shareholder who, at the date upon which the notice is given,

(a) has sent to the corporation the notice referred to in subsection (10); and

(b) has not accepted an offer made by the corporation under subsection (15), if such an offer was made,

D-5

of the date, place and consequences of the application and of the dissenting shareholder’s right to appear and be heard in person or by counsel, and a similar notice shall be given to each dissenting shareholder who, after the date of such first mentioned notice and before termination of the proceedings commenced by the application, satisfies the conditions set out in clauses (a) and (b) within three days after the dissenting shareholder satisfies such conditions. R.S.O. 1990, c. B.16, s. 185 (22).

Parties joined

(23) All dissenting shareholders who satisfy the conditions set out in clauses (22) (a) and (b) shall be deemed to be joined as parties to an application under subsection (18) or (19) on the later of the date upon which the application is brought and the date upon which they satisfy the conditions, and shall be bound by the decision rendered by the court in the proceedings commenced by the application. R.S.O. 1990, c. B.16, s. 185 (23).

Idem

(24) Upon an application to the court under subsection (18) or (19), the court may determine whether any other person is a dissenting shareholder who should be joined as a party, and the court shall fix a fair value for the shares of all dissenting shareholders. R.S.O. 1990, c. B.16, s. 185 (24).

Appraisers

(25) The court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders. R.S.O. 1990, c. B.16, s. 185 (25).

Final order

(26) The final order of the court in the proceedings commenced by an application under subsection (18) or (19) shall be rendered against the corporation and in favour of each dissenting shareholder who, whether before or after the date of the order, complies with the conditions set out in clauses (22) (a) and (b). R.S.O. 1990, c. B.16, s. 185 (26).

Interest

(27) The court may in its discretion allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution is effective until the date of payment. R.S.O. 1990, c. B.16, s. 185 (27).

Where corporation unable to pay

(28) Where subsection (30) applies, the corporation shall, within ten days after the pronouncement of an order under subsection (26), notify each dissenting shareholder that it is unable lawfully to pay dissenting shareholders for their shares. R.S.O. 1990, c. B.16, s. 185 (28).

Idem

(29) Where subsection (30) applies, a dissenting shareholder, by written notice sent to the corporation within thirty days after receiving a notice under subsection (28), may,

(a) withdraw a notice of dissent, in which case the corporation is deemed to consent to the withdrawal and the shareholder’s full rights are reinstated; or

(b) retain a status as a claimant against the corporation, to be paid as soon as the corporation is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the corporation but in priority to its shareholders. R.S.O. 1990, c. B.16, s. 185 (29).

D-6

Idem

(30) A corporation shall not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that,

(a) the corporation is or, after the payment, would be unable to pay its liabilities as they become due; or

(b) the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities. R.S.O. 1990, c. B.16, s. 185 (30).

Court order

(31) Upon application by a corporation that proposes to take any of the actions referred to in subsection (1) or (2), the court may, if satisfied that the proposed action is not in all the circumstances one that should give rise to the rights arising under subsection (4), by order declare that those rights will not arise upon the taking of the proposed action, and the order may be subject to compliance upon such terms and conditions as the court thinks fit and, if the corporation is an offering corporation, notice of any such application and a copy of any order made by the court upon such application shall be served upon the Commission. 1994, c. 27, s. 71 (24).

Commission may appear

(32) The Commission may appoint counsel to assist the court upon the hearing of an application under subsection (31), if the corporation is an offering corporation. 1994, c. 27, s. 71 (24).

E-1

INTERIM ORDER

(see attached)

E-2

F-1

NOTICE OF APPLICATION FOR FINAL ORDER

(see attached)

G-1

INFORMATION CONCERNING THE CORPORATION

Overview

The Corporation is engaged in the development and commercialization of over-the-counter topical medications with active pharmaceutical ingredients and which contain organic and natural ingredients, including a cannabinoid-rich hemp extract containing cannabidiol from the Cannabis sativa L plant. The Corporation’s products are aimed at the rapidly growing markets for topical pain relief and therapeutic skincare and are based on proprietary patent-pending technologies developed by the Corporation. The Corporation’s formulations combine advanced science with organic and natural ingredients to provide safe relief. The Corporation currently offers three lines of products: CBD CLINIC™, marketed to the professional practitioner market, and CBDMEDIC™ and Harmony Hemp™, marketed to the consumer market. The Corporation’s products are offered across the United States and are produced by contract manufacturers, including in an FDA registered and audited manufacturing facility.

Documents Incorporated by Reference

Information has been incorporated by reference in this Information Circular from documents filed with the securities commissions or similar regulatory authorities in Canada. Copies of the documents incorporated by reference herein may be obtained on request without charge from the Secretary of the Corporation at 10 Wanless Avenue, Suite 201, Toronto, Ontario, M4N 1V6, and are also available electronically at www.sedar.com. The Corporation’s filings through SEDAR are not incorporated by reference in this Information Circular except as specifically set out herein.

The following documents, filed or furnished by the Corporation with the securities commissions or similar regulatory authorities in Canada, are specifically incorporated by reference into, and form an integral part of, this Information Circular:

1) The Corporation’s annual information form dated April 29, 2020 for the year ended December 31, 2019;

2) The Corporation’s audited consolidated annual financial statements for the years ended December 31, 2019 and 2018, together with the notes thereto and the report of the independent registered public accounting firm thereon (as refiled on May 4, 2020);

3) The Corporation’s management’s discussion and analysis for the year ended December 31, 2019;

4) The Corporation’s management information circular dated May 21, 2019 prepared in connection with Corporation’s annual meeting of shareholders held on June 18, 2019; and

5) The Corporation’s material change report dated April 1, 2020, in respect of the Arrangement.

Any statement contained in this Information Circular or in any document incorporated or deemed to be incorporated by reference herein or therein shall be deemed to be modified or superseded, for purposes of this Information Circular, to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein modifies or supersedes such prior statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Information Circular.

G-2

Any document of the type required by National Instrument 44-101 – Short Form Prospectus Distributions to be incorporated by reference into a short form prospectus, including any annual information forms, material change reports (except confidential material change reports), business acquisition reports, interim financial statements, annual financial statements (in each case, including exhibits containing updated earnings coverage information) and the independent auditor’s report thereon, management’s discussion and analysis and information circulars of the Corporation, filed by the Corporation with the securities commissions or similar regulatory authorities in Canada after the date of this Information Circular, shall be deemed to be incorporated by reference into this Information Circular. The documents incorporated or deemed to be incorporated herein by reference contain meaningful and material information relating to the Corporation and readers should review all information contained in this Information Circular and the documents incorporated or deemed to be incorporated by reference herein.

Trading Price and Volume

The Subordinate Voting Shares currently trade on the CSE under the symbol “ABCS”. The following table sets out the high and low prices and total trading volume of the Subordinate Voting Shares as reported by the CSE for each month from May 2019 through May 4, 2020.

Subordinate Voting Shares – CSE Price Range Month High Low Total Volume May 2020 (through May 4, 2020) 4.43 4.31 9,477 April 2020 4.77 3.69 889,604 March 2020 4.86 2.75 1,633,226 February 2020 5.30 4.45 798,721 January 2020 5.95 4.95 748,536 December 2019 6.40 5.70 494,850 November 2019 7.20 4.23 844,190 October 2019 6.48 5.70 579,096 September 2019 8.54 6.07 621,251 August 2019 9.00 6.47 780,092 July 2019 10.05 7.10 459,482 June 2019 10.80 9.45 903,918 May 2019 13.25 10.50 565,580

The Abacus Warrants currently trade on the CSE under the symbol “ABCS.WT”. The following table sets out the high and low prices and total trading volume of the Abacus Warrants as reported by the CSE for each month from May 8, 2019 through May 4, 2020.

Abacus Warrants – CSE Price Range Month High Low Total Volume May 2020 (through May 4, 2020) - - 0 April 2020 0.08 0.075 4,000 March 2020 0.10 0.06 4,375 February 2020 0.15 0.04 262,250 January 2020 0.30 0.12 52,904 December 2019 0.24 0.16 9,050 November 2019 0.31 0.20 146,850 October 2019 0.60 0.40 7,335 September 2019 1.10 0.77 6,250 August 2019 1.75 1.00 27,769 July 2019 1.98 1.20 14,350 June 2019 3.06 1.80 7,150 May 8, 2019 – May 31, 2019 3.06 2.48 128,156

G-3

Prior Sales of Securities

The following table sets forth the issuances of securities of the Corporation in the 12-month period prior to the date of this Information Circular.

Date of Issue Securities

Total Number of Securities Price per Security

Exercise Price per Subordinate Voting

Share Total Consideration May 8, 2019 Subordinate Voting Shares(1) 2,464,450 CDN$14.00 n/a CDN$34,502,300 May 8, 2019 Warrants to acquire

Subordinate Voting Shares(1) 1,232,225 n/a CDN$18.00 n/a

May 8, 2019 Warrants to acquire Subordinate Voting Shares(2)

147,867 n/a CDN$14.00 n/a

May 10, 2019 Subordinate Voting Shares(3) 23,906 $3.75 n/a $89,647.50 June 17, 2019 Subordinate Voting Shares(4) 903,140 n/a n/a n/a June 28, 2019 Subordinate Voting Shares(4) 143,979 n/a n/a n/a August 29, 2019 Subordinate Voting Shares(5) 302,835 n/a n/a n/a August 29, 2019 Warrants to acquire

Subordinate Voting Shares(5) 35,666 n/a $15.00 n/a

August 30, 2019 Subordinate Voting Shares(3) 5,697 $3.75 n/a $21,363.75 September 26, 2019

Options to acquire Subordinate Voting Shares(6)

884,000 n/a $5.09 n/a

May 2, 2019 – May 4, 2020

Subordinate Voting Shares(7) 1,408,357 n/a n/a n/a

Notes: (1) Subordinate Voting Shares and warrants to acquire Subordinate Voting Shares comprising units sold under a public offering on a bought-

deal basis. (2) Warrants issued as compensation to underwriters in connection with a public offering on a bought-deal basis. (3) Subordinate Voting Shares issued upon exercise of warrants. (4) Subordinate Voting Shares issued upon conversion of convertible debentures in accordance with their terms based on a price of $2.849 per

Subordinate Voting Share. (5) Subordinate Voting Shares and warrants issued in connection with the entering into of a spokesperson agreement. (6) Options issued under the Long-Term Incentive Plan. (7) Subordinate Voting Shares issued upon conversion of Proportionate Voting Shares.

Dividends

The Corporation has never paid any dividends on any of its securities. Abacus U.S. declared two cash distributions to its members prior to its conversion as a corporation on June 29, 2018, the final payment of which is accrued in the financial statements of Abacus U.S. but not yet paid. The Corporation currently intends to reinvest any earnings (including those of Abacus U.S.) to fund the development and growth of its business. Any future payments of dividends will be at the discretion of the Board and will depend on many factors, including, among other things, the Corporation’s financial condition, current and anticipated capital requirements, contractual requirements, solvency tests imposed by applicable corporate law and other factors it may deem relevant.

Principal Securityholders

See “Voting Information and General Proxy Matters – Record Date, Voting Securities and Principal Holders Thereof” in the Information Circular.

H-1

APPENDIX H INFORMATION CONCERNING CHARLOTTE’S WEB

NOTICE TO READER

Unless the context indicates otherwise, capitalized terms which are used in this Appendix and not otherwise defined in this Appendix H have the meanings given to such terms under the heading “Glossary of Terms” in the Information Circular. The information contained in this Appendix H, unless otherwise indicated, is given as of May 4, 2020, the date of the Information Circular.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements contained in this Appendix H, and in certain documents incorporated by reference into this Appendix H, constitute forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) or financial outlooks within the meaning of applicable Canadian securities laws. Such forward-looking statements relate to future events or Charlotte’s Web’s future performance. Readers are cautioned that actual results may vary. See “General Matters - Caution Regarding Forward-Looking Statements” in the Information Circular. Readers should also carefully consider the matters and cautionary statements discussed under the heading “Risk Factors” in the Information Circular, and under the heading “Risk Factors” in this Appendix H and the Charlotte’s Web AIF.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference into this Information Circular from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the secretary of Charlotte’s Web at 1600 Pearl Street, Suite 300, Boulder, Colorado, United States 80302, telephone: (855) 790-8169, and are also available electronically at www.sedar.com.

The following documents filed by Charlotte’s Web with the various securities commissions or similar authorities in each of the provinces of Canada (except Québec) are specifically incorporated by reference into and form an integral part of this Information Circular:

(a) the Charlotte’s Web AIF;

(b) the audited annual consolidated financial statements of Charlotte’s Web as at and for the years ended(i) December 31, 2019 together with the notes thereto, and the auditor’s report of Ernst & Young LLPattached thereto, and (ii) December 31, 2018 and December 31, 2017 together with the notes thereto, and theauditor’s report of MNP LLP attached thereto;

(c) the Charlotte’s Web MD&A;

(d) the management information circular of Charlotte’s Web dated July 10, 2019 in connection with the annualgeneral and special meeting of the shareholders of Charlotte’s Web held on August 20, 2019;

(e) material change report of Charlotte’s Web dated March 31, 2020 regarding Charlotte’s Web’s asset backedline of credit with J.P. Morgan for USD$10 million; and

(f) material change report of Charlotte’s Web dated April 1, 2020 regarding Charlotte’s Web entering into theArrangement Agreement.

H-2

Any documents of the type described in Section 11.1 of Form 44-101F1 – Short Form Prospectus filed by Charlotte’s Web with a securities commission or similar authority in Canada after the date of this Information Circular and prior to the Effective Date are deemed to be incorporated by reference in this Information Circular.

Any statement contained in this Information Circular or in a document incorporated or deemed to be incorporated by reference in this Information Circular shall be deemed to be modified or superseded for purposes of this Information Circular to the extent that a statement contained in this Information Circular or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference into this Information Circular modifies or supersedes that statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made. Any statement so modified or superseded shall not constitute part of this Information Circular, except as so modified or superseded.

References to Charlotte’s Web’s website in any documents that are incorporated by reference into this Information Circular do not incorporate by reference the information on such website into this Information Circular, and Charlotte’s Web disclaims any such incorporation by reference.

CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION

Unless the context otherwise requires, all references to “$”, “CDN$” and “dollars” in this Appendix H mean references to the lawful money of Canada. All references to “US$” refer to U.S. dollars. On May 1, 2020, the Bank of Canada daily average rate of exchange was US$1.00 = CDN$1.4066 or CDN$1.00 = US$0.7109.

MARKET AND INDUSTRY DATA

Unless otherwise indicated, the market and industry data contained or incorporated by reference in this Appendix H is based upon information from independent industry publications, market research, analyst reports and surveys and other publicly available sources. Although Charlotte’s Web believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any survey. Charlotte’s Web has not independently verified any of the data from third party sources referred to or incorporated by reference herein and accordingly, the accuracy and completeness of such data is not guaranteed.

WHERE YOU CAN FIND MORE INFORMATION

Charlotte’s Web is subject to the full informational requirements of the securities commissions in all provinces of Canada (except Québec). You are invited to read and copy any reports, statements or other information, other than confidential filings, that Charlotte’s Web has filed or intends to file with certain of the Canadian provincial and territorial securities commissions. These filings are electronically available from SEDAR at www.sedar.com. Except as expressly provided herein, documents filed on SEDAR are not, and should not be considered, part of this Information Circular.

SUMMARY DESCRIPTION OF THE BUSINESS OF CHARLOTTE’S WEB

Charlotte’s Web Holdings, Inc. is a market leader in the production and distribution of innovative hemp-based CBD wellness products. CBD is a phytocannabinoid derived from the Cannabis plant. Through Charlotte’s Web’s vertically integrated business model, Charlotte’s Web strives to improve customers’ lives and meet their demands for stringent product quality, efficacy and consistency. Charlotte’s Web does not produce or sell medicinal or recreational marijuana or products derived therefrom.

H-3

Charlotte’s Web products are made from high quality and proprietary strains of whole-plant Hemp extracts containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other minor but valuable Hemp compounds. Charlotte’s Web believes the presence of these various compounds work synergistically to heighten the effects of its products, making them superior to single-compound CBD isolates. Charlotte’s Web also produces a CBD-isolate which consists of CBD derived from Hemp extract.

Hemp extracts are produced from Hemp, which is defined as the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a THC concentration of not more than 0.3% on a dry weight basis. THC causes psychoactive effects when consumed and is typically associated with marijuana (i.e., Cannabis with high-THC content). Charlotte’s Web does not produce or sell medicinal or recreational marijuana or products derived from high-THC Cannabis/marijuana plants. Hemp products have no psychoactive effects.

Charlotte’s Web’s current product categories include human consumables (tinctures, capsules, and gummies), topicals, and pet products. Planned product categories, as or when approved by the FDA, include powdered supplements, beverage, food, beauty, sport, professional (dedicated health care practitioner products), and over-the-counter wellness. Charlotte’s Web’s products are distributed through its e-commerce website, third-party e-commerce websites, select wholesalers and a variety of brick and mortar retailers.

Charlotte’s Web grows its proprietary Hemp on farms leased in northeastern Colorado and sources high quality Hemp through contract farming operations in Kentucky and Oregon.

Charlotte’s Web continues to invest in research and development efforts to identify new product opportunities. Charlotte’s Web plans to scale Charlotte’s Web’s production capacity and sales and marketing infrastructures as demand for its products continues to increase. Charlotte’s Web’s management team believes the timing is right to invest in expanded production capacity to address emerging new product opportunities, take further control of the supply chain and proactively define the competitive landscape. Charlotte’s Web intends to capitalize on the rapidly emerging CBD wellness products industry by driving customer acquisition and retention, as well as accelerating national and international retail expansion.

Charlotte’s Web’s head office is located at 1600 Pearl Street, Suite 300, Boulder, Colorado, United States 80302 and its registered and records office is located at 2800 Park Place, 666 Burrard St, Vancouver, British Columbia, Canada V6C 2Z7. Charlotte’s Web is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. Additional information about Charlotte’s Web’s business is included in the documents incorporated by reference into this Information Circular.

Intercorporate Relationships

The following diagram shows Charlotte’s Web’s subsidiaries as at the date hereof, where the subsidiary was incorporated or formed and the percentage of votes attaching to all voting securities of each subsidiary beneficially owned directly or indirectly by Charlotte’s Web. Reference should be made to the appropriate sections of the Charlotte’s Web AIF for a complete description of the structure of Charlotte’s Web.

H-4

RECENT DEVELOPMENTS

The Arrangement

On March 22, 2020, Charlotte’s Web entered into the Arrangement Agreement with Abacus, pursuant to which Charlotte’s Web proposes to acquire all of the issued and outstanding Subordinate Voting Shares of Abacus (after conversion of all outstanding proportionate voting shares of Abacus) by way of a plan of arrangement under the OBCA. For a full description of the Arrangement and the Arrangement Agreement, see the Information Circular under the headings “The Arrangement” and “Summary of Arrangement Agreement” and further information relating to Abacus set forth in Appendix G.

REGULATORY FRAMEWORK

The industry in which Charlotte’s Web operates is subject to regulation and control resulting from legislation enacted by the various levels of government. All applicable legislation is a matter of public record and Charlotte’s Web is unable to predict what additional legislation or amendments governments may enact in the future. Changes to government regulation could impact Charlotte’s Web’s existing and planned operations or increase its operating expenses, which could have an adverse effect on Charlotte’s Web’s financial condition, results of operations and cash flows.

UNITED STATES REGULATORY MATTERS

The business of Charlotte’s Web consists solely of the business of its Delaware subsidiary, Charlotte’s Web, Inc. (“Charlotte’s Web U.S.”). Therefore when used in this section, references to “Charlotte’s Web” are references to Charlotte’s Web and Charlotte’s Web U.S., as a whole, unless the context otherwise requires.

Charlotte’s Web has retained Frost Brown Todd LLC (Lexington, Kentucky) to provide it with a legal opinion in connection with U.S. regulatory matters in respect of the 2018 Farm Bill and Charlotte’s Web’s Hemp activities discussed in this Appendix .

General Overview

The following overview is subject to and qualified by the more detailed descriptions in the following sections entitled “United States Federal Regulation of Hemp”, “State Regulation of Hemp”, “FDA Regulation”, “Future Uncertainty of Legal Status” and “Charlotte’s Web’s Regulatory Compliance Activities”.

Charlotte’s Web does not produce or sell medicinal or recreational marijuana or products derived therefrom. It sells Hemp-based CBD products. While such products come from the same plant genus and species, Hemp and marijuana are legally distinct and are generally regulated, respectively, by two separate overarching bodies of law: the 2018 Farm Bill and the USCSA. Hemp, by legal definition, contains 0.3% THC or less on a dry weight basis, which is not a sufficient level to create an intoxicating effect like marijuana.

Consequently, Charlotte’s Web’s products are not sold pursuant to the rules and regulations governing the cultivation, transportation and sale of medicinal or recreational marijuana. Charlotte’s Web cultivates, processes, transports and sells its products pursuant to the 2014 Farm Bill and currently applicable provisions of the 2018 Farm Bill and in accordance with applicable state and local laws. All Hemp produced and sold by Charlotte’s Web constitutes Hemp under the 2018 Farm Bill and under the laws of the states in which it produces and sells such Hemp. If sold internationally, products are sold in accordance with the laws of the importing and exporting jurisdiction.

The 2018 Farm Bill permanently removed Hemp and the THC in Hemp from the purview of the USCSA. Hemp is now deemed an agricultural commodity, and is no longer classified as a controlled substance, like marijuana. Furthermore, by defining Hemp to include its derivatives, extracts, and cannabinoids,1 Congress explicitly removed popular Hemp products, such as Hemp-derived CBD, from the purview of the USCSA. Accordingly, the DEA no

1 Agriculture Improvement Act of 2018 (section 10113) (defining hemp under the Agricultural Marketing Act of 1946, 7. U.S.C. 1621).

H-5

longer has regulatory authority to interfere with the interstate commerce of Hemp products, so long as the THC level is at or below 0.3% on a dry weight basis. The 2018 Farm Bill also provides that state and Native American tribal governments may impose separate restrictions or requirements on Hemp growth and the sale of Hemp products. However, they cannot interfere with the interstate transportation or shipment of lawfully produced Hemp or Hemp products. As a result of the 2018 Farm Bill, federal law now provides that CBD derived from Hemp is not a controlled substance under the USCSA; however, CBD derived from Hemp could still be considered a controlled substance under applicable state law. States take varying approaches to regulating the production and sale of Hemp and Hemp-derived CBD. While some states explicitly authorize and regulate the production and sale of Hemp-derived CBD or otherwise provide legal protection for authorized individuals to engage in commercial Hemp activities, other states maintain outdated drug laws that do not distinguish between marijuana and Hemp and/or Hemp-derived CBD, resulting in Hemp being classified as a controlled substance under certain state laws. In these states, sale of CBD, notwithstanding origin, is either restricted to state medical or adult-use marijuana program licensees or remains otherwise unlawful under state criminal laws. Additionally, a number of states prohibit the sale of ingestible CBD products based on the FDA’s position that, pursuant to the FD&C Act, it is unlawful to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are Hemp-derived.

Charlotte’s Web’s activities related to the production, marketing and sale of its products comply with the 2014 Farm Bill and/or 2018 Farm Bill, as currently applicable to its operations. However, certain government agencies (such as the FDA) and certain federal officials have challenged the scope of permissible commercial activity. FDA representatives, for example, have stated they believe that producers of CBD-based products, including Charlotte’s Web, produce and sell their products in violation of the FD&C Act. Similarly, Charlotte’s Web’s marketing activities fall within the FDA’s jurisdiction, and in 2017, the FDA issued a Warning Letter to Charlotte’s Web for FD&C Act non-compliance. In addition, the FDA is currently evaluating whether, and how, Hemp-based CBD dietary supplements and food can be lawfully sold in the U.S. On November 25, 2019, the FDA sent warning letters to fifteen (15) companies marketing CBD products with disease claims. The letters also reiterate the agency’s position that CBD cannot be added to food and dietary supplements. This matter is still in active discussion with the FDA and is unresolved as at the date of this Information Circular, as indicated by the FDA’s March 5, 2020 statement and Congressional report whereby the agency reaffirmed that it is actively evaluating a risk-based enforcement policy and rulemaking to permit the use of CBD in dietary supplements. While Charlotte’s Web disagrees with the position of the FDA, there is risk that this agency could take law enforcement or regulatory actions against Charlotte’s Web.

Legal barriers applicable to, and risks associated with, selling Hemp and Hemp-derived CBD products result from a number of factors, including the fact that Hemp and marijuana are both derived from the Cannabis plant, the rapidly changing patchwork of state laws governing Hemp and Hemp-derived CBD, and the FDA’s position that it is unlawful to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, i.e. IND Preclusion. However, the removal of Hemp and its extracts, including CBD, from the USCSA pursuant to the 2018 Farm Bill, and the FDA’s indication that it is considering using its authority to issue a regulation that could specifically allow Hemp-derived ingredients in foods and supplements, are major developments toward resolving these regulatory barriers. Stakeholders take different positions regarding the scope of legal activity in light of the interplay of federal and state law, and in light of recent developments, such as the 2018 Farm Bill, the September 30, 2017 decision of the World Anti-Doping Agency to drop CBD from its list of prohibited substances, and the World Health Organization Expert Committee on Drug Dependence preliminary report finding that CBD is safe, well-tolerated and non-addictive2.

The foregoing is an abbreviated overview of Charlotte’s Web’s position on the legality of Charlotte’s Web’s operations in the U.S. Additional background and a more thorough analysis of applicable U.S. and international regulatory regimes are set out in greater detail below.

2 World Health Organization Expert Committee on Drug Dependence, Cannabidiol (CBD) Pre-Review Report, November 10, 2017.

H-6

United States Federal Regulation of Hemp

Development of Current Regulatory Framework

Summary

In addition to customary regulations applicable to any commercial business, Charlotte’s Web’s operations are subject to state and federal regulation in respect of the cultivation of Hemp and the production, distribution and sale of products intended for human ingestion or topical application and, with respect to certain products, by animals.

Hemp is an agricultural commodity cultivated for use in the production of a wide range of products globally. Among others, hemp is used in the agriculture, textile, recycling, automotive, furniture, food and beverage, paper, construction materials and personal care industries.

Botanically, Hemp is categorized as Cannabis sativa L., a subspecies of the cannabis genus. Numerous unique, chemical compounds are extractable from Hemp, including THC and CBD. These cannabinoids are responsible for a range of potential psychological and physiological effects. Hemp, as defined in the 2018 Farm Bill, is distinguishable from marijuana, which also comes from the Cannabis sativa L. subspecies, by its absence of more than trace amounts (0.3% or less) of the psychoactive compound THC. Although international standards vary, other countries, such as Canada, have used the same THC potency standards to define Hemp.

Hemp was widely grown in the U.S. as an agricultural commodity from the colonial period into the early 1900s and was commonly used in the manufacture of paper, fabrics, and other products. By 1970, however, the USCSA explicitly prohibited the cultivation of any variety of Cannabis without a DEA permit.

Per the plain language of the USCSA, only certain parts of the Cannabis plant (generally, what was historically considered to be the psychoactive portions of the plant) are controlled and defined as marijuana, while other parts of the Cannabis plant (now inclusive of hemp) are exempted from USCSA control. Consumer goods containing hemp seeds or “hemp hearts,” for example, have long been lawfully imported into the U.S. and legally sold in commerce due to the fact that the sterilized seeds are clearly exempt from the definition of marijuana under the USCSA and are not otherwise controlled substances. Nonetheless, from the enactment of the USCSA until the passage of the 2014 Farm Bill, cultivating hemp for any purpose in the U.S. without a DEA registration was federally illegal. The 2014 Farm Bill loosened the federal prohibition on the domestic production of hemp, by allowing hemp to be cultivated within the context of an agricultural pilot program and where permitted by state law. On December 20, 2018, the 2018 Farm Bill became law. Unlike the 2014 Farm Bill, which did not amend the USCSA but only preempted from USCSA control certain specified activities, the 2018 Farm Bill explicitly amended the USCSA to exclude all parts of the cannabis plant (including its cannabinoids, derivatives, and extracts) containing a THC concentration of not more than 0.3% on a dry weight basis from the definition of marijuana, and also created a specific exemption from the USCSA for THC found in Hemp. As a result, Hemp is no longer classified as a controlled substance, like marijuana. By defining Hemp to include its “extracts, cannabinoids and derivatives,” Congress explicitly removed popular Hemp products, such as Hemp-derived CBD, from the purview of the USCSA. Accordingly, the DEA no longer has regulatory authority to interfere with the interstate commerce of Hemp products. The 2018 Farm Bill also allows farmers to access crop insurance and fully participate in USDA programs for certification and competitive grants. State and tribal governments may impose separate restrictions or requirements on Hemp production, but they cannot interfere with the interstate transport of lawfully produced Hemp or Hemp products.

The 2014 Farm Bill

In 2014, Congress enacted the 2014 Farm Bill.3 The 2014 Farm Bill authorizes institutions of higher education and state departments of agriculture (and their contractual designees) to cultivate hemp, notwithstanding the USCSA or any other federal law, provided that certain conditions are met. The scope of the 2014 Farm Bill is limited to cultivation that is: (a) for research purposes (inclusive of market research, which multiple federal agencies have confirmed includes commercial sales with a research purpose); (b) part of an “agricultural pilot program” or other agricultural or academic research; and (c) permitted by state law. At least forty U.S. states have adopted pilot programs pursuant to

3 See http://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx.

H-7

the 2014 Farm Bill.4 The various state Hemp programs have different requirements regarding the registration of cultivators and processors, the involvement of institutions of higher education, and permissible commercialization.5 The 2014 Farm Bill does not provide a federal regulatory framework or require states to adopt and implement hemp programs. As a result, a few states continue to prohibit the production of hemp, and participating states take differing approaches with respect to the activities permitted under their respective pilot programs. Activities determined to be compliant with the 2014 Farm Bill are protected from federal interference by an appropriations rider (the “Appropriations Rider”). The Appropriations Rider generally prohibits the federal government’s use of funds in contravention of the 2014 Farm Bill and specifically prohibits such federal interference with regard to the “transportation, processing, sale, or use of . . . hemp, or seeds of such plant, that is grown or cultivated in accordance with the [2014 Farm Bill], within or outside the [s]tate in which the . . . hemp is grown or cultivated.” The Appropriations Rider has been renewed on several occasions, including most recently on November 21, 2019 through H.R. 3055, a continuing budget resolution, which extended the applicability of the Appropriations Rider through December 20, 2019. Rather than distinguishing between “hemp” and “marijuana” based on the part of the plant from which a product is derived, the 2014 Farm Bill definition includes all parts of the cannabis plant, and distinguishes hemp from marijuana on the basis of the concentration of THC. Any plants that exceed the 0.3% THC limitation are considered marijuana (a Schedule I controlled substance), and thus are not compliant with the 2014 Farm Bill. Activities determined to be outside the scope of the 2014 Farm Bill are not protected by the Appropriations Rider and may be subject to federal enforcement action. Notwithstanding the passage of the 2018 Farm Bill and the publication of the IFR, the hemp cultivation and research provisions contained in the 2014 Farm Bill remain in effect for the immediate future and will be repealed on or about November 1, 2020 (one year after the USDA regulations governing hemp production in states without their own USDA-approved plans took effect). It is anticipated that many states will rely on their existing pilot program regimes in submitting a 2018 Farm Bill plan to assume primary regulatory authority over hemp production. Because the 2018 Farm Bill permits states and Native American tribes to regulate Hemp and Hemp-derived products more restrictively than the 2018 Farm Bill, variances in these jurisdictions’ laws and regulations on Hemp are likely to persist. Compliance with state law remains imperative under both the 2014 and 2018 Farm Bills.

FDA Approval of Epidiolex

On June 25, 2018, the FDA issued to GW Pharmaceuticals plc its approval for Epidiolex, the first Cannabis-derived prescription medicine to be available in the U.S. The active ingredient in Epidiolex is CBD isolate created from Marijuana-based plants.

The 2018 Farm Bill

The 2018 Farm Bill became law on December 20, 2018. Prior to this law, all non-exempt Cannabis parts grown in the U.S. were scheduled as a controlled substance under the USCSA, and as a result, the cultivation of hemp for any purpose in the U.S. without a Schedule I registration with the DEA was, unless exempted by the 2014 Farm Bill, illegal. The passage of the 2018 Farm Bill materially changed federal laws governing Hemp by removing Hemp from the USCSA and establishing a federal regulatory framework for Hemp production. Specifically, the 2018 Farm Bill: (a) explicitly amended the USCSA to exclude all parts of the cannabis plant (including its cannabinoids, derivatives, and extracts) containing a THC concentration of not more than 0.3% on a dry weight basis from the definition of marijuana; (b) allows the commercial production and sale of Hemp in interstate commerce; (c) establishes the USDA as the primary federal agency regulating the cultivation of Hemp in the U.S., while allowing states to adopt their own plans to regulate the same; and (d) affords farmers the opportunity to obtain crop insurance and research grants. The 2018 Farm Bill also creates a specific exemption from the USCSA for THC found in hemp. By defining Hemp to include its “cannabinoids, derivatives, and extracts,” popular Hemp products, such as Hemp-derived CBD, are no longer subject to DEA control. Accordingly, the DEA no longer has regulatory authority to interfere with the interstate commerce of Hemp products, so long as the THC level of such products is at or below 0.3%.

Although the DEA no longer regulates Hemp, marijuana continues to be classified as a Schedule I controlled substance under the USCSA. As a result, CBD and other cannabinoids, if derived from marijuana as defined by the USCSA,

4 Health and Wellness Versus Non-Health and Wellness Packaged Food and Beverages, Retail Sales 2002-2017; see http://blog.euromonitor.com/2012/11/health-and-wellness-the-trillion-dollar-industry-in-2017-key-researchhighlights.html, page 13. 5 Id.

H-8

also remain Schedule I controlled substances under U.S. federal law. Though chemically and genetically distinct, Hemp and marijuana appear similar to the naked eye. The active enforcement against illegal marijuana and marijuana-based products under current federal law may inadvertently result in enforcement actions taken against Hemp or Hemp-derived products.

The 2018 Farm Bill amends the Agricultural Marketing Act of 1946 to categorize Hemp as an agricultural commodity under the regulatory purview of the USDA in coordination with state departments of agriculture. Although the USDA will be the primary federal regulatory agency overseeing Hemp production in the U.S. states, U.S. territories, and Indian tribes desiring to obtain (or retain) primary regulatory authority over Hemp activities within their borders are allowed to do so after submitting a plan for regulation to the USDA, and receiving approval from the USDA for the same. Pursuant to the 2018 Farm Bill, states, U.S. territories, and Tribal governments can adopt their own regulatory plans for hemp production, even if more restrictive than federal regulations, so long as the plans meet minimum federal standards and are approved by the USDA. Hemp production in states and tribal territories that do not choose to submit their own plans (and that do not prohibit hemp production) will be governed by USDA regulation.

On October 31, 2019, the USDA released the IFR, which governs the domestic production of hemp under the 2018 Farm Bill. The IFR also specifies the provisions that a state or tribal Hemp plan must contain to be in compliance with the 2018 Farm Bill. As a result of the IFR being effective, the USDA will now start reviewing Hemp production plans submitted by state and tribal governments. Once USDA formally receives a plan, the agency will have 60 days to review and approve or disapprove the plan. To date, the USDA has approved a few dozen state and tribal hemp production plans submitted after the IFR became effective. Approximately 15 states – including Kentucky, Colorado, and Oregon – have chosen not to submit plans to the USDA for the 2020 growing season, instead relying on their pilot program authorizations from the 2014 Farm Bill. These states are working with the USDA to improve that agency’s regulatory scheme as a final rule is developed. The status of the USDA’s review of plans, including which states have adopted to continue under the 2014 Farm Bill, is available at https://www.ams.usda.gov/rules-regulations/hemp/state-and-tribal-plan-review.

As introduced above, state and tribal governments may impose separate restrictions or requirements on Hemp cultivation and the sale of Hemp products; however, states may not interfere with the interstate transportation or shipment of lawfully produced Hemp or Hemp products. This was confirmed in a May 2019 memorandum released by the USDA’s Office of General Counsel. That memorandum reiterates that, due to enactment of the 2018 Farm Bill, states and Native American tribes may not prohibit the interstate transportation or shipment of hemp lawfully produced under the 2014 or 2018 Farm Bills. Notwithstanding the passage of the 2018 Farm Bill and the publication of the IFR, the hemp cultivation and research provisions contained in the 2014 Farm Bill remain in effect for the immediate future and will be repealed on or about November 1, 2020 (one year after the USDA regulations governing Hemp production in states without their own USDA-approved plans took effect). The IFR will be effective from October 31, 2019 through November 1, 2021, at which time the USDA will adopt permanent regulations.

It is important to note that the 2018 Farm Bill preserves the authority and jurisdiction of the FDA, under the FD&C Act, to regulate the manufacture, marketing, and sale of food, drugs, dietary supplements, and cosmetics, including products that contain Hemp extracts and derivatives, such as CBD. As a result, the FD&C Act will continue to apply to Hemp-derived food, drugs, dietary supplements, cosmetics, and devices introduced, or prepared for introduction, into interstate commerce. As a producer and marketer of Hemp-derived products, Charlotte’s Web must comply with the FDA regulations applicable to manufacturing and marketing of certain products, including food, dietary supplements, and cosmetics. See “FDA Regulation”, below.

On March 5, 2020, FDA Commissioner Dr. Stephen M. Hahn issued a statement on the FDA’s work related to CBD products. The statement makes clear that the FDA will continue its work to educate the public on CBD’s perceived safety risks and that the FDA is taking steps to solicit additional public feedback, data, and research on the science, safety, and quality of CBD products. These new steps include re-opening the public docket so that FDA can obtain additional scientific data on CBD, which will include a process by which confidential and proprietary information can be shared with the FDA and kept protected. Additionally, Commissioner Hahn’s statement reiterates that the FDA will continue to monitor and police the CBD products marketplace and is evaluating the issuance of a risk-based enforcement policy that provides greater transparency and clarity regarding factors the FDA intends to consider in prioritizing enforcement decisions.

H-9

Much of Commissioner’s Hahn statement was also included in the FDA’s congressionally mandated report on CBD, which was also submitted on March 5, 2020. Importantly, the report confirms that the FDA is actively considering pathways to allow the marketing of CBD as a dietary supplement, which may include a notice and-comment rulemaking and an interim risk-based enforcement policy while FDA potentially engages in this process. The report signals the FDA’s continued interest in certain questions about CBD, including effects from sustained use, effects from different methods of exposure, and effects on the developing brain and on the unborn child and breastfed newborn. The report acknowledges that the FDA is receiving inquiries about whether “full spectrum” and “broad spectrum” Hemp products can currently be marketed and sold, but the FDA has not yet answered the question conclusively. Largely, the report does little to address the current regulatory ambiguity for CBD and does not set a timeline for agency action, but it does signal the FDA’s clear interest in a pathway for the use of CBD in dietary supplements. Further to this point, Commissioner Hahn has publicly stated that it would be a “fool’s game” for the FDA to pull CBD products from the market entirely, as their use is already widespread.6

H.R. 5587

On January 13, 2020, Rep. Collin Peterson (D-MN-7) introduced H.R. 5587, which would exempt Hemp-derived CBD from the FD&C Act’s IND Preclusion, thereby permitting the sale of CBD as a dietary supplement and food additive in interstate commerce, subject to standard FDA regulation. The legislation has garnered 10 co-sponsors, and while it is not expected to pass as a stand-alone bill, it is hoped that its language will be attached to must-pass legislation that is expected to be considered by the full Congress in late spring 2020. Prospects for such passage would be improved by the introduction of companion legislation in the U.S. Senate. Continuing congressional focus on the nation’s response to COVID-19 may delay any action.

State Regulation of Hemp

At present, Charlotte’s Web sources only from proprietary operations and contract suppliers located in Colorado, Kentucky and Oregon that are in compliance with state and federal regulations. However, Charlotte’s Web is aware of variations in certain states’ definition of Hemp as compared with the definition of Hemp in the 2018 Farm Bill. All Hemp produced and sold by Charlotte’s Web constitutes Hemp under the 2018 Farm Bill and under the laws of the states in which it produces and sells such Hemp.

Under both the 2014 and the 2018 Farm Bills, states retain significant discretion and authority to adopt their own regulatory regimes governing hemp production. As a result, regulation of Hemp and the products derived therefrom will likely continue to vary on a state-by-state basis even after the 2018 Farm Bill is fully implemented. In addition, states take varying approaches to regulating the production and sale of hemp-derived CBD. While some states explicitly authorize and regulate the production and sale of hemp-derived CBD or otherwise provide legal protection for authorized individuals to engage in commercial hemp activities, other states maintain outdated drug laws that do not distinguish between marijuana, hemp and/or hemp-derived CBD, resulting in hemp being classified as a controlled substance under state law. In these states, sale of CBD, notwithstanding origin, is either restricted to state medical or adult-use marijuana program licensees or remains otherwise unlawful under state criminal laws. Additionally, a number of states prohibit the sale of ingestible CBD products based on FDA’s position that, pursuant to the FD&C Act, it is unlawful to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived. For example, Kentucky, Tennessee, Indiana, Florida, Missouri, Colorado, and dozens of other states have passed laws that explicitly exempt hemp extracts such as CBD from legal prohibitions applicable to controlled substances such as marijuana. Since Charlotte’s Web’s products are specifically excepted from the USCSA by the 2018 Farm Bill’s definition of Hemp, it is the Charlotte’s Web’s position that such state laws would specifically except them as well.

The treatment of the legality of Hemp-derived CBD products by state and local law enforcement authorities is broadly disparate. These products have been sold at retail and online in all fifty states for many years, and law enforcement actions have been limited and in some cases discontinued after initial enforcement actions. For example, in California, a state public health agency declared that food and dietary supplements that contain hemp-derived CBD could not be

6 See https://www.nutraingredients-usa.com/Article/2020/02/28/FDA-chief-Hahn-says-it-would-be-fool-s-game-to-try-to-shut-down-CBD-markets#.

H-10

sold at retail locations, while permitting the sale of marijuana-derived CBD in dispensaries, and staying silent in regard to online/mail-order sales.

On August 25, 2018, the Ohio Board of Pharmacy issued a regulatory memorandum advising that CBD oil, whether Hemp-derived or not, may only be legally sold in Ohio through state-licensed medical marijuana dispensaries. Since then, the memorandum has served as the basis for a handful of enforcement actions in Ohio, including a February 2019 seizure of a large cargo load of CBD oil traveling in interstate commerce by the Ohio State Highway Patrol. Legal proceedings in that action are believed to be ongoing to get the cargo released, and the primary argument is that under the 2018 Farm Bill, states cannot interfere with the interstate transport of Hemp or Hemp products. In August, 2019, the Ohio General Assembly passed legislation that explicitly exempts Hemp from drug control and permits the retail sale of hemp products such as CBD.

In January 2019, Idaho law enforcement seized a large shipment of hemp legally traveling between two Hemp program states. The Idaho State Police Deputy Director later indicated that CBD oil with THC is illegal under state law, as Hemp is not exempted from the definition of marijuana under the state’s USCSA. Legal proceedings are ongoing to get the shipment released, and the primary argument is that under the 2018 Farm Bill, states cannot interfere with the interstate transport of Hemp or Hemp products.

In February 2019, the North Carolina Department of Agriculture and Consumer Services announced they will issue warning letters to businesses selling CBD-infused food and beverages, selling CBD in nutritional supplements, or making unapproved health claims about CBD. Those who do not comply with the letter are threatened with embargos, product seizure, and injunctions. The state agency based its action on the FDA’s position that CBD is precluded from use in dietary supplements due to the FDA’s approval of the CBD-based drug Epidiolex to treat severe epilepsy. To the knowledge of Charlotte’s Web, no warning letters have been issued.

In Maine, the state’s Department of Health and Human Services ruled that CBD is not a federally approved food additive, which enjoined other state authorities to inform businesses that they must remove foods and supplements that contain CBD from store shelves, and that shoppers must access such products from marijuana dispensaries instead. The state attorney general, however, issued an opinion that even dispensaries should stop selling CBD items to the general public. Since then, the legislature passed a bill that explicitly permits the retail sale of hemp products such as CBD, and the law became effective on September 17, 2019. However, the state just recently announced that Hemp and CBD food and dietary supplements sold at retail must be produced in Maine, with enforcement to begin December 1, 2019. Corrective legislation is currently being considered in the Maine legislature. This legislation, if enacted, would allow CBD food and dietary supplements produced outside Maine to be imported and sold at retail.

Accordingly, the sale of CBD at the retail level in most U.S. states remains a gray area of the law. Charlotte’s Web has chosen to sell its products in all fifty states, with the exception of Louisiana and South Dakota, understanding that there is a risk of state or local law enforcement or regulatory action. Moreover, Charlotte’s Web has limited access to information regarding or control over which states its products may transit through between production and sale.

Colorado is the only jurisdiction in which Charlotte’s Web directly cultivates Hemp. Charlotte’s Web has obtained the following licenses issued by the Colorado Department of Agriculture to Charlotte’s Web U.S.: (i) Registration issued April 3, 2018 in respect of Indoor Commercial Industrial Hemp Registration — 3,000 sq. ft.7; (ii); Registration issued March 7, 2019 Outdoor Commercial Industrial Hemp Registration — 51 acres; (iii) Registration issued March 7, 2019 in respect of Indoor Commercial Industrial Hemp Registration — 5,600 sq. ft. and Outdoor Commercial Industrial Hemp Registration — 43 acres; (iv) Registration issued March 7, 2019 in respect of Outdoor Commercial Industrial Hemp Registration — 30 acres; (v) Registration issued March 7, 2019 in respect of Outdoor Commercial Industrial Hemp Registration — 32 acres; (vi) Registration issued March 7, 2019 in respect of Outdoor Commercial Industrial Hemp Registration — 67 acres; (vii) Registration issued January 14, 2019 in respect of Indoor Commercial Industrial Hemp Registration — 16,000 sq. ft. and Outdoor Commercial Industrial Hemp Registration — 3 acres; and (viii) Registration issued March 7, 2019 in respect of Indoor Commercial Industrial Hemp Registration — 18,600 sq. ft. The foregoing licenses are in respect of cultivation only as a license from the state of Colorado is not required for the subsequent sale of its products.

7 2019 renewal registration has been submitted to the Colorado Department of Agriculture and is awaiting processing.

H-11

Following completion of Charlotte’s Web’s 2019 historical harvest, Charlotte’s Web’s cultivation division has increased its focus on research, while continuing operations in Colorado, Oregon and Kentucky, to further its competitive advantage in optimizing regional genetics and developing Charlotte’s Web’s scalable drying and harvesting systems. Charlotte’s Web’s contract cultivation suppliers in Kentucky have obtained a “Grower License from the Kentucky Department of Agriculture” issued on March 24, 2020, and its contract cultivation supplier in Oregon has obtained an ”Industrial Hemp Certificate” dated December 31, 2019 (all of the foregoing Colorado, Kentucky and Oregon licenses collectively, the “Licenses”). See “Material Contracts” in the Charlotte’s Web AIF and the renewals of the Licenses filed with the Canadian securities regulatory authorities and available on SEDAR at www.sedar.com under Charlotte’s Web’s profile.

The varying regulations with respect to the treatment of Hemp from state to state continue to evolve. The regulations of the particular states most impactful to Charlotte’s Web’s business are described below.

Colorado

The bulk of Charlotte’s Web’s operations are based in Colorado as a result of the state’s legalization of Hemp and mature regulatory program.

Passed in 2012, Amendment 64 to the Colorado Constitution directed the General Assembly to enact legislation governing the cultivation, processing and sale of Hemp by July 1, 2014.8 In 2013, responsibility for establishing regulations pertaining to the cultivation of Hemp, including registration and inspection, was delegated to the CDA.9 The CDA adopted rules and regulations that set forth requirements for registration, inspection, and testing.10 Registration requirements include but are not limited to: disclosing the name and address of the entity that will hold the registration, and the name of each officer, director, member, partner or owner of at least 10% of the entity and any other person who has managing or controlling authority over the entity; providing the CDA with GPS coordinates and a map of the land area where the Hemp will be cultivated; listing the intended use of harvested Hemp materials; and payment of a non-refundable fee11. All registrants are subject to routine inspection and sampling by the CDA to verify that the THC concentration of the plants being cultivated does not exceed 0.3% on a dry weight basis, and to ensure registrants are complying with applicable reporting requirements.12 Reporting requirements include a pre-planting report detailing the varieties to be planted, a planting report specifying the exact land areas where planning occurred, and a harvest report documenting the size of the harvest and the anticipated harvest date.13

After the passage of the 2014 Farm Bill, the Colorado legislature passed the Colorado Industrial Hemp Regulatory Program Act establishing the Colorado Industrial Hemp Regulatory Program.14 The Colorado Industrial Hemp Regulatory Program Act expressly authorizes two distinct categories of Hemp cultivation registration to be issued and administered by the CDA: (i) R&D; and (ii) commercial. “Research and Development” is defined as the “cultivation of Industrial Hemp by an institution of higher education under the pilot program administered by the CDA for purposes of agricultural or academic research in the development of growing Industrial Hemp.”15 In comparison, “Commercial” is defined as “the growth of Industrial Hemp, for any purpose including engaging in commerce, market development and market research, by any person or legal entity other than an institution of higher education or under a pilot program administered by the CDA for purposes of agricultural or academic research in the development of growing Industrial Hemp.”16

Charlotte’s Web believes that cultivation registrations for R&D purposes that operate in compliance with CDA rules and regulations comply with the conditions of the 2014 Farm Bill and the 2018 Farm Bill, and cultivation registrations

8 Colo. Const. art. XVIII, § 16. 9 Colorado Senate Bill 13-241. (63) 8 CCR 1203-23. 10 Id. 11 Id. 12 Id. 13 Id. 14 See C.R.S. §§35-61-101, et seq. 15 8 CCR §1203-23(1.12). 16 8 CCR §1203-23(1.3)

H-12

for commercial purposes operating in compliance with CDA rules and regulations comply with the 2014 Farm Bill and the 2018 Farm Bill.

Finally, on May 30, 2018, the governor of Colorado signed House Bill 18-1295 into law. This legislation modifies the Colorado Food and Drug Act to establish that food, cosmetics, drugs, and devices, as those terms are defined in the act, are not adulterated or misbranded by virtue of containing Hemp. This law codified a policy established in 2017 by the CDPHE that allowed for the production and sale of food products containing Hemp, so long as certain express conditions were satisfied. Under applicable legislation, food products containing Hemp must be produced by a wholesale food manufacturing facility that has registered with the CDPHE, and the finished product must contain a delta-9 THC concentration of no more than three-tenths of one percent (0.3%).

Following the implementation of the 2018 Farm Bill through the IFR, Colorado will continue to operate its 2014 Farm Bill pilot program in 2020.17

Kentucky

Kentucky established a robust agricultural pilot program in 2013,18 which it expanded in 2017. Program participants may grow, cultivate, handle, process or market Hemp and Hemp products. In 2018, the program covered 6,000 acres and included hundreds of participants. For 2019, the program has approved 1,035 applicants to cultivate up to 42,086 planted acres, as well as 2.9 million square feet of greenhouse space for Hemp cultivation. The Kentucky Department of Agriculture has promulgated regulations19 and issued a policy guide for the program, both of which have served as models for newer Hemp regimes in other states.

Kentucky adopts the definition of “Hemp”20 set forth under the 2018 Farm Bill. Kentucky’s definition of marijuana21 excludes lawful Hemp and Hemp products, as well as the stalks, fiber and oil from seeds of the Cannabis plant.

Kentucky’s definition of marijuana specifically exempts Hemp products that do not contain any living plants, viable seeds, leaf materials or floral materials, as well as CBD products derived from hemp.22

Following the implementation of the 2018 Farm Bill through the IFR, Kentucky will continue to operate its 2014 Farm Bill pilot program in 2020.23

While Charlotte’s Web itself is not a program participant, it does take steps to ensure that the Kentucky-based suppliers with which it contracts are participants in the Kentucky agricultural pilot program, including requiring suppliers to represent and warrant their compliance with Kentucky law in writing and obtaining a copy of the applicable license issued to such supplier.

Oregon

Oregon’s Hemp laws are also evolving. Hemp extracts and CBD are referred to or defined in Oregon’s Hemp statutes and the state’s hemp regulations,24 pursuant to which an “industrial hemp commodities or product” includes CBD and other compounds derived from hemp.25 Further, all cannabinoid products from hemp must be tested for their THC and CBD content and microbiological contaminants.26 Only a grower registered with Oregon Department of Agriculture (the “ODA”) may produce Hemp, and only a handler registered with the ODA may process Hemp. A separate

17 See https://www.ams.usda.gov/rules-regulations/hemp/state-and-tribal-plan-review. 18 Ky. Rev. Stat. §§ 260.850-.858. 19 302 Ky. Admin. Regs. 50:010-080. 20 Ky. Rev. Stat. § 260.850(5) (73) Ky. Rev. Stat. § 218A.010(27). 21 Ky. Rev. Stat. § 218A.010(27). 22 Ky. Rev. Stat. § 218A.010(27)(c)-(f). 23 See https://www.ams.usda.gov/rules-regulations/hemp/state-and-tribal-plan-review. 24 See Oregon Revised Statutes § 571.300 et seq.; Oregon Administrative Rules § 603-048-0010 et seq. 25 OAR § 603-048-0010 (11)(a). 26 Id. at § 603-048-2320, 603-048-2340.

H-13

registration is required to handle Hemp seed. There are further restrictions on who a Hemp registrant can sell to27 and Charlotte’s Web’s packaged goods must comply with Oregon’s THC, CBD and microbiological testing requirements.

Following the implementation of the 2018 Farm Bill through the IFR, Oregon will continue to operate its 2014 Farm Bill pilot program in 2020.28

While Charlotte’s Web itself is not registered in Oregon, it does take steps to ensure the Oregon-based suppliers with which it contracts are appropriately registered with the ODA, including requiring suppliers to represent and warrant such compliance in writing and obtaining a copy of the applicable license issued to such supplier.

FDA Regulation

The governing food and drug law in the U.S. is the FD&C Act. One purpose of the FD&C Act is to forbid the movement in interstate commerce of adulterated and misbranded food, drugs, devices and cosmetics.29 The FDA is charged with protecting the integrity of the U.S. food supply and its cosmetic products, as well as monitoring the safety and efficacy of drugs, biological products, and almost any compound intended for human or animal consumption, among other areas.30 To date, the FDA has approved one product containing CBD as a drug, and has taken the position that CBD cannot be marketed as a dietary supplement or added to food because a product containing CBD was approved as a drug and substantial clinical trials studying CBD as a new drug were made public prior to the marketing of any food or dietary supplements containing CBD, and therefore dietary supplements or food are precluded from containing this ingredient. This creates additional barriers to lawfully selling certain CBD and CBD-based products in the U.S.

Notably, the FDA does not impose the same restrictions on the use of CBD in cosmetic products. The agency states on its website that “[c]ertain cosmetic ingredients are prohibited or restricted by regulation, but currently that is not the case for any cannabis or cannabis-derived ingredients.”31 However the FDA further notes that such products must comply with all applicable legal requirements including the adulteration and misbranding provisions of the FD&C Act specific to cosmetic products.

The Dietary Supplement Health and Education Act (the “DSHEA”), an amendment to the federal FD&C Act, established a framework governing the composition, safety, labeling, manufacturing and marketing of dietary supplements in the U.S. Generally, under DSHEA, dietary ingredients marketed in the U.S. prior to October 15, 1994 may be used in dietary supplements without notifying the FDA. “New” dietary ingredients (i.e. dietary ingredients “not marketed in the U.S. before October 15, 1994”) must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been “present in the food supply as an article used for food” and is not “chemically altered.” Any new dietary ingredient notification must provide the FDA with evidence of a “history of use or other evidence of safety” establishing that use of the dietary ingredient ”will reasonably be expected to be safe.”

The FDA has taken the position that CBD cannot be marketed as a dietary supplement because it has been the subject of investigation as a new drug (such restrictions referred to as “IND Preclusion”). According to the FDA, the submission of the IND application for Epidiolex by Greenwich Biosciences, the U.S. subsidiary of London-based GW Pharmaceuticals, preceded the sales and marketing of CBD as a dietary supplement. Excluded from the DSHEA definition of a dietary supplement is: “an article authorized for investigation as a new drug, antibiotic, or biological for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, which was not before such approval, certification, licensing, or authorization marketed as a dietary supplement or as a food unless the Secretary, in the Secretary’s discretion, has issued a regulation, after notice and comment, finding that the article would be lawful under this Act.” It is the FDA’s interpretation of the IND Preclusion that the preclusion date is the date in which it authorized the drug for investigation; however, Charlotte’s

27 OAR § 603-048-0100. 28 See https://www.ams.usda.gov/rules-regulations/hemp/state-and-tribal-plan-review. 29 Ky. Rev. Stat. §§ 260.850-.858. 30 U.S. Food and Drug Administration, Mission Statement: http://www.fda.gov/downloads/aboutfda/reportsmanualsforms/reports/budgetreports/ ucm298331.pdf. 31 U.S. Food and Drug Administration, “FDA Regulation of Cannabis and Cannabis-Derived Products, Including Cannabidiol (CBD), Questions and Answers,” https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd#qandas.

H-14

Web believes there are significant arguments against this position in that all conditions of the statute must be met before the IND Preclusion applies, including (1) authorization for investigation as a new drug; (2) substantial clinical investigations must be instituted; (3) such substantial investigations must be made public; and (4) all of the above must occur prior to the marketing of the article as a food or dietary supplement. As discussed below, the FDA takes the position that CBD was not marketed in a food or dietary supplement prior to the conditions for the IND Preclusion rendering effective. Charlotte’s Web disagrees with this position and further believes that CBD was sold in interstate commerce prior to the publication of substantial clinical investigations. Thus, Charlotte’s Web takes the position that the IND Preclusion does not apply. As of the date of this Information Circular, Charlotte’s Web has not, and does not intend to file an investigational drug application with the FDA, concerning any of its products that contain CBD derived from Hemp.

The FD&C Act provides that a substance added to food is unsafe unless the substance is Generally Recognized as Safe (“GRAS”). The FDA has not recognized CBD as GRAS for human consumption, although certain hemp seed derivatives may be considered GRAS.32,33 Further research is needed to determine if other cannabinoids would be considered GRAS or what steps would be necessary for them to be recognized as GRAS. In the meantime, stakeholders including Charlotte’s Web are collecting data to pursue a GRAS determination for CBD, as the FDA has indicated it cannot conclude that CBD is GRAS due to the current lack of information to support this determination. As discussed below on March 6, 2020 Charlotte’s Web achieved GRAS status for its hemp extract, adding to the current body of scientific literature on the safe use of CBD. Enforcement of this prohibition on the use of CBD in food has been generally limited to products making unlawful drug or disease claims, with the FDA also asserting its position that CBD is not a permissible food or dietary supplement ingredient. Charlotte’s Web’s products containing CBD derived from Hemp are not marketed or sold using claims that the products are intended to diagnose, mitigate, treat, cure or prevent disease in violation of the FD&C Act.

In October 2017, Charlotte’s Web received a warning letter from FDA regarding claims being made for its products and citing to FDA’s position concerning the IND Preclusion (the “Warning Letter”). Charlotte’s Web responded in two phases: (1) one letter identifying corrective actions made to its website and marketing related to product claims; and (2) a separate letter responding to FDA’s comments on IND Preclusion and establishing Charlotte’s Web’s position that CBD is not precluded from being a food or dietary ingredient since it was marketed in a food or dietary supplement prior to substantial clinical investigations being instituted and being made public.

On May 23, 2018, Charlotte’s Web received a response from FDA noting the changes to Charlotte’s Web’s website and marketing, but also indicating the FDA did not agree with Charlotte’s Web’s position that CBD is not precluded from being a food or dietary ingredient since it was marketed in a food or dietary supplement prior to substantial clinical investigations being instituted and being made public. As stated above, Charlotte’s Web does not agree with the FDA’s position. Charlotte’s Web has asked FDA to elaborate on the basis for its position in a July 11, 2018 letter to the agency, since FDA’s May 23, 2018 response did not provide any such basis. To date, Charlotte’s Web has not received a direct response to its July 11, 2018 letter.

On December 20, 2018, the FDA released a statement from former Commissioner Scott Gottlieb, which restated FDA’s current position, opining that products containing CBD ingredients may not be sold as food or dietary supplements. The statement also contained, for the first time, a clear path toward FDA’s permanent and formal acceptance of hemp-derived CBD as a food or dietary supplement ingredient. For the first time, the FDA has indicated that it is considering using its authority to issue a regulation that will specifically allow hemp-derived CBD in foods and supplements.

Statements from the FDA issued in July 2019 made clear that the FDA is “[p]aving the way for regulatory clarity[.]”34 FDA “is committed to evaluating the regulatory frameworks for non-drug uses, including products marketed as foods and dietary supplements[.]”35 Importantly, FDA “recognize[s] that there is substantial public interest in marketing and accessing CBD in food, including dietary supplements . . . [and that] [t]he statutory provisions that currently prohibit

32 21 CFR § § 170.30(b), (c), 170.3(f). 33 21 CFR § 1308.35 (a)(2). The DEA’s final rule on legal hemp materials and products specifically excludes materials used for human consumption. 34 Amy Abernathy, M.D., Ph.D., et al., “FDA is Committed to Sound, Science-based Policy on CBD,” fda.gov, https://www.fda.gov/news-events/fda-voices-perspectives-fda-leadership-and-experts/fda-committed-sound-science-based-policy-cbd. 35 Id.

H-15

marketing CBD in these forms also allow the FDA to issue a regulation creating an exception, and some stakeholders have asked that the FDA consider issuing such a regulation to allow for the marketing of CBD in conventional foods or as a dietary supplement, or both.”36

As it continues down this path, the FDA is “[l]istening to and learning from stakeholders[.]”37 The FDA held a public hearing on May 31, 2019 to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing Cannabis or Cannabis-derived compounds. Numerous hemp industry stakeholders and consumers shared their perspectives, including Jonathan Miller, regulatory counsel to Charlotte’s Web and General Counsel for the U.S. Hemp Roundtable (“Roundtable”)—the industry’s leading national business advocacy association and for which Charlotte’s Web serves as a member of the Board of Directors. Since then, Miller met with the FDA’s recently empaneled CBD Working Group, which is expediting its review of CBD as a food additive and dietary supplement ingredient. The Working Group was expected to release a report on its progress in Fall 2019, which delayed until early 2020.

On July 16, 2019, the FDA issued a consumer update on its efforts to address “unanswered questions about the science, safety, and quality of products containing CBD” through the feedback from the May 31, 2019 hearing and information and data gathered through a public docket.38 Specifically, the FDA noted concerns regarding potential liver toxicity, questions about cumulative exposure to CBD over time, the effects of CBD on special populations (e.g., the elderly, children, adolescents, pregnant and lactating women), and the safety of CBD use in animals including pets. On October 16, 2019, the FDA issued another consumer update cautioning against the use of CBD, THC, and marijuana during pregnancy or while breastfeeding due to the current lack of comprehensive research studying the effects of CBD on the developing fetus, pregnant mother, or breastfed baby.39 On November 25, 2019, the FDA provided another consumer update stating there is limited available information about CBD, including about its effects on the body.40 The FDA also sent another round of warning letters to companies marketing CBD products with disease claims. In addition, the agency reiterated its position that CBD cannot be added to food and dietary supplements and stated that it is “not aware of any basis to conclude that CBD is GRAS [Generally Recognized as Safe] among qualified experts for its use in human or animal food.”41

On March 5, 2020, FDA Commissioner Dr. Stephen M. Hahn issued a statement on the FDA’s work related to CBD products. The statement makes clear that the FDA will continue its work to educate the public on CBD’s perceived safety risks and that the FDA is taking steps to solicit additional public feedback, data, and research on the science, safety, and quality of CBD products. These new steps include re-opening the public docket so that FDA can obtain additional scientific data on CBD, which will include a process by which confidential and proprietary information can be shared with the FDA and kept protected. Additionally, Commissioner Hahn’s statement reiterates that the FDA will continue to monitor and police the CBD products marketplace and is evaluating the issuance of a risk-based enforcement policy that provides greater transparency and clarity regarding factors the FDA intends to consider in prioritizing enforcement decisions.

Much of Commissioner Hahn’s statement was also included in the FDA’s congressionally mandated report on CBD, which was also submitted on March 5, 2020. Importantly, the report confirms that the FDA is actively considering pathways to allow the marketing of CBD as a dietary supplement, which may include a notice-and-comment rulemaking and an interim risk-based enforcement policy while the FDA potentially engages in this process. The report signals the FDA’s continued interest in certain questions about CBD, including effects from sustained use, effects from different methods of exposure, and effects on the developing brain and on the unborn child and breastfed newborn. The report acknowledges that the FDA is receiving inquiries about whether “full spectrum” and “broad spectrum” Hemp products can currently be marketed and sold, but the FDA has not yet answered the question conclusively. Largely, the report does little to address the current regulatory ambiguity for CBD and does not set a timeline for agency action, but it does signal the FDA’s clear interest in a pathway for the use of CBD in dietary

36 Id. 37 Id. 38 Id. 39 U.S. Food and Drug Administration, “What You Should Know About Using Cannabis, Including CBD, When Pregnant or Breastfeeding,” https://www.fda.gov/consumers/consumer-updates/what-you-should-know-about-using-cannabis-including-cbd-when-pregnant-or-breastfeeding. 40 U.S. Food and Drug Administration, “FDA warns 15 companies for illegally selling various products containing cannabidiol as agency details safety concerns,” https://www.fda.gov/news-events/press-announcements/fda-warns-15-companies-illegally-selling-various-products-containing-cannabidiol-agency-details. 41 Id.

H-16

supplements. Further to this point, Commissioner Hahn has publicly stated that it would be a “fool’s game” for the FDA to pull CBD products from the market entirely, as their use is already widespread.42

Despite the position taken by the FDA that there is no evidence of CBD being marketed as a food or dietary supplement prior to drug trials being commenced and made public, Charlotte’s Web believes there is substantial uncertainty and different interpretations among state and federal regulatory agencies, legislators, academics and businesses as to whether cannabinoids including CBD were present in the food supply and marketed prior to October 15, 1994 or whether such inclusion of cannabinoids is otherwise permitted by the FDA as dietary ingredients, notwithstanding that Cannabis and the cannabinoids contained therein have been therapeutically used and consumed as food by human beings for centuries even if not specifically marketed as CBD or other cannabinoids. As a result, Charlotte’s Web believes the federal legality regarding the distribution and sale of hemp-based products intended for human consumption must be considered on a case-by-case basis and that the uncertainties cannot be resolved without further federal legislation, regulation or a definitive judicial interpretation of existing legislation and rules. A determination that Hemp products containing CBD or other cannabinoids were not present in the food supply, marketed prior to October 15, 1994, are not otherwise permissible for use as a dietary ingredient, may have a materially adverse effect upon Charlotte’s Web and its business. Moreover, if the FDA were to enforce the IND Preclusion based on its interpretation of the legislation, this would have a materially adverse effect upon Charlotte’s Web and its business.

Hemp-derived products may be legally sold and marketed in the U.S. where they contain Hemp lawfully imported from another country or cultivated pursuant to a state agricultural program, provided the product complies with the FD&C Act and applicable state and federal law. Textiles, fibers, and certain food and cosmetic products containing Hemp seed and Hemp seed oils can be lawfully sold in compliance with federal law. Products containing CBD, however, may only be legal to the extent they are lawfully sourced, sold in a state where state law does not prohibit such sale and where they are compliant with the FD&C Act. Compliance with the FD&C Act may prove difficult for most CBD products, while other Hemp-based products such as Hemp or CBD topicals, Hemp seed, Hemp seed oils and certain non-consumable products may be able to achieve compliance with FD&C Act more easily.

Except as described above and elsewhere in this Appendix H, Charlotte’s Web is in compliance with applicable law and has not received any citations or notices of violation which may have an impact on Charlotte’s Web’s Licenses, business activities or operations.

Future Uncertainty of Legal Status

There remain a number of considerations and uncertainties regarding the cultivation, sourcing, production and distribution of Hemp and products containing hemp derivatives. Applicable laws and regulations remain subject to change as there are different interpretations among federal, state and local regulatory agencies, legislators, academics and businesses with respect to the treatment of the importation of derivatives from exempted portions of the Cannabis plant and the scope of operation of 2018 Farm Bill-compliant hemp programs. These different federal, state and local agency interpretations, as discussed above, touch on the regulation of cannabinoids by the FDA and the extent to which imported derivatives, and/or 2018 Farm Bill-compliant cultivators and processors may engage in interstate commerce, whether under federal and/or state law. The uncertainties likely cannot be resolved without further federal and state legislation, regulation or a definitive judicial interpretation of existing legislation and rules.

Materially all of Charlotte’s Web’s assets, liabilities and operations are exposed to U.S. Hemp-related activities.

Charlotte’s Web’s Regulatory Compliance Activities

Under the oversight of the VP of Regulatory Affairs and Compliance, Charlotte’s Web’s senior management team regularly monitors the development of applicable U.S. laws and Charlotte’s Web engages U.S. legal counsel to ensure

42 See https://www.nutraingredients-usa.com/Article/2020/02/28/FDA-chief-Hahn-says-it-would-be-fool-s-game-to-try-to-shut-down-CBD-markets#.

H-17

it is operating in compliance with all applicable laws and permits. These compliance-related activities include efforts affecting the following objectives, when and as applicable:

ensuring all raw materials are sourced in compliance with the 2018 Farm Bill and applicable state and local laws; evaluating supply chain partners for quality standards; setting and maintaining quality standards through raw material specifications; employing qualified quality assurance personnel; and ensuring processing activities performed in Colorado comply with CDPHE Guidance, the Colorado Food and Drug Act, and the Colorado Industrial Hemp Regulatory Program Act.

Charlotte’s Web is a key member of the U.S. Hemp Roundtable. The U.S. Hemp Roundtable is a coalition of dozens of Hemp companies representing each key link of the product chain, from seed to sale, as well as the Hemp industry’s major national grassroots organizations. Charlotte’s Web is also working closely with the U.S. Hemp Roundtable’s efforts to develop standards, best practices and a self-regulated organization for the industry to give confidence to consumers that Hemp products are safe, and to law enforcement, that Hemp products are legal.

In January 2019, Charlotte’s Web received U.S. Hemp Authority Certification. The U.S. Hemp Authority is an industry self-regulatory organization. The U.S. Hemp Authority Certification program provides education on standards and best practices for the hemp industry and continued certification requires an annual third-party audit.

On March 6, 2020, Charlotte’s Web completed its assessment for self-affirmed GRAS status for its hemp extract. Charlotte’s Web made this determination based on composite safety information and an expert panel review as permitted under the FDA’s GRAS regulation.43 According to the GRAS definition,44 experts can generally recognize a substance as safe through either (1) scientific procedures, or (2) experience based on common use before January 1, 1958. The FDA’s GRAS regulation provides a voluntary notification process under which a company may notify the FDA of a conclusion that a substance is GRAS under the conditions of its intended use, or make an independent conclusion of GRAS (“self-affirmation of GRAS”), where the conclusion of GRAS status remains with the firm or company of that conclusion rather than be submitted to the Agency for review. The criteria and eligibility for self-affirmed GRAS must fully satisfy the criteria for eligibility of GRAS as if it were being submitted through the notification process. In addition, a company may make a self-affirmation for any ingredient that would also be eligible to go through the GRAS notification process (with some exceptions). Charlotte’s Web achieved this recognition of safety through scientific procedures, i.e., safety and toxicology studies, a comprehensive literature review of CBD, and by publishing the results of its safety studies in accordance with FDA guidelines for GRAS.

SOUTH AMERICAN, EUROPEAN, ASIAN AND CANADIAN REGULATORY MATTERS

South America, Europe and Asia

Charlotte’s Web is currently exploring manufacturing partnerships for local production, manufacturing and/or distribution in select international markets. Legislative approaches to the regulation of CBD-related products vary country by country, including local regulations with respect to THC content, and continue to evolve. For example, to comply with more restrictive THC content specifications in Europe, products distributed therein must contain no more than 0.2% THC. In connection with its international expansion efforts, Charlotte’s Web engages local legal counsel to advise on matters applicable to the proposed expansion activities of Charlotte’s Web, including review of the applicable regulatory regimes. Charlotte’s Web makes decisions as to international expansion upon completion of this regulatory review.

International sales activities require compliance with the THC content limits of the applicable international jurisdictions in which Charlotte’s Web sells its U.S.-manufactured products, as well as applicable local regulations regarding the import and sale in such jurisdictions. Charlotte’s Web periodically reviews changes in applicable U.S. export laws, regulations and departmental practices as well as applicable international laws and adjusts its sales practices accordingly, including the temporary suspension of sales, if necessary. In addition to its regulatory review

43 21 C.F.R. 170.30. 44 21 C.F.R. 170.30(e)(i).

H-18

regarding potential international production, manufacturing and distribution activities, Charlotte’s Web periodically reviews the current compliance procedures implemented by its mail-order/online distributors. International sales only take place in a country once the applicable review of current regulatory regimes is complete and applicable compliance procedures have been implemented or updated. Sales of Charlotte’s Web’s products in international jurisdictions are conducted in accordance with local regulatory regimes permitting such sales.

Charlotte’s Web has sold its products in Argentina, Brazil, Canada, Italy, Puerto Rico, and Uruguay, and to other jurisdictions through third party distributors who take delivery in bulk and manage individual orders. Each of these countries regulates the import of Cannabis-derived products and requires some form of importation license, permit or other documentation for products. The exact nature of the importation documentation varies from country to country, and is affected by various factors, including the level of THC content and the intended use of the product. For example, in certain international jurisdictions, CBD products may be regulated as a dietary supplement and subject to local packaging and labelling requirements, whereas in certain jurisdictions a prescription from a licensed medical practitioner is required.

In the event any prior sales or distributions were conducted in contravention of a local law or regulation, Charlotte’s Web may be subject to penalties imposed by the applicable jurisdiction. To the knowledge of Charlotte’s Web, it has not breached any substantive foreign law. However, were there such a breach, Charlotte’s Web does not believe such non-compliance would have a material adverse effect on Charlotte’s Web given the limited amount of sales, the fact that all sales were conducted by recognized local distributors for whom Charlotte’s Web’s products typically represented a small portion of total sales of hemp-products in the jurisdiction and the lack of notice of regulatory non-compliance to date. In 2019, aggregate sales in international jurisdictions represented approximately 0.7% of Charlotte’s Web’s total sales.

Canada

Charlotte’s Web has limited sales to consumers with a medical exception in Canada under an exemption to import. Although Charlotte’s Web’s products are not marijuana, they are regulated as Cannabis pursuant to the Cannabis Act and Cannabis Regulations. Therefore, their importation and sale in Canada is governed by Health Canada, which has the authority to grant exemptions and issue import permits on a case by case basis. Charlotte’s Web requires each Canadian purchaser to obtain licenses and permits authorizing the importation of Cannabis under the Cannabis Act and Cannabis Regulations and to provide an import permit from Health Canada for each order delivered to Canada, which permit indicates that Health Canada has permitted the legal importation thereof by the purchaser. Charlotte’s Web does not produce any products in Canada.

Charlotte’s Web does not conduct its business with the “intent to conceal or convert” such proceeds as contemplated under Section 462.31 of the Criminal Code (Canada). The business of Charlotte’s Web in Canada is the lawful production and sale of CBD pursuant to applicable regulatory regimes, which business if conducted in Canada, would not be an offence in Canada. Charlotte’s Web has considered the foregoing provisions and is satisfied that its activities will not violate the Criminal Code (Canada).

DESCRIPTION OF THE SHARE CAPITAL OF CHARLOTTE’S WEB

The following describes the material terms of Charlotte’s Web’s share capital. The summary does not purport to be complete, is indicative only and is qualified in its entirety by reference to, the terms and provisions of Charlotte’s Web’s notice of articles and articles, as amended (the “Charlotte’s Web Articles”). Charlotte’s Web’s authorized share capital consists of an unlimited number of Charlotte’s Web Common Shares of which 71,915,914 were issued and outstanding as of May 1, 2020, an unlimited number of Charlotte’s Web Proportionate Voting Shares of which 92,455.5775 were issued and outstanding as of May 1, 2020, and an unlimited number of preferred shares, issuable in series, none of which were issued and outstanding as of May 1, 2020. If all such outstanding Charlotte’s Web Proportionate Voting Shares were converted, there would be 108,898,145 Charlotte’s Web Common Shares outstanding.

Charlotte’s Web received an exemption order dated August 23, 2018 from the securities regulatory authorities in each of the provinces of Canada (except Québec) which provided an exemption from (i) Section 12.2 of National Instrument

H-19

41-101 – General Prospectus Requirements (“NI 41-101”), sections 1.13 and 10.6 of Form 41-101F1 – Information Required in a Prospectus and sections 1.12 and 7.7 of Form 44-101F1 – Short Form Prospectus relating to restricted security disclosure in Charlotte’s Web’s initial public offering final long form prospectus dated August 23, 2018 and in relation to other prospectuses that may be filed pursuant to NI 44-101, including a prospectus filed under National Instrument 44-102 – Shelf Distributions; (ii) Section 12.3 of NI 41-101 relating to prospectus filing eligibility for distributions of restricted securities; (iii) Part 10 of NI 51-102 relating to the use of restricted security terms and restricted security disclosure in connection with continuous disclosure documents that may be filed by Charlotte’s Web under NI 51-102; (iv) Part 2 of OSC Rule 56-501 – Restricted Shares (“OSC Rule 56-501”) relating to the use of restricted share terms and restricted share disclosure in connection with dealer and adviser documentation, rights offering circulars and offering memoranda of Charlotte’s Web; and (v) Part 3 of OSC Rule 56-501 relating to the withdrawal of prospectus exemptions for distributions of restricted shares in connection with (a) distributions of the Charlotte’s Web Common Shares pursuant to Charlotte’s Web’s initial public offering final long form prospectus dated August 23, 2018; and (b) in connection with the stock distributions (as defined in OSC Rule 56-501) of Charlotte’s Web, in each such case subject to compliance with the conditions in the exemption order by Charlotte’s Web at the time or times that Charlotte’s Web relies on such exemptions.

Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares

Holders of Charlotte’s Web Proportionate Voting Shares are entitled to 400 votes per Charlotte’s Web Proportionate Voting Share and holders of Charlotte’s Web Common Shares are entitled to one vote per Charlotte’s Web Common Share on all matters upon which holders of shares are entitled to vote. As of May 1, 2020, the Charlotte’s Web Common Shares collectively represent approximately 99.87% of Charlotte’s Web’s total issued and outstanding shares and approximately 66% of the voting power attached to all of Charlotte’s Web’s issued and outstanding shares and the Charlotte’s Web Proportionate Voting Shares collectively represent approximately 0.13% of Charlotte’s Web’s total issued and outstanding shares and approximately 34% of the voting power attached to all of Charlotte’s Web’s issued and outstanding shares.

The Charlotte’s Web Proportionate Voting Shares and Charlotte’s Web Common Shares are collectively referred to herein as the “Charlotte’s Web Shares”.

Conversion Rights and Transfers

Issued and outstanding Charlotte’s Web Proportionate Voting Shares, including fractions thereof, may at any time, subject to the FPI Condition (as defined below), at the option of the holder, be converted into Charlotte’s Web Common Shares at a ratio of 400 Charlotte’s Web Common Shares per Charlotte’s Web Proportionate Voting Share. Further, the Charlotte’s Web Board may determine in the future that it is no longer advisable to maintain the Charlotte’s Web Proportionate Voting Shares as a separate class of shares (a “Conversion Event”) and may cause all of the issued and outstanding Charlotte’s Web Proportionate Voting Shares to be converted into Charlotte’s Web Common Shares at a ratio of 400 Charlotte’s Web Common Shares per Charlotte’s Web Proportionate Voting Share.

The Charlotte’s Web Proportionate Voting Shares are not transferrable without approval of the Charlotte’s Web Board, except to Permitted Holders (as defined below) and in compliance with U.S. securities laws.

Conversion Conditions

The right to convert the Charlotte’s Web Proportionate Voting Shares into Charlotte’s Web Common Shares is subject to certain conditions in order to maintain Charlotte’s Web’s status as a “foreign private issuer” under U.S. securities laws. Unless otherwise waived by the Charlotte’s Web Board, the right to convert the Charlotte’s Web Proportionate Voting Shares is subject to the condition that the aggregate number of Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares (calculated as a single class) held of record, directly or indirectly, by residents of the U.S. (as determined in accordance with Rules 3b-4 and 12g3-2(a) under the 1934 Exchange Act) may not exceed forty percent (40%) of the aggregate number of Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares issued and outstanding after giving effect to such conversions (calculated as a single class) (the “FPI Condition”). The FPI Condition may be waived at any time, and in connection with one or more conversion instances, by the Charlotte’s Web Board.

H-20

A holder of Charlotte’s Web Common Shares may at any time, at the option of the holder and with the consent of Charlotte’s Web, convert such Charlotte’s Web Common Shares into Charlotte’s Web Proportionate Voting Shares on the basis of 400 Charlotte’s Web Common Shares for one Charlotte’s Web Proportionate Voting Share.

No fractional Charlotte’s Web Common Shares will be issued on any conversion of any Charlotte’s Web Proportionate Voting Shares and any fractional Charlotte’s Web Common Shares will be rounded down to the nearest whole number.

For the purposes of the foregoing:

“Affiliate” means, with respect to any specified Person, any other Person which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified Person.

“Permitted Holders” means (i) the initial holders of Charlotte’s Web Proportionate Voting Shares, as applicable, on closing of Charlotte’s Web’s initial public offering; and (ii) any Affiliate or Person controlled, directly or indirectly, by one or more of the Persons referred to in clause (i) above.

“Person” means any individual, partnership, corporation, company, association, trust, joint venture or limited liability company.

A Person is “controlled” by another Person or other Persons if: (i) in the case of a company or other body corporate wherever or however incorporated: (A) securities entitled to vote in the election of directors carrying in the aggregate at least a majority of the votes for the election of directors and representing in the aggregate at least a majority of the participating (equity) securities are held, other than by way of security only, directly or indirectly, by or solely for the benefit of the other Person or Persons; and (B) the votes carried in the aggregate by such securities are entitled, if exercised, to elect a majority of the board of directors of such company or other body corporate; or (ii) in the case of a Person that is not a company or other body corporate, at least a majority of the participating (equity) and voting interests of such Person are held, directly or indirectly, by or solely for the benefit of the other Person or Persons; and “controls”, “controlling” and “under common control with” shall be interpreted accordingly.

Voting Rights

All holders of Charlotte’s Web Shares will be entitled to receive notice of any meeting of shareholders of Charlotte’s Web, and to attend, vote and speak at such meetings, except those meetings at which only holders of a specific class of shares are entitled to vote separately as a class under the BCBCA. A quorum for the transaction of business at a meeting of shareholders is present if shareholders who, together, hold not fewer than 25% of the votes attaching to the outstanding voting shares entitled to vote at the meeting are present in person or represented by proxy.

On all matters upon which holders of Charlotte’s Web Shares are entitled to vote:

each Charlotte’s Web Common Share is entitled to one vote per Charlotte’s Web Common Share; and

each Charlotte’s Web Proportionate Voting Share is entitled to 400 votes per Charlotte’s Web Proportionate Voting Share, and each fraction of a Charlotte’s Web Proportionate Voting Share is entitled to the number of votes calculated by multiplying the fraction by 400.

The number of votes represented by fractional Charlotte’s Web Proportionate Voting Shares will be rounded down to the nearest whole number. Unless a different majority is required by law or the Charlotte’s Web Articles, resolutions to be approved by holders of Charlotte’s Web Shares require approval by a simple majority of the total number of votes of all Charlotte’s Web Shares cast at a meeting of shareholders at which a quorum is present based on the voting entitlements of each class of Charlotte’s Web Shares described above.

Dividend Rights

Holders of Charlotte’s Web Shares are entitled to receive dividends out of the assets available for the payment or distribution of dividends at such times and in such amount and form as the Charlotte’s Web Board may from time to

H-21

time determine, subject to any preferential rights of the holders of any outstanding preferred shares, on the following basis, and otherwise without preference or distinction among or between the Charlotte’s Web Shares: each Charlotte’s Web Proportionate Voting Share will be entitled to 400 times the amount paid or distributed per Charlotte’s Web Common Share (including by way of share dividends, which holders of Charlotte’s Web Proportionate Voting Shares will receive in Charlotte’s Web Proportionate Voting Shares, unless otherwise determined by the Charlotte’s Web Board) and each fraction of a Charlotte’s Web Proportionate Voting Share will be entitled to the applicable fraction thereof. Charlotte’s Web is permitted to pay dividends unless there are reasonable grounds for believing that: (i) Charlotte’s Web is insolvent; or (ii) the payment of the dividend would render Charlotte’s Web insolvent. See also “Description of the Share Capital of Charlotte’s Web – Conversion Rights and Transfers” above.

Liquidation Rights

In the event of the liquidation, dissolution or winding-up of Charlotte’s Web or any other distribution of its assets among its shareholders for the purpose of winding-up its affairs, whether voluntarily or involuntarily, the holders of Charlotte’s Web Shares will be entitled to receive all of Charlotte’s Web’s assets remaining after payment of all debts and other liabilities, subject to any preferential rights of the holders of any outstanding preferred shares, on the basis that each Charlotte’s Web Proportionate Voting Share will be entitled to 400 times the amount distributed per Charlotte’s Web Common Share (and each fraction of a Charlotte’s Web Proportionate Voting Share will be entitled to the amount calculated by multiplying the fraction by the amount otherwise payable in respect of a whole Charlotte’s Web Proportionate Voting Share), and otherwise without preference or distinction among or between the Charlotte’s Web Shares. See “Description of the Share Capital of Charlotte’s Web – Conversion Rights and Transfers” above.

Pre-emptive and Redemption Rights

Holders of Charlotte’s Web Shares will not have any pre-emptive or redemption rights.

Subdivision or Consolidation

No subdivision or consolidation of any class of Charlotte’s Web Shares may be carried out unless, at the same time, the Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares, as the case may be, are subdivided or consolidated in the same manner and on the same basis, so as to preserve the relative rights of the holders of each class of Charlotte’s Web Shares.

Certain Amendments

In addition to any other voting right or power to which the holders of Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares shall be entitled by law or regulation or other provisions of the Charlotte’s Web Articles from time to time in effect, but subject to the provisions of the Charlotte’s Web Articles, holders of Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares shall each be entitled to vote separately as a class, in addition to any other vote of shareholders that may be required, in respect of any alteration, repeal or amendment of the Charlotte’s Web Articles which would adversely affect the rights or special rights of the holders of Charlotte’s Web Common Shares or Charlotte’s Web Proportionate Voting Shares, or which would affect the rights of the holders of the Charlotte’s Web Common Shares and the holders of Charlotte’s Web Proportionate Voting Shares differently, on a per share basis, including an amendment to the terms of the Charlotte’s Web Articles that provide that any Charlotte’s Web Proportionate Voting Shares sold or transferred to a Person that is not a Permitted Holder shall be automatically converted into Charlotte’s Web Common Shares.

Pursuant to the Charlotte’s Web Articles, holders of Charlotte’s Web Shares will be treated equally and identically, on a per share basis, in certain change of control transactions that require approval of Charlotte’s Web’s shareholders under the BCBCA, unless different treatment of the shares of each such class is approved by a majority of the votes cast by the holders of the Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares, each voting separately as a class.

The rights, privileges, conditions and restrictions attaching to any Charlotte’s Web Shares may be modified if the amendment is authorized by not less than 66 % of the votes cast at a meeting of holders of Charlotte’s Web Shares

H-22

duly held for that purpose. However, if the holders of Charlotte’s Web Proportionate Voting Shares, as a class, or the holders of Charlotte’s Web Common Shares, as a class, are to be affected in a manner materially different from such other class of Charlotte’s Web Shares, the amendment must, in addition, be authorized by not less than 66 % of the votes cast at a meeting of the holders of the class of shares which is affected differently.

Issuance of Additional Charlotte’s Web Proportionate Voting Shares

Charlotte’s Web may issue additional Charlotte’s Web Proportionate Voting Shares upon the approval of the Charlotte’s Web Board. Approval is not required in connection with a subdivision or consolidation on a pro rata basis as between the Charlotte’s Web Common Shares and the Charlotte’s Web Proportionate Voting Shares.

Take-Over Bid Protection

If an offer is being made for Charlotte’s Web Proportionate Voting Shares (a “PVS Offer”) where: (i) by reason of applicable securities legislation or stock exchange requirements, the offer must be made to all holders of the class of Charlotte’s Web Proportionate Voting Shares; and (ii) no equivalent offer is made for the Charlotte’s Web Common Shares, the holders of Charlotte’s Web Common Shares have the right, pursuant to the Charlotte’s Web Articles, at their option, to convert their Charlotte’s Web Common Shares into Charlotte’s Web Proportionate Voting Shares for the purpose of allowing the holders of the Charlotte’s Web Common Shares to tender to such PVS Offer, provided that such conversion into Charlotte’s Web Proportionate Voting Shares will be solely for the purpose of tendering the Charlotte’s Web Proportionate Voting Shares to the PVS Offer in question and that any Charlotte’s Web Proportionate Voting Shares that are tendered to the PVS Offer but that are not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Charlotte’s Web Common Shares that existed prior to such conversion.

In the event that holders of Charlotte’s Web Common Shares are entitled to convert their Charlotte’s Web Common Shares into Charlotte’s Web Proportionate Voting Shares in connection with a PVS Offer pursuant to (ii) above, holders of an aggregate of Charlotte’s Web Common Shares of less than 400 (an “Odd Lot”) will be entitled to convert all but not less than all of such Odd Lot of Charlotte’s Web Common Shares into an applicable fraction of one Charlotte’s Web Proportionate Voting Share, provided that such conversion into a fractional Charlotte’s Web Proportionate Voting Share will be solely for the purpose of tendering the fractional Charlotte’s Web Proportionate Voting Share to the PVS Offer in question and that any fraction of a Charlotte’s Web Proportionate Voting Share that is tendered to the PVS Offer but that is not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Charlotte’s Web Common Shares that existed prior to such conversion.

Advance Notice Provisions

Charlotte’s Web has included certain advance notice provisions with respect to the election of its directors in the Charlotte’s Web Articles (the “Advance Notice Provisions”). The Advance Notice Provisions are intended to: (i) facilitate orderly and efficient annual general meetings or, where the need arises, special meetings; (ii) ensure that all shareholders receive adequate notice of Charlotte’s Web Board nominations and sufficient information with respect to all nominees; and (iii) allow shareholders to register an informed vote. Only persons who are nominated by shareholders in accordance with the Advance Notice Provisions will be eligible for election as directors at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors.

Under the Advance Notice Provisions, a shareholder wishing to nominate a director would be required to provide Charlotte’s Web notice, in the prescribed form, within the prescribed time periods. These time periods include, (i) in the case of an annual meeting of shareholders (including annual and special meetings), not fewer than 30 days prior to the date of the annual meeting of shareholders; provided, that if the first public announcement of the date of the annual meeting of shareholders (the “Notice Date”) is fewer than 50 days before the meeting date, not later than the close of business on the 10th day following the Notice Date; and (ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for any purpose which includes electing directors, not later than the close of business on the 15th day following the Notice Date, provided that, in either instance, if notice-and-access (as defined in National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer) is used for delivery of proxy related materials in respect of a meeting described above, and the Notice Date in respect of the

H-23

meeting is not fewer than 50 days prior to the date of the applicable meeting, the notice must be received not later than the close of business on the 40th day before the applicable meeting.

Forum Selection

Charlotte’s Web has included a forum selection provision in the Charlotte’s Web Articles that provides that, unless Charlotte’s Web consents in writing to the selection of an alternative forum, the Supreme Court of British Columbia, Canada and the appellate courts therefrom, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on Charlotte’s Web’s behalf; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of Charlotte’s Web’s directors, officers or other employees to Charlotte’s Web; (iii) any action or proceeding asserting a claim arising pursuant to any provision of the BCBCA or the Charlotte’s Web Articles; or (iv) any action or proceeding asserting a claim otherwise related to the relationships among Charlotte’s Web, its Affiliates and their respective shareholders, directors and/or officers, but excluding claims related to Charlotte’s Web’s business or such Affiliates. The forum selection provision also provides that Charlotte’s Web’s securityholders are deemed to have consented to personal jurisdiction in the Province of British Columbia and to service of process on their counsel in any foreign action initiated in violation of the foregoing provisions.

CONSOLIDATED CAPITALIZATION

The following table sets forth (i) Charlotte’s Web’s capitalization as at December 31, 2019, and (ii) Charlotte’s Web’s pro forma consolidated capitalization after giving effect to the Arrangement (as if it had closed on December 31, 2019) and certain related adjustments. The table should be read together with the unaudited pro forma consolidated financial statements included in Schedule A to Appendix I, the respective historical consolidated financial statements of Charlotte’s Web and Abacus, and the related management’s discussion and analysis.

Description

Authorized Outstanding as at

December 31, 2019

Outstanding as at December 31, 2019 (after giving

effect to the Arrangement, as if it had closed on December 31,

2019) Charlotte’s Web Common Shares

Unlimited 69,253,544 87,595,586

Charlotte’s Web Proportionate Voting Shares

Unlimited 95,342 95,342

Share Capital - US$123,927,00 US$174,838,000

Options(1) - 4,251,343 5,708,915

Founders Options - 799,948 799,948

Restricted Stock Awards - 114,266 114,266

Charlotte’s Web Warrants - 2,500,000 4,392,879

Broker Warrants(2) - 1,110 1,110

Stock Appreciation Rights - - 126,540 Line of Credit US$10,000,000 Nil Nil

Notes: (1) Reflects the Charlotte’s Web Common Share equivalent into which options are exercisable. (2) Broker warrants to purchase Charlotte’s Web Common Shares issued under Charlotte’s Web’s final long form prospectus

dated August 23, 2018. The pro forma financial information in the table is derived from the unaudited pro forma consolidated financial statements included in Schedule A to Appendix I. This pro forma information is provided for illustrative purposes only and does not necessarily reflect what the consolidated capitalization of Charlotte’s Web would have been on December 31, 2019 if the Arrangement had closed on that date. The pro forma adjustments applied to this information are based upon preliminary estimates, currently available information and certain assumptions. It is expected that the

H-24

actual adjustments will differ from these pro forma adjustments, and the differences may be material. See “General Matters - Caution Regarding Forward Looking Statements” in the Information Circular, “Risk Factors” in this Appendix H, and “Risk Factors” in Appendix I.

PRIOR SALES

The following table sets for the details regarding all issuances of Charlotte’s Web Common Shares, including issuances of all securities convertible or exchangeable into Charlotte’s Web Common Shares, during the 12-month period before the date of this Information Circular.

Date of Issue Type of Security Issued

Number of Securities

Issued

Price Per Security (CDN$, unless

otherwise noted)

Total Consideration (CDN$, unless

otherwise noted)(7)

April 1, 2019(3) Charlotte’s Web Common Shares 6,900 $7.00 $48,300 April 1, 2019(1) Stock Options 40,565 $28.16 N/A April 1, 2019(5) Restricted Stock Awards 8,530 N/A N/A April 3 2019(4) Charlotte’s Web Common Shares 390,000 N/A N/A April 5, 2019(3) Charlotte’s Web Common Shares 240 $7.00 $1,680 April 5, 2019(4) Charlotte’s Web Common Shares 566,000 N/A N/A April 7, 2019(6) Charlotte’s Web Common Shares 504,992 US$0.00056 US$281

April 11, 2019(4) Charlotte’s Web Common Shares 992,000 N/A N/A April 19, 2019(4) Charlotte’s Web Common Shares 275,516 N/A N/A April 24, 2019(4) Charlotte’s Web Common Shares 978,000 N/A N/A April 26, 2019(5) Restricted Stock Awards 79,065 N/A N/A April 26, 2019(1) Stock Options 34,669 $25.53 N/A April 30, 2019(4) Charlotte’s Web Common Shares 180,000 N/A N/A May 9, 2019(6) Charlotte’s Web Common Shares 225,000 US$0.00056 US$125 May 9, 2019(4) Charlotte’s Web Common Shares 1,230,000 N/A N/A

May 15, 2019(6)(2) Charlotte’s Web Common Shares 631,488 US$0.5556 US$350,855 May 15, 2019(6)(2) Charlotte’s Web Common Shares 350,000 US$0.00056 US$196 May 15, 2019(4)(2) Charlotte’s Web Common Shares 6,018,512 N/A N/A May 16, 2019(4) Charlotte’s Web Common Shares 998,212 N/A N/A May 24, 2019(4) Charlotte’s Web Common Shares 400,000 N/A N/A

May 24, 2019(6)(2) Charlotte’s Web Common Shares 80,221 US$0.5556 US$44,571 May 24, 2019(6)(2) Charlotte’s Web Common Shares 52,500 US$0.00056 US$30 May 24, 2019(4)(2) Charlotte’s Web Common Shares 917,279 N/A N/A May 30, 2019(4) Charlotte’s Web Common Shares 129,112 N/A N/A June 7, 2019(6) Charlotte’s Web Common Shares 2,255,464 US$0.00056 US$1,263

June 12, 2019(4) Charlotte’s Web Common Shares 495,304 N/A N/A June 14, 2019(4) Charlotte’s Web Common Shares 106,000 N/A N/A June 17, 2019(1) Stock Options 25,000 $15.98 N/A June 18, 2019(4) Charlotte’s Web Common Shares 240,000 N/A N/A June 21, 2019(4) Charlotte’s Web Common Shares 52,000 N/A N/A July 8, 2019(1) Stock Options 22,833 $22.06 N/A July 11, 2019(4) Charlotte’s Web Common Shares 900,000 N/A N/A July 12, 2019(4) Charlotte’s Web Common Shares 150,000 N/A N/A July 22, 2019(1) Stock Options 44,417 $19.98 N/A July 31, 2019(6) Charlotte’s Web Common Shares 5,000 US$0.5556 US$2,778 July 31, 2019(4) Charlotte’s Web Common Shares 300,000 N/A N/A

August 1, 2019(4) Charlotte’s Web Common Shares 96,000 N/A N/A

H-25

Date of Issue Type of Security Issued

Number of Securities

Issued

Price Per Security (CDN$, unless

otherwise noted)

Total Consideration (CDN$, unless

otherwise noted)(7)

August 6, 2019(4) Charlotte’s Web Common Shares 2,202,516 N/A N/A August 8, 2019(4) Charlotte’s Web Common Shares 1,284,600 N/A N/A August 9, 2019(6) Charlotte’s Web Common Shares 100,000 US$0.5556 US$55,560 August 9, 2019(4) Charlotte’s Web Common Shares 765,784 N/A N/A

August 13, 2019(4) Charlotte’s Web Common Shares 893,200 N/A N/A August 15, 2019(1) Stock Options 35,580 $24.98 N/A August 15, 2019(5) Restricted Stock Awards 26,671 N/A N/A August 16, 2019(4) Charlotte’s Web Common Shares 128,808 N/A N/A August 20, 2019(1) Stock Options 18,960 $24.61 N/A August 23, 2019(6) Charlotte’s Web Common Shares 10,000 US$0.5556 US$5,556 August 23, 2019(4) Charlotte’s Web Common Shares 650,144 N/A N/A August 28, 2019(4) Charlotte’s Web Common Shares 900,000 N/A N/A August 28, 2019(3) Charlotte’s Web Common Shares 4,820 N/A N/A August 29, 2019(4) Charlotte’s Web Common Shares 120,000 N/A N/A

September 4 2019(4) Charlotte’s Web Common Shares 295,714 N/A N/A September 5, 2019(6) Charlotte’s Web Common Shares 105,840 US$0.5556 US$58,805 September 5, 2019(6) Charlotte’s Web Common Shares 40,000 US$0.5556 US$22,224 September 17, 2019(4) Charlotte’s Web Common Shares 118,032 N/A N/A September 17, 2019(6) Charlotte’s Web Common Shares 55,000 US$0.5556 US$30,558 September 25, 2019(6) Charlotte’s Web Common Shares 150,000 US$0.5556 US$83,340 September 25, 2019(6) Charlotte’s Web Common Shares 70,000 US$0.5556 US$38,892 September 25, 2019(4) Charlotte’s Web Common Shares 90,000 N/A N/A September 26, 2019(4) Charlotte’s Web Common Shares 74,000 N/A N/A

October 1, 2019(1) Stock Options 162,003 $16.29 N/A October 1, 2019(5) Restricted Stock Awards 51,397 N/A N/A

October 11, 2019(6) Charlotte’s Web Common Shares 75,000 US$0.5556 US$41,670 October 15, 2019(4) Charlotte’s Web Common Shares 1,446,000 N/A N/A October 23, 2019(6) Charlotte’s Web Common Shares 63,504 US$0.5556 US$35,282 October 23, 2019(6) Charlotte’s Web Common Shares 150,000 US$0.5556 US$83,340 October 23, 2019(4) Charlotte’s Web Common Shares 20,000 N/A N/A October 24, 2019(8) Charlotte’s Web Common Shares 51,397 N/A N/A October 28, 2019(6) Charlotte’s Web Common Shares 150,000 US$0.5556 US$83,340 October 28, 2019(4) Charlotte’s Web Common Shares 1,931,548 N/A N/A October 28, 2019(1) Stock Options 3,453 $18.18 N/A October 31, 2019(6) Charlotte’s Web Common Shares 200,000 US$0.5556 US$111,120

November 14, 2019(6) Charlotte’s Web Common Shares 10,000 US$0.5556 US$5,556 November 14, 2019(4) Charlotte’s Web Common Shares 1,335,868 N/A N/A November 14, 2019(1) Stock Options 9,645 $12.65 N/A November 18, 2019(6) Charlotte’s Web Common Shares 150,000 US$0.5556 US$83,340 November 21, 2019(6) Charlotte’s Web Common Shares 30,000 US$0.5556 US$16,668 December 3, 2019(9) Units 5,000,000 $13.25 $66,250,000 December 3, 2019(4) Charlotte’s Web Common Shares 1,438,926 N/A N/A December 3, 2019(6) Charlotte’s Web Common Shares 105,839 US$0.5556 US$58,804 December 3, 2019(6) Charlotte’s Web Common Shares 150,000 US$0.5556 US$83,340 December 4, 2019(6) Charlotte’s Web Common Shares 43,200 US$0.5556 US$24,001 December 4, 2019(6) Charlotte’s Web Common Shares 400,000 US$0.5556 US$222,240

H-26

Date of Issue Type of Security Issued

Number of Securities

Issued

Price Per Security (CDN$, unless

otherwise noted)

Total Consideration (CDN$, unless

otherwise noted)(7)

December 6, 2019(6) Charlotte’s Web Common Shares 150,000 US$0.00056 US$84 December 16, 2019(4) Charlotte’s Web Common Shares 632,400 N/A N/A December 16, 2019(6) Charlotte’s Web Common Shares 300,000 US$0.00056 US$168 December 19, 2019(6) Charlotte’s Web Common Shares 75,000 US$0.5556 US$41,670 December 23, 2019(6) Charlotte’s Web Common Shares 550,000 US$0.00056 US$308

January 6, 2020(6) Charlotte’s Web Common Shares 150,000 US$0.00056 US$84 January 10, 2020(6) Charlotte’s Web Common Shares 510,123 US$0.5556 US$283,424 January 10, 2020(6) Charlotte’s Web Common Shares 150,000 US$0.5556 US$83,340 January 13, 2020(6) Charlotte’s Web Common Shares 649,948 US$0.00056 US$363 January 17, 2020(4) Charlotte’s Web Common Shares 33,597 N/A N/A January 17, 2020(4) Charlotte’s Web Common Shares 136,525 N/A N/A January 21, 2020(4) Charlotte’s Web Common Shares 200,000 N/A N/A January 23, 2020(6) Charlotte’s Web Common Shares 175,000 US$0.5556 US$97,230 January 24, 2020(6) Charlotte’s Web Common Shares 80,000 US$0.5556 US$44,448 February 3, 2020(1) Stock Options 157,589 CDN$9.45 N/A February 3, 2020(6) Charlotte’s Web Common Shares 175,000 US$0.5556 US$97,230 February 6, 2020(4) Charlotte’s Web Common Shares 150,000 N/A N/A February 11, 2020(4) Charlotte’s Web Common Shares 27,000 N/A N/A February 24, 2020(6) Charlotte’s Web Common Shares 100,000 US$0.5556 US$55,560 February 27, 2020(6) Charlotte’s Web Common Shares 150,824 US$0.5556 US$83,798

March 3, 2020(6) Charlotte’s Web Common Shares 50,000 US$0.5556 US$27,780 March 3, 2020(6) Charlotte’s Web Common Shares 187,426 US$0.5556 US$104,134 March 5, 2020(6) Charlotte’s Web Common Shares 134,000 US$0.5556 US$74,450 March 10, 2020(6) Charlotte’s Web Common Shares 173,053 US$0.5556 US$96,148 March 12, 2020(6) Charlotte’s Web Common Shares 60,000 US$0.5556 US$33,336 March 12, 2020(6) Charlotte’s Web Common Shares 130,000 US$0.5556 US$72,228 March 19, 2020(4) Charlotte’s Web Common Shares 607,644 N/A N/A March 25, 2020(6) Charlotte’s Web Common Shares 187,425 US$0.5556 US$104,133 March 26, 2020(1) Stock Options 1,091,120 $6.76 N/A March 26, 2020(5) Restricted Stock Awards 264,470 N/A N/A March 30, 2020(1) Stock Options 77,337 $5.78 N/A March 30, 2020(5) Restricted Stock Awards 32,969 N/A N/A April 1, 2020(8) Charlotte’s Web Common Shares 409 $28.16 N/A April 6, 2020(6) Charlotte’s Web Common Shares 60,000 US$0.5556 US$33,336

April 20, 2020(6) Charlotte’s Web Common Shares 100,000 US$0.5556 US$55,560 April 26, 2020(8) Charlotte’s Web Common Shares 19,766 N/A N/A April 28, 2020(6) Charlotte’s Web Common Shares 100,000 US$0.5556 US$55,560

Notes: (1) Charlotte’s Web granted stock options to certain directors, executives and employees of Charlotte’s Web or its subsidiary. (2) In connection with the underwritten public offering of 7,000,000 Charlotte’s Web Common Shares sold by certain

shareholders of Charlotte’s Web at a price of CDN$20.00 per Charlotte’s Web Common Share. (3) Issued upon conversion of Charlotte’s Web Common Share purchase warrants. (4) Issued upon conversion of Charlotte’s Web Proportionate Voting Shares. (5) Charlotte’s Web granted restricted stock awards to certain executives of Charlotte’s Web. (6) Issued upon exercise of stock options of Charlotte’s Web. (7) Numbers may not be exact due to rounding. (8) Issued upon vesting of the restricted stock awards of Charlotte’s Web.

H-27

(9) Issued pursuant to underwritten public offering of units of Charlotte’s Web at a price of CDN$13.25 per unit. Each unit was comprised of one Charlotte’s Web Common Share and one half of one Charlotte’s Web Warrant. Each Charlotte’s Web Warrant is exercisable to acquire one Charlotte’s Web Common Share until December 3, 2021 at an exercise price of CDN$16.50 per Charlotte’s Web Common Share, subject to adjustment in certain events.

TRADING PRICE AND VOLUME

Charlotte’s Web Common Shares

The Charlotte’s Web Common Shares are listed and posted for trading on the TSX under the symbol “CWEB” and on the OTCQX under the symbol “CWBHF”. The following table sets forth the price range (monthly high and low prices at close) in Canadian dollars of the Charlotte’s Web Common Shares and volume traded for the periods indicated (as reported by the TSX and the CSE). The Charlotte’s Web Common Shares were delisted from the CSE on May 30, 2019 and the Charlotte’s Web Common Shares were listed on the TSX on May 31, 2019.

High (CDN$) Low (CDN$) Volume 2019

January 21.89 15.02 6,914,612 February 22.75 17.51 5,339,100 March 27.75 17.75 7,200,780 April 33.77 24.28 8,677,235 May 26.45 17.75 10,646,241 June 20.70 14.65 6,923,909 July 24.49 17.85 9,342,488 August 30.10 20.00 15,130,169 September 24.25 18.17 7,928,125 October 19.58 15.60 6,480,944 November 21.89 15.02 12,042,378 December 13.07 9.55 8,580,073 2020 January 11.83 8.33 7,866,017 February 9.93 6.25 5,160,678 March 8.00 4.08 8,368,156 April 6.65 5.50 3,609,789 May(1) 6.29 5.69 213,061

Note: (1) For May 1, 2020.

Charlotte’s Web Warrants

The Charlotte’s Web Warrants are listed and posted for trading on the TSX under the symbol “CWEB.WT”. The following table sets forth the price range (monthly high and low prices at close) in Canadian dollars of the Charlotte’s Web Warrants and volume traded for the periods indicated (as reported by the TSX). The Charlotte’s Web Warrants were issued on December 3, 2019.

High (CDN$) Low (CDN$) Volume 2019

December(1) 1.39 0.70 669,243 2020 January 1.40 0.94 313,202 February 1.04 0.50 184,418 March 0.72 0.32 40,531 April 0.53 0.34 148,710 May(2) 0.335 0.335 500

Notes: (1) From December 3, 2019 to December 31, 2019. (2) For May 1, 2020.

H-28

DIVIDENDS

Charlotte’s Web has never paid any dividends on its Charlotte’s Web Common Shares. While Charlotte’s Web is not restricted from paying dividends other than pursuant to certain solvency tests prescribed under the BCBCA, Charlotte’s Web does not intend to pay dividends on any of its Charlotte’s Web Common Shares in the foreseeable future.

RISK FACTORS

An investment in Charlotte’s Web Common Shares is subject to certain risks. Investors should carefully consider the risk factors described under the heading “Risk Factors” in the Information Circular and in the Charlotte’s Web AIF and the Charlotte’s Web MD&A, which are incorporated by reference herein. In addition, investors should carefully review and consider all other information contained in the Information Circular together with all of the information included or incorporated by reference in the Information Circular, before making an investment decision or a decision to vote for or against the Arrangement Resolution, and consult their own experts where necessary.

There are a number of risk factors that could cause future results to differ materially from those described herein. The risks and uncertainties described herein are not the only ones Charlotte’s Web faces. Additional risks and uncertainties, including those that Charlotte’s Web does not currently know about or that it currently deems immaterial, may also adversely affect Charlotte’s Web’s business. If any of the following risks actually occur, Charlotte’s Web’s business may be harmed, and its financial condition and results of operations may suffer significantly.

Risks Related to the Regulatory Environment

Changes to State Laws Pertaining to Hemp

The 2018 Farm Bill provides that states and Native American tribes may assume primary regulatory authority over the production of Hemp in their jurisdictions through a Hemp plan approved by the USDA. As of the date hereof, the USDA has approved a few dozen state and tribal Hemp production plans submitted after the IFR became effective. If a state does not elect to devise a Hemp regulatory program, the USDA will develop a program under which Hemp cultivators in such states can apply for licenses. Approximately 15 states – including Kentucky, Colorado, and Oregon – have chosen not to submit plans to the USDA for the 2020 growing season, instead relying on their pilot program authorizations from the 2014 Farm Bill. Continued development of the Hemp industry will be dependent upon new legislative authorization of Hemp at the state level, and further amendment or supplementation of legislation at the federal level. Any number of events or occurrences could slow or halt progress all together in this space. While progress within the Hemp industry is currently encouraging, growth is not assured. While there appears to be ample public support for favorable legislative action at the state and federal levels, numerous factors may impact or negatively affect the legislative process(es) within the various states Charlotte’s Web has business interests in. Any one of these factors could slow or halt use of Hemp or CBD, which would negatively impact Charlotte’s Web’s business or growth, including possibly causing Charlotte’s Web to discontinue operations as a whole.

Changes to Federal Laws Pertaining to Hemp

Federal regulations under the 2018 Farm Bill were promulgated in the IFR on October 31, 2019. The IFR governs the domestic production of Hemp under the 2018 Farm Bill and also specifies the provisions that a state or tribal Hemp plan must contain to be in compliance with the 2018 Farm Bill. However, some states are continuing to operate under the 2014 Farm Bill through the 2020 growing season, and the IFR expires November 1, 2021, at which time the USDA will adopt permanent regulations. This means that the complete effects of the IFR (and potentially other federal regulations for Hemp) are yet unknown and will take time to unfold and be implemented. Should the IFR or other regulations result in stricter requirements on Charlotte’s Web than those of the 2014 or 2018 Farm Bills, such changes could have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations.

H-29

Risks Associated with Numerous Laws and Regulations

The production, labeling and distribution of the products that Charlotte’s Web distributes are regulated by various federal, state and local agencies. These governmental authorities may commence regulatory or legal proceedings, which could restrict the permissible scope of Charlotte’s Web’s product claims or the ability to sell its products in the future. The FDA regulates Charlotte’s Web’s products to ensure that the products are not adulterated or misbranded.

Charlotte’s Web is subject to regulation by various agencies as a result of the manufacture and sale of its hemp-based CBD wellness products. The shifting compliance environment and the need to build and maintain robust systems to comply with different regulations in multiple jurisdictions increases the possibility that Charlotte’s Web may violate one or more of the requirements. If Charlotte’s Web’s operations are found to be in violation of any of such laws or any other governmental regulations, or perceived to be in violation, Charlotte’s Web may be subject to penalties or other negative effects, including, without limitation, civil and criminal penalties, damages, fines, the curtailment or restructuring of Charlotte’s Web’s operations or asset seizures and the denial of regulatory applications (including those regulatory regimes outside of the scope of FDA jurisdiction, but which may rely on the positions of the FDA in the application of its regulatory regime), any of which could adversely affect Charlotte’s Web’s business and financial results.

Failure to comply with FDA requirements may result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions. Charlotte’s Web’s advertising is subject to regulation by the Federal Trade Commission (“FTC”) under the Federal Trade Commission Act as well as subject to regulation by the FDA under the DSHEA. In recent years, the FTC has initiated numerous investigations of dietary and nutritional supplement products and companies based on allegedly deceptive or misleading claims. At any point, enforcement strategies of a given agency can change as a result of other litigation in the space or changes in political landscapes, and could result in increased enforcement efforts, which would materially impact Charlotte’s Web’s business. Additionally, some states also permit advertising and labeling laws to be enforced by state attorney generals, who may seek relief for consumers, class action certifications, class wide damages and product recalls of products sold by Charlotte’s Web. Private litigants may also seek relief for consumers, class action certifications, class wide damages and product recalls of products sold by Charlotte’s Web. Any actions against Charlotte’s Web by governmental authorities or private litigants could have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations.

Compliance with changes in legal, regulatory and industry standards may adversely affect Charlotte’s Web’s business

The formulation, manufacturing, packaging, labelling, handling, distribution, importation, exportation, licensing, sale and storage of Charlotte’s Web’s products are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints. Such laws, regulations and other constraints may exist at the federal, provincial or local levels. There is currently no uniform regulation applicable to natural health products worldwide. There can be no assurance that Charlotte’s Web is in compliance with all of these laws, regulations and other constraints, and changes to such laws, regulations and other constraints may have a material adverse effect on Charlotte’s Web’s operations. Incorrect Interpretation of the 2018 Farm Bill

Charlotte’s Web’s position is that the 2018 Farm Bill permanently removed Hemp from the USCSA and is now deemed an agricultural commodity, and accordingly the DEA no longer has any claim to interfere with the interstate commerce of Hemp products, so long as the THC level is at or below 0.3% on a dry weight basis. There is a risk that Charlotte’s Web’s interpretation of the legislation is inaccurate or that it will be successfully challenged by federal or state authorities. A successful challenge to such position by a state or federal authority could have a material adverse effect on Charlotte’s Web, including civil and criminal penalties, damages, fines, the curtailment or restructuring of Charlotte’s Web’s operations or asset seizures and the denial of regulatory applications.

International Regulatory Risks

Charlotte’s Web has conducted sales in various international jurisdictions and Charlotte’s Web intends to expand internationally. As a result, it is and will become further subject to the laws and regulations of (as well as international

H-30

treaties among) the foreign jurisdictions in which it operates or imports or exports products or materials. In addition, Charlotte’s Web may avail itself of proposed legislative changes in certain jurisdictions to expand its product portfolio, which expansion may include business and regulatory compliance risks as yet undetermined. Failure by Charlotte’s Web to comply with the current or evolving regulatory framework in any jurisdiction could have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations. There is the possibility that any such international jurisdiction could determine that Charlotte’s Web was not or is not compliant with applicable local regulations. If Charlotte’s Web’s historical or current sales or operations were found to be in violation of such international regulations, Charlotte’s Web may be subject to enforcement actions in such jurisdictions including, but not limited to civil and criminal penalties, damages, fines, the curtailment or restructuring of Charlotte’s Web’s operations or asset seizures and the denial of regulatory applications.

Cannabis-related financial transactions are subject to a variety of laws that vary by jurisdiction, many of which are unsettled and still developing. While the interpretations of these laws are unclear, in some jurisdictions, financial benefit, directly or indirectly, arising from conduct that would be considered unlawful in such jurisdiction may be viewed to be within the purview of such laws, and persons receiving any such benefit, including investors in an applicable jurisdiction, may be subject to liability. Each prospective investor should contact his, her or its own legal advisor.

There has been an increasing movement in certain foreign markets to increase the regulation of natural health products, which will impose additional restrictions or requirements. In addition, there has been increased regulatory scrutiny of nutritional supplements and marketing claims under existing and new regulations. Such anticipated regulatory and standards changes may introduce some risk and harm Charlotte’s Web’s operations if its products or advertising activities are found to violate existing or new regulations or if Charlotte’s Web is not able to affect necessary changes to its products in a timely and efficient manner to respond to new regulations.

Entry into International Markets

Charlotte’s Web’s entry into new international markets requires management attention and financial resources that would otherwise be spent on other parts of its business. Charlotte’s Web’s international sales could expose it to risks and expenses inherent in operating or selling products in foreign jurisdictions, and developing and emerging markets in particular where the risks may be heightened. These risks and expenses include:

adverse currency exchange rate fluctuations; risks associated with complying with laws and regulations in the countries in which Charlotte’s Web products are sold, such as requirements to apply for and obtain licenses, permits or other approvals for products, and the delays associated with obtaining such licenses, permits or other approvals; the costs of adapting products for sale in foreign countries, including to changes to formulations, formats, labelling or packaging; multiple, changing, and often inconsistent enforcement of laws, rules and regulations, including regulations and standards relating to consumer health products; risks associated with the reliance on international distributors, including the possible failure of international distributors to appropriately understand, represent and effectively market and sell Charlotte’s Web’s products; damage to reputation or brand if counterfeit versions of Charlotte’s Web products are introduced into international markets; the imposition of additional foreign governmental controls or regulations, new or enhanced trade restrictions or non-tariff barriers to trade, or restrictions on the activities of foreign agents, representatives, employees and distributors; increases in taxes, tariffs, customs and duties, or costs associated with compliance with import and export licensing and other compliance requirements; downward pricing pressure on Charlotte’s Web products in international markets, due to competitive factors or otherwise; laws and business practices favouring local companies; political, social or economic unrest or instability;

H-31

greater risk on credit terms, longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; difficulties in enforcing or defending intellectual property rights; and the effect of disruptions caused by severe weather, natural disasters, outbreak of disease or other events that make travel to a particular region less attractive or more difficult.

Charlotte’s Web’s international efforts may not produce desired levels of sales. Furthermore, its experience with selling products in its current international markets may not be relevant or may not necessarily translate into favourable results if Charlotte’s Web sells in other international markets. If and when Charlotte’s Web enters into new markets in the future, it may experience different competitive conditions, less familiarity with Charlotte’s Web brands and/or different consumer tastes and discretionary spending patterns. As a result, it may be less successful than expected in expanding Charlotte’s Web sales in current and targeted international markets. Sales into new international markets may take longer to ramp up and reach expected sales and profit levels, or may never do so, thereby affecting its overall growth and profitability. To build brand awareness in new markets, Charlotte’s Web may need to make greater investments in advertising and promotional activity than originally planned, which could negatively impact the profitability of its sales in those markets. These or one or more of the factors listed above may harm Charlotte’s Web’s business, results of operations or financial condition. Any material decrease in Charlotte’s Web international sales or profitability could also adversely impact Charlotte’s Web’s business, results of operations or financial condition. Uncertainty Caused by Potential Changes to Regulatory Framework

There is substantial uncertainty and different interpretations among federal, state and local regulatory agencies, legislators, academics and businesses as to the importation of derivatives from exempted portions of the Cannabis plant and the scope of 2018 Farm Bill-compliant hemp programs relative to the 2018 Farm Bill and the emerging regulation of cannabinoids. These different opinions include, but are not limited to, the regulation of cannabinoids by the FDA and the extent to which manufacturers of products containing imported raw materials and/or 2018 Farm Bill-compliant cultivators and processors may engage in interstate commerce. The uncertainties cannot be resolved without further federal, and potentially state-level, legislation, regulation or a definitive judicial interpretation of existing legislation and rules. If these uncertainties continue, they may have an adverse effect upon the introduction of Charlotte’s Web’s products in different markets.

Although Charlotte’s Web believes that the resignation of Commissioner Gottlieb of the FDA will not have a significant long-term impact on the development of a regulatory regime permitting Cannabis-derived compounds in foods or dietary supplements, there can be no certainty that Commissioner Hahn, Commissioner Gottlieb’s replacement, will continue on that same path, even though Commissioner Hahn has expressed openness to a regulatory path for CBD in dietary supplements and stated that it would be a “fool’s game” to close the CBD products market entirely. If Commissioner Hahn, or any other FDA Commissioner, were to halt current initiatives of the FDA, such as the recently-announced public meeting process, this could delay the development of such a regulatory regime and have an adverse effect on the business of Charlotte’s Web.

NDI Objection by FDA

There is substantial uncertainty and different interpretations among state and federal regulatory agencies, legislators, academics and businesses as to whether cannabinoids were present in the food supply and marketed prior to October 15, 1994, or whether such inclusion of cannabinoids is otherwise approved by the FDA as dietary ingredients. In addition, there is substantial uncertainty and different interpretations as to whether cannabinoids are by definition an impermissible adulterant due to marijuana being a controlled substance under the USCSA. The uncertainties cannot be resolved without further federal legislation, regulation or a definitive judicial interpretation of existing legislation and rules. A determination that hemp products containing cannabinoids were not present in the food supply, marketed prior to October 15, 1994, are not otherwise permissible for use as a dietary ingredient or are adulterants would have a materially adverse effect upon Charlotte’s Web and its business. Charlotte’s Web could be required to submit an NDI notification to the FDA with respect to hemp extracts. If FDA objects to Charlotte’s Web’s NDI notification, this would have a material adverse effect upon Charlotte’s Web and its business.

H-32

FDA Interpretation of IND Preclusion

The FDA has taken the position that CBD cannot be added to food or marketed as a dietary supplement because it has been the subject of investigation as a new drug (i.e. IND Preclusion). According to the FDA, the submission of the IND application for Epidiolex by Greenwich Biosciences, the U.S. subsidiary of London-based GW Pharmaceuticals, preceded the sales and marketing of CBD as a dietary supplement. It is the FDAs interpretation of the IND Preclusion that the preclusion date is the date in which it authorized the drug for investigation. The FDA has asserted its IND Preclusion position in a Warning Letter to Charlotte’s Web. Charlotte’s Web responded to the Warning Letter with its position that CBD was marketed in a dietary supplement or food prior to substantial clinical investigations being instituted and being made public. If the FDA were to enforce the IND Preclusion based on its interpretation of the legislation, this would materially and adversely impact Charlotte’s Web’s business and financial condition.

FDA Enforcement Letters

The FDA continues to enforce against violations of the FD&C Act by issuing warning letters to companies marketing and selling hemp derived CBD products. Notably, on November 25, 2019, the FDA issued warning letters to companies marketing and selling unapproved hemp derived CBD products. The FDA also issued a consumer update reaffirming its position that CBD cannot lawfully be added to a food or marketed as a dietary supplement due to existing provisions of the FD&C Act, and outlines the data and potential safety issues it is considering as part of its ongoing evaluation of potential regulatory frameworks for CBD. Notably, the FDA states that it could not conclude based on available data that CBD is “generally recognized as safe” for use in human or animal food. While this is broad and may not be applicable in all instances, it nevertheless could materially and adversely impact Charlotte’s Web’s business and financial condition. Further, the FDA has recently stated that it will continue to police the market and enforce against CBD products. The FDA’s current prohibition on certain hemp-derived products and the unknowns and associated risks of potential future regulations governing hemp-derived CBD products create risk for Charlotte’s Web’s business.

Regulatory Approval and Permits

Charlotte’s Web may be required to obtain and maintain certain permits, licenses and approvals in the jurisdictions where its products are sold. There can be no assurance that Charlotte’s Web will be able to obtain or maintain any necessary licenses, permits or approvals. Any material delay or inability to receive these items is likely to delay and/or inhibit Charlotte’s Web’s ability to conduct its business, and would have an adverse effect on its business, financial condition and results of operations.

Environmental, Health and Safety Laws

Charlotte’s Web is subject to environmental, health and safety laws and regulations in each jurisdiction in which Charlotte’s Web operates. Such regulations govern, among other things, emissions of pollutants into the air, wastewater discharges, waste disposal, the investigation and remediation of soil and groundwater contamination, and the health and safety of Charlotte’s Web’s employees. For example, Charlotte’s Web’s products and the raw materials used in its production processes are subject to numerous environmental laws and regulations. Charlotte’s Web may be required to obtain environmental permits from governmental authorities for certain of its current or proposed operations. Charlotte’s Web may not have been, nor may it be able to be at all times, in full compliance with such laws, regulations and permits. If Charlotte’s Web violates or fails to comply with these laws, regulations or permits, Charlotte’s Web could be fined or otherwise sanctioned by regulators.

As with other companies engaged in similar activities or that own or operate real property, Charlotte’s Web faces inherent risks of environmental liability at its current and historical production sites. Certain environmental laws impose strict and, in certain circumstances, joint and several liability on current or previous owners or operators of real property for the cost of the investigation, removal or remediation of hazardous substances as well as liability for related damages to natural resources. In addition, Charlotte’s Web may discover new facts or conditions that may change its expectations or be faced with changes in environmental laws or their enforcement that would increase its liabilities.

H-33

Charlotte’s Web’s costs of complying with current and future environmental and health and safety laws, liabilities arising from past or future releases of, or exposure to, regulated materials, or more vigorous enforcement of environmental and employee health and safety laws, may have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations.

Anti-money Laundering Laws and Regulations

Charlotte’s Web is subject to a variety of laws and regulations domestically and in the U.S. that involve money laundering, financial recordkeeping and proceeds of crime, including the U.S. Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the Bank Secrecy Act), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Criminal Code (Canada), as amended and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S. and Canada.

In February 2014, the Financial Crimes Enforcement Network (“FCEN”) of the U.S. Department of the Treasury issued a memorandum providing instructions to banks seeking to provide services to marijuana related businesses (the “FCEN Memo”). The FCEN Memo states that in some circumstances, it may not be appropriate to prosecute banks that provide services to marijuana-related businesses for violations of federal money laundering laws. It refers to supplementary guidance that Deputy Attorney General Cole issued to federal prosecutors relating to the prosecution of money laundering offenses predicated on Cannabis-related violations of the USCSA. It is unclear at this time whether the current administration will follow the guidelines of the FCEN Memo. Under U.S. federal law, banks or other financial institutions that provide a Cannabis-related business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering, aiding and abetting, or conspiracy.

If any of Charlotte’s Web’s investments, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such investments in the U.S. or Canada were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could restrict or otherwise jeopardize the ability of Charlotte’s Web to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada. Furthermore, while Charlotte’s Web has no current intention to declare or pay dividends on its Charlotte’s Web Common Shares in the foreseeable future, Charlotte’s Web may decide or be required to suspend declaring or paying dividends without advance notice and for an indefinite period of time.

On December 3, 2019, the Federal Reserve Board, Federal Deposit Insurance Corporation, FCEN, and Office of the Comptroller of the Currency in consultation with the Conference of State Bank Supervisors, issued a statement to provide clarity regarding the legal status of commercial growth and production of hemp and relevant requirements for banks under the Bank Secrecy Act. The statement emphasized that banks were no longer required to file suspicious activity reports for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations.

Banking

Since the production and possession of Cannabis is currently illegal under U.S. federal law and Charlotte’s Web relies on exemptions promulgated pursuant to the 2018 Farm Bill, it is possible that banks may refuse to open bank accounts for the deposit of funds from businesses involved with the Cannabis industry. The inability to open bank accounts with certain institutions could materially and adversely affect the business of Charlotte’s Web.

On December 3, 2019, the Federal Reserve Board, Federal Deposit Insurance Corporation, FCEN, and Office of the Comptroller of the Currency in consultation with the Conference of State Bank Supervisors, issued a statement to provide clarity regarding the legal status of commercial growth and production of hemp and relevant requirements for banks under the Bank Secrecy Act. The statement emphasized that banks were no longer required to file suspicious activity reports for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations.

H-34

Line of Credit

From time to time, Charlotte’s Web may rely on debt financing for a portion of its business activities, including capital and operating expenditures. There are no assurances that Charlotte’s Web will be able to comply at all times with the covenants applicable under its debt arrangements; nor are there assurances that Charlotte’s Web will be able to secure new financing that may be necessary to finance its operations and capital growth program. Any failure of Charlotte’s Web to secure financing or refinancing, to obtain new financing or to comply with applicable covenants under its borrowings could have a material adverse effect on Charlotte’s Web’s financial results. Further, any inability of Charlotte’s Web to obtain new financing may limit its ability to support future growth. On March 23, 2020, Charlotte’s Web announced that it had entered into a new asset backed line of credit with J.P. Morgan for $10 million with an accordion feature to extend the line to $20 million with a three year maturity.

Ability to Access Public and Private Capital and Banking Services

Charlotte’s Web currently holds a bank account with a regional U.S. institution. Charlotte’s Web also currently has a payment processing agreement in place providing for online/credit card payments in connection with its e-commerce sales. Charlotte’s Web has historically, and continues to have, access to equity and debt financing from the prospectus-exempt (private placement) markets in Canada and the U.S. Charlotte’s Web’s executive team and the Charlotte’s Web Board also have relationships with sources of private capital which Charlotte’s Web could investigate. Charlotte’s Web has not attempted to obtain bank financing in the U.S. and has not attempted to access the public capital markets other than pursuant to Charlotte’s Web’s initial public offering, shelf prospectus offering and Charlotte’s Web’s Line of Credit. Charlotte’s Web anticipates that funding sources may be available pursuant to private and public offerings of equity and/or debt and bank lending. However, if equity and/or debt financing was not available in the public capital markets in Canada or the U.S., then Charlotte’s Web expects that it would have access to raise equity and/or debt financing privately. Commercial banks, private equity firms and venture capital firms have approached the Cannabis industry cautiously to date. However, there have been an increasing number of meaningful investments from both the private and the public capital markets in companies and projects similar to Charlotte’s Web’s business. Although there has been an increase in the amount of financing available to companies in the Cannabis industry over the last several years, there is neither a broad nor deep pool of institutional capital that is available to Cannabis industry participants. There can be no assurance that additional financing, if raised privately or publicly, will be available to Charlotte’s Web when needed or on terms which are acceptable. Charlotte’s Web’s inability to raise financing to fund capital expenditures or acquisitions could limit its growth and may have a material adverse effect upon future profitability.

Denial of Deductibility of Certain Expenses

Section 280E of the Code prohibits businesses from deducting certain expenses associated with trafficking controlled substances (within the meaning of Schedule I and II of the USCSA). The IRS has invoked Section 280E in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws. Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly, and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section 280E favorable to Cannabis businesses.

Although Charlotte’s Web’s position is that Charlotte’s Web is not subject to section 280E of the Code, Charlotte’s Web may incur significant tax liabilities if the IRS continues to determine that certain expenses of businesses working with the cannabis plant are not permitted tax deductions under section 280E of the Code.

Liability for Actions of Employees, Contractors and Consultants

Charlotte’s Web could be liable for fraudulent or illegal activity by its employees, contractors and consultants resulting in significant financial losses to claims against Charlotte’s Web.

Charlotte’s Web is exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent

H-35

conduct or disclosure of unauthorized activities to Charlotte’s Web that violates: (i) government regulations; (ii) manufacturing standards; (iii) U.S. federal fraud and abuse laws and regulations; or (iv) laws that require the true, complete and accurate reporting of financial information or data. It is not always possible for Charlotte’s Web to identify and deter misconduct by its employees and other third parties, and the precautions taken by Charlotte’s Web to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Charlotte’s Web from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against Charlotte’s Web, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, the curtailment of Charlotte’s Web’s operations or asset seizures, any of which could have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations.

Risks Related to Charlotte’s Web’s Business and Industry

Impacts of COVID-19 to Charlotte’s Web’s Business

The impacts of the global emergence of the novel strain of coronavirus, identified as COVID-19, on Charlotte’s Web’s business are currently unknown. Charlotte’s Web will monitor the situation and may take actions that alter its business operations as may be required by federal, state or local authorities or that Charlotte’s Web determines are in the best interests of its employees, customers, partners, suppliers, shareholders and stakeholders. Any such actions could impact or cause substantial interruption to Charlotte’s Web’s business, which could have a material adverse effect on Charlotte’s Web’s business and operations or financial results. In response to, or as a result of, the current COVID-19 pandemic, Charlotte’s Web may experience, among other things, voluntary or mandated temporary closures of one or more of Charlotte’s Web’s facilities; temporary or long-term labor shortages; temporary or long-term adverse impacts on Charlotte’s Web’s supply chain and distribution channels; the potential of increased network vulnerability and risk of data loss resulting from increased use of remote access and removal of data from Charlotte’s Web’s facilities; difficulty in complying with covenants under its current or future debt agreements; required reallocation or adjustment of resources, which may impact Charlotte’s Web’s business plans and product offerings. In addition, the direct or indirect impacts of COVID-19 may extend to disrupt Charlotte’s Web’s suppliers, partners, manufacturers, farmers, customers and other stakeholders, which in turn could materially adversely affect Charlotte’s Web’s business, results of operations or financial condition. Any change or disruption in operations could impact and have a material adverse effect on Charlotte’s Web’s operations and/or results from operations.

In addition, voluntary or mandated efforts to slow the spread of COVID-19 could impact Charlotte’s Web’s operations. To date, a number of governments worldwide have enacted measures to combat the spread of the virus, including in the United States. These measures have included the implementation of travel restriction, self-isolation measures, physical distancing and in some instances, the suspension of non-essential business. If portions or all of Charlotte’s Web’s, or its retail-partners’, operations are disrupted or suspended as a result of these or other measures, it could have a material adverse impact on Charlotte’s Web’s profitability, results of operations, financial condition and stock price.

Further, there are potentially significant economic and social impacts of the COVID-19 pandemic, including a surge in unemployment which may lead to a deterioration in consumer balance sheets, reduction in the availability of consumer credit, and have an impact on consumer behavior, as well as a reduction in retail purchases as a result of business suspension and physical distancing measures, any of which may have a material adverse impact on Charlotte’s Web’s profitability, results of operations, financial condition and stock price.

Charlotte’s Web will continue to monitor the situation and work with its stakeholders (including customers, employees and suppliers) in order to assess further possible implications to its business, supply chain and customers, and, where practicable, take actions with a goal to mitigating adverse consequences and responsibly addressing this global pandemic.

H-36

Product Viability

If the products Charlotte’s Web sells are not perceived to have the effects intended by the end user, its business may suffer. Many of Charlotte’s Web’s products contain innovative ingredients or combinations of ingredients. There is little long-term data with respect to efficacy, unknown side effects and/or interaction with individual human biochemistry. Moreover, there is little long-term data with respect to efficacy, unknown side effects and/or its interaction with individual animal biochemistry. As a result, Charlotte’s Web’s products could have certain side effects if not taken as directed or if taken by an end user that has certain known or unknown medical conditions.

Products have Limited Shelf Life

Charlotte’s Web holds goods in inventory and its products have a limited shelf life. Its inventory may reach its expiration date and not be sold. Although Charlotte’s Web manages its inventory, it may be required to write-down the value of any inventory that has reached its expiration date, which could have a material adverse effect on Charlotte’s Web’s business, financial condition, and results of operations. Success of Quality Control Systems

The quality and safety of Charlotte’s Web’s products are critical to the success of its business and operations. As such, it is imperative that Charlotte’s Web’s (and its service provider’s) quality control systems operate effectively and successfully. Quality control systems can be negatively impacted by the design of the quality control systems, the quality training program, and adherence by employees to quality control guidelines. Although Charlotte’s Web strives to ensure that all of its service providers have implemented and adhere to high caliber quality control systems, any significant failure or deterioration of such quality control systems could have a material adverse effect on Charlotte’s Web’s business and operating results.

Reliance on the Stanley Brothers Brand

Charlotte’s Web’s brand (and those brands associated with Charlotte’s Web, such as “Charlotte’s Web”) is closely associated with the Stanley brothers. Any act, omission or occurrence which negatively effects the reputation of or goodwill associated with the Stanley brothers may have a commensurate impact on Charlotte’s Web. Charlotte’s Web has limited influence upon any of the Stanley brothers and may lack effective means of mitigating such risks. In addition, and pursuant to the Name and Likeness Agreement (as defined in the Charlotte’s Web AIF), the Stanley brothers may cause Charlotte’s Web to cease using the “Stanley Brothers” brand in certain circumstances.

Product Recalls

Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. If any of Charlotte’s Web’s products are recalled due to an alleged product defect or for any other reason, Charlotte’s Web could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. Charlotte’s Web may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Recall of products could lead to adverse publicity, decreased demand for Charlotte’s Web’s products and could have significant reputational and brand damage. Although Charlotte’s Web has detailed procedures in place for testing its products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. A recall for any of the foregoing reasons could lead to decreased demand for Charlotte’s Web’s products and could have a material adverse effect on the results of operations and financial condition of Charlotte’s Web. Additionally, product recalls may lead to increased scrutiny of Charlotte’s Web’s operations by regulatory agencies, requiring further management attention and potential legal fees and other expenses.

H-37

Product Liability

Charlotte’s Web’s products will be produced for sale directly to end consumers, and therefore there is an inherent risk of exposure to product liability claims, regulatory action and litigation if the products are alleged to have caused loss or injury. In addition, the production and sale of Charlotte’s Web’s products involves the risk of injury to end users due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human or animal consumption of Charlotte’s Web’s products alone or in combination with other medications or substances could occur. Charlotte’s Web may be subject to various product liability claims, including, among others, that its products caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against Charlotte’s Web could result in increased costs, could adversely affect Charlotte’s Web’s reputation, and could have a material adverse effect on its business and operational results.

Positive Test for THC or Banned Substances

Charlotte’s Web’s products are made from Cannabis, which contains THC. As a result, certain of Charlotte’s Web’s products contain low levels of THC. THC is considered a banned substance in many jurisdictions. Moreover, regulatory framework for legal amounts of consumed THC is evolving. Whether or not ingestion of THC (at low levels or otherwise) is permitted in a particular jurisdiction, there may be adverse consequences to end users who test positive for trace amounts of THC attributed to use of Charlotte’s Web’s products. In addition, certain metabolic processes in the body may cause certain molecules to convert to other molecules which may negatively affect the results of drug tests. Positive tests may adversely affect the end user’s reputation, ability to obtain or retain employment and participation in certain athletic or other activities. A claim or regulatory action against Charlotte’s Web based on such positive test results could adversely affect Charlotte’s Web’s reputation and could have a material adverse effect on its business and operational results.

Product Returns

Product returns are a customary part of Charlotte’s Web’s business. Products may be returned for various reasons, including expiration dates or lack of sufficient sales volume. Any increase in product returns could reduce Charlotte’s Web’s results of operations.

Reputational Risk

Charlotte’s Web believes that the Cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the Cannabis produced. Consumer perception can be significantly influenced by scientific research or findings, regulatory proceedings, litigation, media attention and other publicity regarding the consumption of Cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the Cannabis market or any particular product, or consistent with currently held views. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could have a material adverse effect on the Cannabis industry and demand for its products and services, which could affect Charlotte’s Web’s business, financial condition and results of operations and cash flows. Charlotte’s Web’s dependence upon consumer perception means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on Charlotte’s Web, its business, financial condition, results of operations and cash flows. Further, adverse publicity, reports or other media attention regarding the safety, efficacy and quality of Cannabis in general, or Charlotte’s Web’s products specifically, or associating the consumption of Cannabis with illness or other negative effects or events, could have a material adverse effect. Such adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products legally, appropriately, or as directed.

In addition, parties outside of the Cannabis industry with which Charlotte’s Web does business may perceive that they are exposed to reputational risk as a result of Charlotte’s Web’s Cannabis related business activities. For example, Charlotte’s Web could receive a notification from a financial institution advising it that they would no longer maintain banking relationships with those in the Cannabis industry. Charlotte’s Web may, in the future, have difficulty

H-38

establishing or maintaining bank accounts or other business relationships that it needs to operate its business. Failure to establish or maintain business relationships could have a material adverse effect on Charlotte’s Web.

Weather Patterns and Agricultural Operations Risks

Charlotte’s Web’s business can be affected by unusual weather patterns. The production of some of Charlotte’s Web’s products relies on the availability and use of live plant material, which is grown in Colorado, Kentucky and Oregon and may be grown in South America. Growing seasons, yields and harvesting operations can be impacted by weather patterns. In addition, severe weather, including drought and hail, can destroy a crop, which could result in Charlotte’s Web having no or limited Hemp to process. If Charlotte’s Web is unable to harvest Hemp through its proprietary operations or contract farming arrangements, its ability to meet customer demand, generate sales, and maintain operations will be impacted. Given the proprietary nature of Charlotte’s Web’s crops, it may not be practicable for Charlotte’s Web to source adequate, or any, replacement Hemp to produce its downstream products.

Charlotte’s Web’s business is dependent on the outdoor growth and production of Hemp, an agricultural product. As such, the risks inherent in engaging in agricultural businesses apply. Potential risks include the risk that crops may become diseased or victim to insects, fungus or other pests or contaminants, or subject to extreme weather conditions such as excess rainfall, hail, freezing temperature or drought, all of which could result in low crop yields, decreased availability of industrial hemp, inadequate inventory levels for future expected growth, and higher acquisition prices. There can be no guarantee that an agricultural event will not adversely affect the business and operating results.

In addition, Charlotte’s Web’s agricultural activities are based on certain assumptions regarding supply and demand. These assumptions are directly impacted by the various risk factors disclosed herein and in the Charlotte’s Web AIF, and any change in or impact on these assumptions may impair Charlotte’s Web’s ability to accurately anticipate cultivation volume requirements, which inability may result in a misallocation of capital resources and have a negative impact on Charlotte’s Web’s financial condition.

Natural disasters, unusually adverse weather, pandemic outbreaks, boycotts and geo-political events could materially adversely affect Charlotte’s Web’s business, results of operations or financial condition

The occurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, pandemic outbreaks, boycotts and geo-political events, such as civil unrest and acts of terrorism, or similar disruptions could materially adversely affect Charlotte’s Web’s business, results of operations or financial condition. These events could result in physical damage to one or more of Charlotte’s Web’s properties, increases in fuel or other energy prices, temporary or permanent closure of one or more of Charlotte’s Web’s facilities, labour shortages, temporary or long-term disruption in the supply of raw materials and other inputs, temporary disruption in transport to and from overseas markets, disruption in Charlotte’s Web’s distribution network or disruption to Charlotte’s Web’s information systems, any of which could have a material adverse effect on Charlotte’s Web’s business, results of operations or financial results.

Availability of Adequate Crop Insurance

Charlotte’s Web may not be able to obtain crop insurance at economically feasible rates, on acceptable terms or at all. As a result, Charlotte’s Web may have limited or no recourse in the event of a failed crop or other event that standard crop insurance would typically insure against. Such inability may adversely affect Charlotte’s Web’s business and operating results.

Risks Related to Farmland

Charlotte’s Web may not be able to maintain or obtain high quality farmland in sufficient acreage to support production levels or sustained accelerated growth. Moreover, where farmland is available in sufficient acreage, it may not be available at rental rates or otherwise on acceptable economic terms. Inability to obtain sufficient farmland for operations (with or without significant product demand growth) could negatively affect Charlotte’s Web’s operations and financial condition.

H-39

The agricultural landscape continues to evolve as a result of factors including farm and industry consolidation, agricultural productivity and development and climate change. Farm consolidation in the U.S. and other developed markets has been ongoing for decades and is expected to continue as grower demographics shift and advancements in innovative technology and equipment enables farmers to manage larger operations to create economies of scale in a lower-margin, more capital-intensive environment. Increased consolidation in the crop nutrient industry has resulted in greater resources dedicated to expansion, research and development opportunities, leading to increased competition in advanced product offerings and innovative technologies. Some of these competitors have greater total resources or are state-supported, which make them less vulnerable to industry downturns and better positioned to pursue new expansion and development opportunities.

The advancement and adoption of technology and digital innovations in agriculture and across the value chain has increased and is expected to further accelerate as grower demographics shift and pressures from consumer preferences, governments and climate change initiatives evolve. The development of seeds that require less crop nutrients, development of full or partial substitutes for Charlotte’s Web’s products or developments in the application of crop nutrients such as improved nutrient use or efficiency through use of precision agriculture could also emerge, all of which have the potential to adversely affect the demand for Charlotte’s Web’s products and results of operations.

Other Agricultural Production Risks

Agricultural production by its nature contains elements of risks and uncertainties which may adversely affect the business and operations of Charlotte’s Web, including but not limited to the following: (i) any future climate change with a potential shift in weather patterns leading to droughts and associated crop losses; (ii) potential insect, fungal and weed infestations resulting in crop failure and reduced yields; (iii) wild and domestic animal conflicts; and (iv) crop-raiding, sabotage or vandalism. Adverse weather conditions represent a significant operating risk to Charlotte’s Web, affecting quality and quantity of production and the levels of farm inputs.

Charlotte’s Web may also encounter difficulties with the importation of agro-inputs and securing a supply of spares and maintenance items. In the event of a delay in the delivery from suppliers of agro-inputs and machinery, Charlotte’s Web may be unable to achieve its production targets.

Climate Change-Related Risks

Climate change could exacerbate certain of the risks inherent in Charlotte’s Web’s agricultural operations. Climate change could result in increasing frequency and severity of weather-related events, resource shortages, changes in rainfall and storm patterns and intensities, water shortages and changing temperatures, and of which can damage or destroy crops, resulting in Charlotte’s Web having no or limited hemp to process. If Charlotte’s Web is unable to harvest hemp through its proprietary operations or contract farming arrangements, its ability to meet customer demand, generate sales, and maintain operations will be impacted. Furthermore, severe weather-related events may result in substantial costs to Charlotte’s Web, including costs to respond during the event, to recover from the event, and to possibly modify existing or future infrastructure requirements to prevent recurrence Climate changes could also disrupt Charlotte’s Web’s operations by impacting the availability and costs of materials needed for production and could increase insurance and other operating costs.

A number of governments or governmental bodies have introduced or are introducing regulatory changes in response to concerns about the potential impact of climate change. Charlotte’s Web faces the risk that its operations could be subject to government initiatives aimed at countering climate change, which could impose constraints on Charlotte’s Web’s operations, for example due to increased costs for fossil fuels, electricity and transportation and costs associated with monitoring and reporting.

Hemp Plant Specific Agricultural Risks

Hemp plants can be vulnerable to various pathogens including bacteria, fungi, viruses and other miscellaneous pathogens. Such instances often lead to reduced crop quality, stunted growth and/or death of the plant. Moreover, hemp is phytoremediative, meaning that it may extract toxins or other undesirable chemicals or compounds from the ground in which it is planted. Various regulatory agencies have established maximum limits for pathogens, toxins,

H-40

chemicals and other compounds that may be present in agricultural materials. If Charlotte’s Web’s hemp is found to have levels of pathogens, toxins, chemicals or other undesirable compounds that exceed established limits, Charlotte’s Web may have to destroy the applicable portions of its hemp crop. Should Charlotte’s Web’s crops be lost due to pathogens, toxins, chemicals or other undesirable compounds, it may have a material adverse effect on its business and financial condition.

Transportation Risk

In order for customers of Charlotte’s Web to receive their product, Charlotte’s Web relies on third-party transportation services. This can cause logistical problems with, and delays in, end users obtaining their orders which Charlotte’s Web cannot control. Any delay by third-party transportation services may adversely affect Charlotte’s Web’s financial performance.

Moreover, transportation to and from Charlotte’s Web’s facilities is critical. A breach of security during transport could have material adverse effects on Charlotte’s Web’s business, financials and prospects. Any such breach could impact Charlotte’s Web’s operations and financial performance.

Domestic Supply Risk

Charlotte’s Web’s business relies on full compliance under applicable laws and regulations relating to the sale of its products across the U.S. and internationally. The regulation of third-party suppliers may have a significant impact upon Charlotte’s Web’s business. Any enforcement activity or any additional uncertainties which may arise in the future could cause substantial interruption or cessation of Charlotte’s Web’s business, including adverse impacts to Charlotte’s Web’s supply chain and distribution channels, and other civil and/or criminal penalties at the federal level.

Reliance on Third-Party Suppliers, Service Providers and Distributors

Charlotte’s Web intends to maintain a full supply chain for the material portions of the production and distribution process of its products. Charlotte’s Web’s suppliers, service providers and distributors may elect, at any time, to breach or otherwise cease to participate in supply, service or distribution agreements, or other relationships, on which Charlotte’s Web’s operations rely. Loss of its suppliers, service providers or distributors would have a material adverse effect on Charlotte’s Web’s business and operational results. Charlotte’s Web currently relies on a single production facility in Colorado and certain third-party manufacturers. Disruption of operations at any of these facilities could adversely affect inventory supplies and Charlotte’s Web’s ability to meet product delivery deadlines.

Parties with whom Charlotte’s Web does business may be subject to insolvency risks or may otherwise become unable or unwilling to perform their obligations to Charlotte’s Web Charlotte’s Web is party to business relationships, transactions and contracts with various third parties, pursuant to which such third parties have performance, payment and other obligations to Charlotte’s Web. If any of these third parties were to become subject to bankruptcy, receivership or similar proceedings, Charlotte’s Web’s rights and benefits in relation to its business relationships, contracts and transactions with such third parties could be terminated, modified in a manner adverse to Charlotte’s Web, or otherwise impaired. Charlotte’s Web cannot make any assurances that it would be able to arrange for alternate or replacement business relationships, transactions or contracts on terms as favorable as existing business relationships, transactions or contracts if at all. Any inability on Charlotte’s Web’s part to do so could have a material adverse effect on its business and results of operations. Industry Competition

The markets for businesses in the CBD and hemp oil industries are competitive and evolving. In particular, Charlotte’s Web faces strong competition from both existing and emerging companies that offer similar products. Some of its current and potential competitors may have longer operating histories, greater financial, marketing and other resources and larger customer bases than Charlotte’s Web.

H-41

Given the rapid changes affecting the global, national, and regional economies generally and the CBD industry, in particular, Charlotte’s Web may not be able to create and maintain a competitive advantage in the marketplace. Charlotte’s Web’s success will depend on its ability to keep pace with any changes in such markets, especially in light of legal and regulatory changes. Its success will depend on Charlotte’s Web’s ability to respond to, among other things, changes in the economy, market conditions, and competitive pressures. Any failure by Charlotte’s Web to anticipate or respond adequately to such changes could have a material adverse effect on its financial condition, operating results, liquidity, cash flow and operational performance.

Intra-Industry Competition

The number of competitors in Charlotte’s Web’s market segment is expected to increase, both nationally and internationally, which could negatively impact Charlotte’s Web’s market share and demand for products.

The introduction of a recreational model for marijuana production and distribution in various jurisdictions may cause producers in those jurisdictions to expand beyond the medical marijuana market and compete with Charlotte’s Web’s products. The impact of this potential development may be negative for Charlotte’s Web and could result in increased levels of competition in its existing market and/or the entry of new competitors in the overall Cannabis market in which Charlotte’s Web operates.

There is potential risk that Charlotte’s Web will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and manufacturing and marketing experience than Charlotte’s Web. Increased competition by larger and better financed competitors could materially and adversely affect the business, financial condition and results of operations of Charlotte’s Web.

Charlotte’s Web also faces competition from producers who may not comply with applicable regulations. As a result, such producers may have lower operating costs, make impermissible claims and utilize other competitive advantages based on circumvention of regulatory requirements. To remain competitive, Charlotte’s Web will require continued significant investment in research and development, marketing, sales and customer support. Charlotte’s Web may not have sufficient resources to maintain R&D, marketing, sales and customer support efforts on a competitive basis which could materially and adversely affect the business, financial condition and results of operations of Charlotte’s Web.

As well, the legal landscape for Charlotte’s Web’s products is changing internationally. More countries have passed laws that allow for the production and distribution of Cannabis in some form or another. Increased international competition might lower the demand for Charlotte’s Web’s products on a global scale.

Future Activities of the Stanley Brothers

The Stanley brothers and certain affiliates and parties associated with the Stanley brothers currently, and may in the future, conduct business which conflicts with the business of Charlotte’s Web. The mechanisms available to Charlotte’s Web to effectively deal with such conflicts (which may include competition) may be limited. Charlotte’s Web relies on the name, likeness and assistance of the Stanley brothers. Should the Stanley brothers take action which separates or otherwise distances their name, likeness or brand from, or association with, Charlotte’s Web, it could result in marketplace confusion, loss of goodwill and/or similar negative consequences. Should any of such scenarios arise, it could have a material adverse impact on Charlotte’s Web’s business and financial condition.

Other Conflicts of Interest

Certain of the employees and directors of Charlotte’s Web may also be directors, officers, consultants or stakeholders of other companies or enterprises, some of which may be in similar sectors, and conflicts of interest may arise between their duties to Charlotte’s Web and their duties to or interests in such other companies or enterprises. Certain of such conflicts may be required to be disclosed in accordance with, and subject to, such procedures and remedies as applicable under the BCBCA and applicable securities laws, however, such procedures and remedies may not fully protect Charlotte’s Web.

H-42

Changing Consumer Preferences and Customer Retention

As a result of changing consumer preferences, many dietary supplements and other innovative products attain financial success for a limited period of time. Even if Charlotte’s Web’s products find retail success, there can be no assurance that any of its products will continue to see extended financial success. Charlotte’s Web’s success will be significantly dependent upon its ability to develop new and improved product lines. Even if it is successful in introducing new products or developing its current products, a failure to gain consumer acceptance or to update products with compelling content could cause a decline in its products’ popularity that could reduce revenues and harm Charlotte’s Web’s business, operating results and financial condition. Failure to introduce new features and product lines and to achieve and sustain market acceptance could result in Charlotte’s Web being unable to meet consumer preferences and generate revenue which would have a material adverse effect on its profitability and financial results from operations.

Charlotte’s Web’s success depends on its ability to attract and retain customers. There are many factors which could impact Charlotte’s Web’s ability to attract and retain customers, including but not limited to Charlotte’s Web’s ability to continually produce desirable and effective product, the successful implementation of Charlotte’s Web’s customer acquisition plan and the continued growth in the aggregate number of people selecting CBD wellness products. Charlotte’s Web’s failure to acquire and retain customers could have a material adverse effect on Charlotte’s Web’s business, operating results and financial position.

Charlotte’s Web’s customers may not adequately support its products or its relationships with such retailers may deteriorate

Charlotte’s Web relies on retailers to display, present and sell its products to consumers in their brick and mortar stores and through their online e-commerce sites. Charlotte’s Web’s retailers stock and display its products, and, in certain health food and other specialty stores, explain its product attributes and health benefits. Charlotte’s Web’s relationships with these retailers are important for maintaining and building consumer trust in Charlotte’s Web’s brands and for executing the advertising and educational programs Charlotte’s Web continues to deploy. Charlotte’s Web’s failure to maintain these relationships with its retailers or difficulties experienced by these retailers could harm Charlotte’s Web’s business.

Charlotte’s Web does not receive long-term purchase commitments from retailers, and confirmed orders received from retail partners may be difficult to enforce. In some instances, it is obliged to accept returned inventory. Furthermore, there can be no assurance that Charlotte’s Web will be able, in the future, to continue to sell its products to its retail customers on favourable trading terms or at all. Charlotte’s Web may be obligated to stop shipments to its retail customers or such customers may refuse shipments from Charlotte’s Web in the course of negotiating the resolution of trading issues with such customers. Factors that could affect Charlotte’s Web’s ability to maintain or expand its sales to these retailers include: (i) failure to accurately identify the needs of Charlotte’s Web’s customers; (ii) lack of customer acceptance of new products or product expansions; (iii) unwillingness of Charlotte’s Web’s retailers to attribute premium value to Charlotte’s Web’s existing and new products relative to competing products; (iv) failure to obtain shelf space from retailers; and (v) new, well-received product introductions by competitors. Charlotte’s Web’s sales depend, in part, on retailers effectively displaying its products, including providing attractive space in their stores, including online e-commerce platforms, and, in certain channels, having knowledgeable employees that can explain Charlotte’s Web’s products and their benefits. If Charlotte’s Web loses any of its key retailers, or if any key retailer reduces their purchases of Charlotte’s Web’s existing or new products, reduces their number of stores or operations, promotes products of competitors over Charlotte’s Web, or suffers financial difficulty or insolvency, Charlotte’s Web may experience reduced sales of its products, resulting in lower revenue and gross profit margin, which would harm Charlotte’s Web’s profitability and financial condition. Maintaining and Promoting Charlotte’s Web’s Brand

Management believes that maintaining and promoting Charlotte’s Web’s brand is critical to expanding its customer base. Maintaining and promoting Charlotte’s Web’s brand will depend largely on its ability to continue to provide quality, reliable and innovative products, which it may not do successfully. Charlotte’s Web may introduce new products or services that its customers do not like, which may negatively affect its brand and reputation. Maintaining and enhancing Charlotte’s Web’s brand may require it to make substantial investments, and these investments may

H-43

not achieve the desired goals. If Charlotte’s Web fails to successfully promote and maintain its brand or if it incurs excessive expenses in this effort, its business and financial results from operations could be materially adversely affected.

Unfavourable Publicity or Consumer Perception

Charlotte’s Web believes its industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of its products and perceptions of regulatory compliance. Consumer perception of Charlotte’s Web’s products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favourable to the CBD market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived to be less favourable than, or that question, earlier research reports, findings or publicity could have a material adverse effect on the demand for Charlotte’s Web’s products and the business, results of operations, financial condition and cash flows of Charlotte’s Web. Charlotte’s Web’s dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on Charlotte’s Web, the demand for products, and the business, results of operations, financial condition and cash flows of Charlotte’s Web. Further, adverse publicity, reports or other media attention regarding the safety, efficacy and quality of CBD products in general, or Charlotte’s Web’s products specifically, or associating the consumption of CBD products with illness or other negative effects or events, could have such a material adverse effect. Consumers, vendors, landlords/lessors, industry partners or third-party service providers may incorrectly perceive hemp products as marijuana thereby applying the unfavourable stigma of marijuana to Charlotte’s Web’s products. Such adverse publicity, reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products legally, appropriately or as directed.

Inability to Sustain Pricing Models

Significant price fluctuations or shortages in the cost of materials may increase Charlotte’s Web’s cost of goods sold and cause its results of operations and financial condition to suffer. If Charlotte’s Web is unable to secure materials at a reasonable price, it may have to alter or discontinue selling some of its products or attempt to pass along the cost to its customers, any of which could adversely affect its results of operations and financial condition.

Additionally, any significant interruption in, or increasing costs of, labour, freight and energy could increase Charlotte’s Web’s and its suppliers’ cost of goods and have a material impact on Charlotte’s Web’s financial condition and results from operations. If Charlotte’s Web’s suppliers are affected by increases in their costs of labour, freight and energy, they may attempt to pass these cost increases on to Charlotte’s Web. If Charlotte’s Web pays such increases, it may not be able to offset them through increases in its pricing, which could adversely affect its results of operations and financial condition.

Reliance on Key Inputs

Charlotte’s Web’s business is dependent on a number of key inputs and their related costs, including raw materials and supplies related to its growing operations, as well as electricity, water and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition and operating results of Charlotte’s Web. Any inability to secure required supplies and services, or to do so on appropriate terms, could have a materially adverse impact on the business, financial condition and operating results of Charlotte’s Web.

The ability of Charlotte’s Web to compete and grow will be dependent on having access, at a reasonable cost and in a timely manner, to skilled labour, equipment, parts and components. No assurances can be given that Charlotte’s Web will be successful in maintaining the required supply of skilled labour, equipment, parts and components. It is also possible that the expansion plans contemplated by Charlotte’s Web may cost more than anticipated, in which circumstance Charlotte’s Web may curtail, or extend timeframes for completing the expansion plans. This could have a material adverse effect on the financial results and operations of Charlotte’s Web.

H-44

Effectiveness and Efficiency of Advertising and Promotional Expenditures

Charlotte’s Web’s future growth and profitability will depend on the effectiveness and efficiency of advertising and promotional expenditures, including its ability to: (i) create greater awareness of its products; (ii) determine the appropriate creative message and media mix for future advertising expenditures; and (iii) effectively manage advertising and promotional costs in order to maintain acceptable operating margins. There can be no assurance that advertising and promotional expenditures will result in revenues in the future or will generate awareness of Charlotte’s Web’s technologies or services. In addition, no assurance can be given that Charlotte’s Web will be able to manage its advertising and promotional expenditures on a cost-effective basis.

Charlotte’s Web may not be able to successfully implement its growth strategy on a timely basis or at all Charlotte’s Web’s future success depends, in part, on its ability to implement its growth strategy, including (i) product innovations within existing categories and growth into adjacent categories and continued growth of existing products in existing categories; (ii) further penetration into new markets and geographies; and (iii) in support of its profitability targets, improvements in Charlotte’s Web’s operating income, gross profit and Adjusted EBITDA margins. Charlotte’s Web’s ability to implement this growth strategy depends, among other things, on its ability to:

develop new products and product line extensions that appeal to consumers and will be supported by retailers and distributors; maintain and expand brand loyalty and brand recognition by effectively implementing its marketing strategy and advertising initiatives; maintain and improve its competitive position with existing and newly acquired brands in the channels in which it competes; identify and successfully enter and market its products in new geographic markets and market segments and categories; enter into successful distribution arrangements with new distributors and retailers of its products; maintain and, to the extent necessary, improve Charlotte’s Web’s high standards for product quality, safety and integrity; successfully and efficiently scale up operations in its manufacturing and distribution processes to buoy improvements in operating income, gross profit and Adjusted EBITDA margins; and maintain sources for the required supply of quality raw ingredients to meet growing demand.

Charlotte’s Web may not be able to successfully implement its growth strategy and reach its revenue and profitability improvement targets. Difficulty to Forecast

Charlotte’s Web will need to rely largely on its own market research to forecast industry trends and statistics as detailed forecasts are, with certain exceptions, not generally available from other sources at this early stage of the Cannabis industry. A failure in the demand for Charlotte’s Web’s products to materialize as a result of competition, technological change, change in the regulatory or legal landscape or other factors could have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations. Key Officers and Employees

Charlotte’s Web’s success and future will depend, to a significant degree, on the continued efforts of its directors, officers and key employees, including certain technical individuals, and sales and marketing personnel, the retention of which cannot be guaranteed. The loss of key personnel could materially adversely affect Charlotte’s Web’s business. The loss of any such personnel could harm or delay the plans of Charlotte’s Web’s business either while management time is directed to finding suitable replacements (who, in any event, may not be available), or, if not, covering such vacancy until suitable replacements can be found. In either case, this may have a material adverse effect on the future of Charlotte’s Web’s business.

H-45

Competition for such personnel can be intense, and Charlotte’s Web cannot provide assurance that it will be able to attract or retain highly qualified technical, sales, marketing and management personnel in the future. From time to time, share-based compensation may comprise a significant component of Charlotte’s Web’s compensation for key personnel, and if the price of the Charlotte’s Web Common Shares declines, it may be difficult to recruit and retain such individuals.

In addition, COVID-19 poses a risk to all of Charlotte’s Web’s activities, including the potential that a member of management may become negatively impacted by the virus and Charlotte’s Web’s ability to continue to rely on its key personnel throughout the pandemic. Charlotte’s Web will diligently monitor developments relating to COVID-19 and its impact on Charlotte’s Web’s personnel, and make operational adjustments as necessary. Any of the foregoing risks or actions could disrupt Charlotte’s Web’s operations and have a materials adverse effect on Charlotte’s Web’s results from operations and financial condition.

Inability to Renew Leases

Charlotte’s Web may be unable to renew or maintain its leases (commercial, real property or farmland) on commercially acceptable terms or at all. An inability to renew its leases, or a renewal of its leases with a rental rate higher than the prevailing rate under the applicable lease prior to expiration, may have an adverse impact on Charlotte’s Web’s operations, including disruption of its operations or an increase in its cost of operations. In addition, in the event of non-renewal of any of Charlotte’s Web’s leases, Charlotte’s Web may be unable to locate suitable replacement properties for its facilities or it may experience delays in relocation that could lead to a disruption in its operations. Any disruption in Charlotte’s Web’s operations could have an adverse effect on its financial condition and results of operations.

Obtaining Insurance

Due to Charlotte’s Web’s involvement in the hemp industry, it may have a difficult time obtaining the various insurances that are desired to operate its business, which may expose Charlotte’s Web to additional risk and financial liability. Insurance that is otherwise readily available, such as general liability, and directors and officer’s insurance, may be more difficult to find, and more expensive, because of the regulatory regime applicable to the industry. There are no guarantees that Charlotte’s Web will be able to find such insurance coverage in the future, or that the cost will be affordable. If Charlotte’s Web is unable to obtain insurance coverage on acceptable terms, it may prevent Charlotte’s Web from entering into certain business sectors, may inhibit growth, and may expose Charlotte’s Web to additional risk and financial liabilities.

Additional Financings

If Charlotte’s Web requires additional capital to fund growth or other initiatives, it may seek additional equity or debt financing. There can be no assurances that Charlotte’s Web will be able to obtain additional financial resources on favorable commercial terms or at all. Failure to obtain such financial resources could affect Charlotte’s Web’s plan for growth or result in Charlotte’s Web being unable to satisfy its obligations as they become due, either of which could have a material adverse effect on the business, results of operations and the financial condition of Charlotte’s Web.

Management of Growth

Charlotte’s Web may be subject to growth-related risks, including capacity constraints and pressure on its internal systems and controls. The ability of Charlotte’s Web to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The inability of Charlotte’s Web to deal with this growth may have a material adverse effect on Charlotte’s Web’s business, financial condition, results of operations and prospects. In addition, there are specific risks inherent in growth of Charlotte’s Web’s business-to-business distribution and direct-to-consumer sales, including, among others, increased competition and risks related to the use of information systems.

H-46

Risks Related to Acquisitions and Partnerships

Charlotte’s Web may acquire, partner or otherwise transact with other companies in the future and there are risks inherent in any such activities. Specifically, there could be unknown or undisclosed risks or liabilities of such companies for which Charlotte’s Web is not sufficiently indemnified. Any such unknown or undisclosed risks or liabilities could materially and adversely affect Charlotte’s Web’s financial performance and results of operations. Charlotte’s Web could encounter additional transaction and integration related costs or experience an impact to its operations or results of operation as a result of the failure to realize all of the anticipated benefits from such acquisitions or partnerships, or an inability to successfully integrate an acquisition as anticipated. All of these factors could cause dilution to Charlotte’s Web’s earnings per share or decrease or delay the anticipated accretive effect of the acquisition or partnership and cause a decrease in the market price of Charlotte’s Web’s securities, or have a material adverse effect on Charlotte’s Web’s operations or results from operations. Charlotte’s Web may not be able to successfully integrate and combine the operations, personnel and technology infrastructure of any such acquired company with its existing operations. As a result of integration efforts, Charlotte’s Web may experience interruptions in its business activities, deterioration in its employee and customer relationships, increased costs of integration and harm to its reputation, all of which could have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations. Charlotte’s Web may experience difficulties in combining corporate cultures, maintaining employee morale and retaining key employees. The integration of any such acquired companies may also impose substantial demands on management of Charlotte’s Web. There is no assurance that these acquisitions will be successfully integrated in a timely manner or without additional expenses incurred.

In respect of potential future acquisitions or partnerships, there can be no assurance that Charlotte’s Web will be able to identify acquisition or partnership opportunities that meet its strategic objectives, or to the extent such opportunities are identified, that it will be able to negotiate acceptable terms.

Breach of Confidentiality

While discussing potential business relationships or other transactions with third parties, Charlotte’s Web may disclose confidential information relating to the business, operations or affairs of Charlotte’s Web. Although confidentiality agreements are to be signed by third parties prior to the disclosure of any confidential information, a breach of such confidentiality agreement could put Charlotte’s Web at competitive risk and may cause significant damage to its business. The harm to Charlotte’s Web’s business from a breach of confidentiality cannot presently be quantified but may be material and may not be compensable in damages. There can be no assurance that, in the event of a breach of confidentiality, Charlotte’s Web will be able to obtain equitable remedies, such as injunctive relief from a court of competent jurisdiction in a timely manner, if at all, in order to prevent or mitigate any damage to its business that such a breach of confidentiality may cause.

Inability to Protect Intellectual Property

Charlotte’s Web’s success is heavily dependent upon its intangible property and technology. Charlotte’s Web relies upon copyrights, patents, trade secrets, unpatented proprietary know-how and continuing innovation to protect the intangible property, technology and information that is considered important to the development of the business. Charlotte’s Web relies on various methods to protect its proprietary rights, including confidentiality agreements with consultants, service providers and management that contain terms and conditions prohibiting unauthorized use and disclosure of confidential information. However, despite efforts to protect intangible property rights, unauthorized parties may attempt to copy or replicate intangible property, technology or processes. There can be no assurances that the steps taken by Charlotte’s Web to protect its intangible property, technology and information will be adequate to prevent misappropriation or independent third-party development of Charlotte’s Web’s intangible property, technology or processes. It is likely that other companies can duplicate a production process similar to Charlotte’s Web’s. Other companies may also be able to materially duplicate Charlotte’s Web’s proprietary plant strains. To the extent that any of the above would occur, revenue could be negatively affected, and in the future, Charlotte’s Web may have to litigate to enforce its intangible property rights, which could result in substantial costs and divert management’s attention and Charlotte’s Web’s resources.

Charlotte’s Web’s ability to successfully implement its business plan depends in part on its ability to obtain, maintain and build brand recognition using its trademarks, service marks, trade dress, domain names and other intellectual

H-47

property rights, including Charlotte’s Web’s names and logos. If Charlotte’s Web’s efforts to protect its intellectual property are unsuccessful or inadequate, or if any third party misappropriates or infringes on its intellectual property, the value of its brands may be harmed, which could have a material adverse effect on Charlotte’s Web’s business and might prevent its brands from achieving or maintaining market acceptance.

Charlotte’s Web may be unable to obtain registrations for its intellectual property rights for various reasons, including refusal by regulatory authorities to register trademarks or other intellectual property protections, prior registrations of which it is not aware, or it may encounter claims from prior users of similar intellectual property in areas where it operates or intends to conduct operations. This could harm its image, brand or competitive position and cause Charlotte’s Web to incur significant penalties and costs.

On April 20, 2018 the U.S. Patent and Trademark Office (“USPTO”) issued a Final Office Action refusing registration of two trademark applications submitted by Charlotte’s Web based on the Trademark Examiner’s interpretation that the marks were not in lawful use in commerce under Sections 1 and 45 of the United States Trademark Act and because the goods identified in the application were not in compliance with either the USCSA or the FD&C Act. Charlotte’s Web filed a Request for Reconsideration of the refusals in March 2019. Despite USPTO’s aforementioned position and refusal for registration, Charlotte’s Web may rely on common law theories of trademark protection and enforcement in cases of actual or suspected trademark infringement of the trademarks it wishes to protect.

Intellectual Property Claims

Companies in the retail and wholesale CPG industries frequently own trademarks and trade secrets and often enter into litigation based on allegations of infringement or other violations of intangible property rights. Charlotte’s Web may be subject to intangible property rights claims in the future and its products may not be able to withstand any third-party claims or rights against their use. Any intangible property claims, with or without merit, could be time consuming, expensive to litigate or settle and could divert management resources and attention. An adverse determination also could prevent Charlotte’s Web from offering its products to others and may require that Charlotte’s Web procure substitute products or services.

With respect to any intangible property rights claim, Charlotte’s Web may have to pay damages or stop using intangible property found to be in violation of a third party’s rights. Charlotte’s Web may have to seek a license for the intangible property, which may not be available on reasonable terms and may significantly increase operating expenses. The technology also may not be available for license at all. As a result, Charlotte’s Web may also be required to pursue alternative options, which could require significant effort and expense. If Charlotte’s Web cannot license or obtain an alternative for the infringing aspects of its business, it may be forced to limit product offerings and may be unable to compete effectively. Any of these results could harm Charlotte’s Web’s brand and prevent it from generating sufficient revenue or achieving profitability.

Class Action Litigation Risks

On January 17, 2020, a putative class action lawsuit was filed against Charlotte’s Web in federal district court in the Northern District of Illinois. The complaint was served on Charlotte’s Web on January 29, 2020. The complaint alleges that Charlotte’s Web unlawfully marketed two products, Soothing Scent Hemp Infused Cream and Unscented Hemp Infused Cream, as containing 750 mg of “hemp extract,” even though the products—according to testing conducted at the request of plaintiffs—contain less than 750 mg of cannabinoids. While Charlotte’s Web believes that its products are accurately labeled and that the claims are without merit and intends to vigorously defend itself against any such suits, the outcome of such claims cannot be predicted. Furthermore, Charlotte’s Web may be subject to similar or other litigation in the future. Monitoring and defending against legal actions, whether or not meritorious, is time-consuming for management and detracts from management’s ability to fully focus internal resources on business activities. In addition, legal fees and costs incurred in connection with such activities may be significant and Charlotte’s Web could, in the future, be subject to judgments or enter into settlements of claims for significant monetary damages. A decision adverse to the interests of Charlotte’s Web could result in the payment of substantial damages and could have a material adverse effect on cash flow, results of operations and financial position. With respect to any litigation, Charlotte’s Web’s insurance may not reimburse or may not be sufficient to reimburse Charlotte’s Web for the expenses or losses it may suffer in contesting and concluding such litigation. Substantial litigation costs may adversely impact Charlotte’s Web’s business, operating results or financial condition.

H-48

Litigation

On January 21, 2019, a complaint was filed against Charlotte’s Web in state court in Denver, Colorado alleging that Charlotte’s Web breached its obligations to AgriMed LLC and Wellness Group Pharms, LLC under an Exclusive License Agreement between the parties (“License Agreement”) that granted AgriMed LLC the right to produce, distribute and/or sell Charlotte’s Web products in the State of Illinois in the medical marijuana dispensary channel. AgriMed contends that Charlotte’s Web breached its obligations to AgriMed by, among other things, breaching the License Agreement’s non-compete provision by selling or distributing Charlotte’s Web products in Illinois. Charlotte’s Web contends that AgriMed violated the terms of the License Agreement by failing to pay required royalties to Charlotte’s Web and continuing to sell Charlotte’s Web products subsequent to termination of the License Agreement. Discovery in the litigation closed in January 2020 and the case is set for trial (on a date yet to be confirmed as a result of COVID-19-related delays).

Charlotte’s Web is, and may from time to time become, party to litigation in the ordinary course of business which could adversely affect its business. Should any litigation in which Charlotte’s Web is, or becomes, involved be determined against Charlotte’s Web, such a decision could adversely affect Charlotte’s Web’s ability to continue operating and the market price for the Charlotte’s Web Common Shares and could use significant resources. Even if Charlotte’s Web is involved in litigation and wins, such litigation could redirect significant Charlotte’s Web resources. Litigation may also create a negative perception of Charlotte’s Web’s brand.

Trade Secrets may be Difficult to Protect

Charlotte’s Web’s success depends upon the skills, knowledge and experience of its scientific and technical personnel, consultants and advisors, as well as contractors. Because Charlotte’s Web operates in a highly competitive industry, it relies in part on trade secrets to protect its proprietary products and processes. However, trade secrets are difficult to protect. Charlotte’s Web enters into confidentiality or non-disclosure agreements with its corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally require that the receiving party keep confidential, and not disclose to third parties, confidential information developed by the receiving party or made known to the receiving party by Charlotte’s Web during the course of the receiving party’s relationship with Charlotte’s Web. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to Charlotte’s Web will be its exclusive property, and Charlotte’s Web enters into assignment agreements to perfect its rights.

These confidentiality, inventions and assignment agreements, where in place, may be breached and may not effectively assign intellectual property rights to Charlotte’s Web. Charlotte’s Web’s trade secrets also could be independently discovered by competitors, in which case Charlotte’s Web would not be able to prevent the use of such trade secrets by its competitors. The enforcement of a claim alleging that a party illegally obtained and was using Charlotte’s Web’s trade secrets could be difficult, expensive and time consuming and the outcome could be unpredictable. Failure to obtain or maintain effective trade secret protection could adversely affect Charlotte’s Web’s competitive position.

Use of Customer Information and Other Personal and Confidential Information

Charlotte’s Web collects, processes, maintains and uses data, including sensitive information on individuals, available to Charlotte’s Web through online activities and other customer interactions with its business. Charlotte’s Web’s current and future marketing programs may depend on its ability to collect, maintain and use this information, and its ability to do so is subject to evolving international, U.S. and Canadian laws and enforcement trends. Charlotte’s Web strives to comply with all applicable laws and other legal obligations relating to privacy, data protection and customer protection, including those relating to the use of data for marketing purposes. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, conflict with other rules, conflict with Charlotte’s Web’s practices or fail to be observed by its employees or business partners. If so, Charlotte’s Web may suffer damage to its reputation and be subject to proceedings or actions against it by governmental entities or others. Any such proceeding or action could hurt Charlotte’s Web’s reputation, force it to spend significant amounts to defend its practices, distract its management or otherwise have an adverse effect on its business.

H-49

Certain of Charlotte’s Web’s marketing practices rely upon e-mail, social media and other means of digital communication to communicate with consumers on its behalf. Charlotte’s Web may face risk if its use of e-mail, social media or other means of digital communication is found to violate applicable laws. Charlotte’s Web posts its privacy policy and practices concerning the use and disclosure of user data on its websites. Any failure by Charlotte’s Web to comply with its posted privacy policy or other privacy-related laws and regulations could result in proceedings which could potentially harm its business. In addition, as data privacy and marketing laws change, Charlotte’s Web may incur additional costs to ensure it remains in compliance. If applicable data privacy and marketing laws become more restrictive at the international, federal, provincial or state levels, Charlotte’s Web’s compliance costs may increase, its ability to effectively engage customers via personalized marketing may decrease, its investment in its e-commerce platform may not be fully realized, its opportunities for growth may be curtailed by its compliance burden and its potential reputational harm or liability for security breaches may increase.

Information Technology Systems and Data Security Breaches

Charlotte’s Web’s operations depend, in part, on how well it and its third party service providers protect networks, equipment, information technology (“IT”) systems and software against damage from a number of threats, including, but not limited to, cable cuts, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. Charlotte’s Web’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact Charlotte’s Web’s reputation and results of operations.

Charlotte’s Web or its third-party service providers collect, process, maintain and use sensitive personal information relating to its customers and employees, including customer financial data (e.g. credit card information) and their personally identifiable information, and rely on third parties for the operation of its e-commerce site and for the various social media tools and websites it uses as part of its marketing strategy. Any perceived, attempted or actual unauthorized disclosure of customer financial data (e.g. credit card information) or personally identifiable information regarding Charlotte’s Web’s employees, customers or website visitors could harm its reputation and credibility, reduce its e-commerce sales, impair its ability to attract website visitors, reduce its ability to attract and retain customers and could result in litigation against Charlotte’s Web or the imposition of significant fines or penalties.

Recently, data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting new foreign, federal, provincial and state laws and legislative proposals addressing data privacy and security. As a result, Charlotte’s Web may become subject to more extensive requirements to protect the customer information that it processes in connection with the purchase of its products, resulting in increased compliance costs.

Charlotte’s Web’s on-line activities, including its e-commerce websites, also may be subject to denial of service or other forms of cyber-attacks. While Charlotte’s Web has taken measures to protect against those types of attacks, those measures may not adequately protect its on-line activities from such attacks. If a denial of service attack or other cyber event were to affect its e-commerce sites or other information technology systems, its business could be disrupted, it may lose sales or valuable data, and its reputation may be adversely affected. Charlotte’s Web’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, Charlotte’s Web may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Global Economic Uncertainty

Demand for Charlotte’s Web’s products and services are influenced by general economic and consumer trends beyond Charlotte’s Web’s control. There can be no assurance that Charlotte’s Web’s business and corresponding financial performance will not be adversely affected by general economic or consumer trends. In particular, global economic

H-50

conditions remain constrained, and if such conditions continue, recur or worsen, this may have a material adverse effect on Charlotte’s Web’s business, financial condition and results of operations.

Furthermore, such economic conditions have produced downward pressure on stock prices and on the availability of credit for financial institutions and corporations. If current levels of market disruption and volatility continue, Charlotte’s Web might experience reductions in business activity, increased funding costs and funding pressures, as applicable, a decrease in the market price of the Charlotte’s Web Common Shares, a decrease in asset values, additional write-downs and impairment charges and lower profitability.

In addition, the outbreak of COVID-19 has resulted in governments worldwide enacting measures to combat the spread of the virus, including in the United States. These measures, which include the implementation of travel restriction, self-isolation measures, physical distancing and in some instances, the suspension of non-essential business, have caused material disruption to businesses globally, resulting in an economic slowdown. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the response measures. It is impossible to forecast the duration and full scope of the economic impact of COVID-19 and other consequential changes it will have on Charlotte’s Web’s business, operations and prospects, both in the short term and in the long term. Future crises may be precipitated by any number of causes, including natural disasters, public health crises, geopolitical instability, or sovereign defaults. These factors may impact Charlotte’s Web’s operations and the ability of Charlotte’s Web to obtain equity or debt financing in the future and, if obtained, on terms favorable to Charlotte’s Web. Increased levels of volatility and market turmoil can adversely impact Charlotte’s Web’s operations and stock price.

Risks Related to Charlotte’s Web’s Social Responsibility Goals

Charlotte’s Web may place a focus on creating social good and the benefits of a socially responsible corporate culture. This may involve making charitable donations to further its social responsibility goals.

In addition, Charlotte’s Web may, in future and subject to any required regulatory and stakeholder approvals, pursue certification as a “Certified B Corporation”, a certification granted by B Lab, an independent non-profit organization. B Corporations are required to adhere to rigorous standards of social and environmental performance, accountability and transparency.

Emerging Industry

As a pioneer in a new industry, Charlotte’s Web has limited access to industry benchmarks in relation to Charlotte’s Web’s business. Industry-specific data points such as operating ratios, research and development projects, debt structures, compliance and other financial and operational related data is limited and accordingly, management will be required to make decisions in the absence of such data points.

Risks Relating to Charlotte’s Web’s Securities

No Assurance Future Financing Will be Available

Charlotte’s Web expects to require substantial additional capital in the near future to fund its acquisition strategy and to continue operations at its cultivation and production facilities, dispensaries, expansion of its product lines, development of its intellectual property base, increasing production capabilities and expanding its operations in states where it currently operates and states where it currently does not have operations. Charlotte’s Web may not be able to obtain additional financing on terms acceptable to it, or at all. If Charlotte’s Web fails to raise additional capital, as needed, its ability to implement its business model and strategy could be compromised.

Even if Charlotte’s Web obtains financing for its near-term operations, it expects that it will require additional capital thereafter. The capital needs of Charlotte’s Web will depend on numerous factors including: (i) profitability; (ii) the release of competitive products by competitors; (iii) the level of investment in research and development; and (iv) the amount of Charlotte’s Web’s capital expenditures, including acquisitions. There can be no assurance that Charlotte’s Web will be able to obtain capital in the future to meet its needs.

H-51

Charlotte’s Web is continually assessing a range of public and private financing options, including secured and unsecured debt, equity, convertible debt and real estate sale/leaseback transaction. Although Charlotte’s Web has accessed private financing in the past, there is neither a broad nor deep pool of institutional capital that is available to companies in the U.S. hemp industry. There can be no assurance that additional financing, if raised privately, will be available to Charlotte’s Web when needed or on terms which are acceptable.

Discretion in the Use of Proceeds

Generally, when Charlotte’s Web issues securities, management of Charlotte’s Web will have broad discretion with respect to the application of net proceeds received by Charlotte’s Web from the sale of the securities and may spend such proceeds in ways that do not improve Charlotte’s Web’s results of operations or enhance the value of the securities issued and outstanding from time to time. Any failure by management to apply these funds effectively could result in financial losses that could have a material adverse effect on Charlotte’s Web’s business or cause the price of the securities of Charlotte’s Web issued and outstanding from time to time to decline.

Forward-Looking Information

The forward-looking information included in this Information Circular relating to, among other things, Charlotte’s Web’s future results, performance, achievements, prospects, targets, intentions or opportunities or the markets in which Charlotte’s Web operates and the other statements listed in “General Matters - Caution Regarding Forward Looking Statements” in the Information Circular is based on opinions, assumptions and estimates made by Charlotte’s Web’s management in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Charlotte’s Web believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Charlotte’s Web’s actual results in the future may vary significantly from the historical and estimated results and those variations may be material. Charlotte’s Web makes no representation that its actual results in the future will be the same, in whole or in part, as those included in this Information Circular. See “General Matters - Caution Regarding Forward Looking Statements” in the Information Circular.

Limited Market for Charlotte’s Web Common Shares and Charlotte’s Web Warrants

The Charlotte’s Web Common Shares are listed on the TSX under the symbol “CWEB”. The Charlotte’s Web Warrants are listed on the TSX under the symbol “CWEB.WT”. However, there can be no assurance that an active and liquid market for the Charlotte’s Web Common Shares or Charlotte’s Web Warrants will be maintained and an investor may find it difficult to resell any securities of Charlotte’s Web.

Potential Volatility of Prices of Charlotte’s Web Common Shares and Other Listed Securities

The market price of the Charlotte’s Web Common Shares and Charlotte’s Web Warrants may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond Charlotte’s Web’s control. This volatility may affect the ability of holders of the Charlotte’s Web Common Shares and Charlotte’s Web Warrants to sell their securities at an advantageous price. Such volatility could be subject to significant fluctuations in response to numerous factors including:

the public’s reaction to Charlotte’s Web’s press releases, announcements and filings with regulatory authorities and those of its competitors; fluctuations in broader stock market prices and volumes or adverse changes in general market conditions or economic trends; changes in market valuations of similar companies; investor perception of Charlotte’s Web, its prospects or the industry in general; additions or departures of key personnel; commencement of or involvement in litigation; changes in the regulatory landscape applicable to Charlotte’s Web, the dietary supplement and/or the hemp industry;

H-52

media reports, publications or public statements relating to, or public perceptions of, the regulatory landscape applicable to Charlotte’s Web, the dietary supplement and/or the hemp industry, whether correct or not; announcements by Charlotte’s Web or its competitors of strategic alliances, significant contracts, new technologies, acquisitions, dispositions, commercial relationships, joint ventures or capital commitments; variations in Charlotte’s Web’s quarterly results of operations or cash flows or those of other comparable companies; revenues and operating results failing to meet the expectations of securities analysts or investors in a particular quarter; downward revision in securities analysts’ estimates; changes in Charlotte’s Web’s pricing policies or the pricing policies of its competitors; future issuances and sales of Charlotte’s Web Common Shares or other securities of Charlotte’s Web, including as a result of the conversion of Charlotte’s Web Proportionate Voting Shares and the sale of the Charlotte’s Web Common Shares issuable thereunder; sales of Charlotte’s Web Common Shares by insiders of Charlotte’s Web; third party disclosure of significant short positions; demand for and trading volume of Charlotte’s Web Common Shares and other listed securities of Charlotte’s Web; changes in securities analysts’ recommendations and their estimates of Charlotte’s Web’s financial performance; short-term fluctuation in stock price caused by changes in general conditions in the domestic and worldwide economies or financial markets; consequences of government action in response to COVID-19; changes in global financial markets and global economies and general market conditions, such as interest rates and product price volatility, and including those caused by COVID-19; the other risk factors described in this Appendix H.

The realization of any of these risks and other factors beyond Charlotte’s Web’s control could cause the market price of the Charlotte’s Web Common Shares to decline significantly.

In addition, broad market and industry factors may harm the market price of the Charlotte’s Web Common Shares or other listed securities of Charlotte’s Web. Hence, the price of the Charlotte’s Web Common Shares could fluctuate based upon factors that have little or nothing to do with Charlotte’s Web, and these fluctuations could materially reduce the price of the Charlotte’s Web Common Shares regardless of Charlotte’s Web’s operating performance. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue, Charlotte’s Web’s operations could be adversely impacted and the trading price of the Charlotte’s Web Common Shares or other listed securities of Charlotte’s Web may be materially adversely affected.

In the past, following a significant decline in the market price of a company’s securities, there have been instances of securities class action litigation having been instituted against that company. If Charlotte’s Web were involved in any similar litigation, it could incur substantial costs, management’s attention and resources could be diverted and it could harm Charlotte’s Web’s business, operating results and financial condition.

Dividends to Shareholders

Charlotte’s Web does not anticipate paying cash dividends on the Charlotte’s Web Common Shares in the foreseeable future. Charlotte’s Web currently intends to retain all future earnings to fund the development and growth of its business. Any payment of future dividends will be at the discretion of the directors and will depend on, among other things, Charlotte’s Web’s earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, and other considerations that the directors deems relevant. Investors must rely on sales of Charlotte’s Web Common Shares after price appreciation, which may never occur, as the only way to realize a return on their investment.

H-53

Holding Company Structure

Charlotte’s Web is a holding company and substantially all of its assets consist of shares of Charlotte’s Web U.S. As a result, investors are subject to the risks attributable to Charlotte’s Web U.S. and any and all future affiliates. Charlotte’s Web does not have any significant assets and conducts substantially all of its business through its Subsidiary, which generates all or substantially all of Charlotte’s Web’s revenues. The ability of Charlotte’s Web U.S. to distribute funds to Charlotte’s Web will depend on its operating results, tax considerations (both domestic and cross-border) and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained by Charlotte’s Web U.S. and contractual restrictions contained in the instruments governing its debt, existing or if incurred. In the event of a bankruptcy, liquidation or reorganization of Charlotte’s Web U.S. or any other future subsidiary, holders of indebtedness and trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to Charlotte’s Web.

Future Sales of Charlotte’s Web Common Shares by Shareholders, Directors or Officers

Subject to compliance with applicable securities laws and the terms of any applicable lock-up arrangements, Charlotte’s Web’s officers, directors, the holders of Charlotte’s Web Proportionate Voting Shares and their affiliates may sell some or all of their Charlotte’s Web Common Shares in the future. No prediction can be made as to the effect, if any, such future sales of Charlotte’s Web Common Shares will have on the market price of the Charlotte’s Web Common Shares prevailing from time to time. However, the future sale of a substantial number of Charlotte’s Web Common Shares by Charlotte’s Web’s officers, directors, the holders of Charlotte’s Web Proportionate Voting Shares and their affiliates, or the perception that such sales could occur, could materially adversely affect prevailing market prices for the Charlotte’s Web Common Shares and other listed securities of Charlotte’s Web.

All of the currently outstanding Charlotte’s Web Common Shares are, subject to applicable securities laws, generally immediately available for resale in the public markets. Additional Charlotte’s Web Common Shares issuable upon the exercise of stock options or the conversion of Charlotte’s Web Proportionate Voting Shares may also become available for sale in the public market, which may also cause the market price of the Charlotte’s Web Common Shares to fall. Accordingly, if substantial amounts of Charlotte’s Web Common Shares are sold in the public market, the market price could fall.

Risks Related to Potential Changes in Definition of Foreign Private Issuer

Charlotte’s Web is a foreign private issuer as defined in Rule 405 under the 1933 Securities Act and Rule 3b-4 under the 1934 Exchange Act. The term “foreign private issuer” is defined as any non-U.S. issuer, other than a non-U.S. government, except any issuer meeting the following conditions: (i) more than 50% of the outstanding voting securities of such issuer are, directly or indirectly, held of record by residents of the U.S.; and (ii) any one of the following: (A) the majority of the issuer’s executive officers or directors are U.S. citizens or residents; (B) more than 50% of the assets of the issuer are located in the U.S.; or (C) the business of the issuer is administered principally in the U.S.

In December 2016, the SEC issued a Compliance and Disclosure Interpretation to clarify that issuers with multiple classes of voting stock carrying different voting rights may, for the purposes of calculating compliance with the 50% U.S. resident threshold, examine either (i) the combined voting power of its share classes, or (ii) the number of voting securities, in each case held of record by U.S. residents. Based on this interpretation, each issued and outstanding Charlotte’s Web Proportionate Voting Share is counted as one voting security and each issued and outstanding Charlotte’s Web Common Share is counted as one voting security for the purposes of determining the 50% U.S. resident threshold.

Should the SEC’s guidance and interpretation change, Charlotte’s Web may lose its foreign private issuer status.

Risks Related to Charlotte’s Web’s Loss of Foreign Private Issuer Status in the U.S.

If, as of the last business day of Charlotte’s Web’s second fiscal quarter for any year, Charlotte’s Web determines that more than 50% of its outstanding voting securities (as determined under Rule 405 under the 1933 Securities Act, as further described under “Risks Related to Potential Changes in Definition of Foreign Private Issuer”) are directly or

H-54

indirectly held of record by residents of the U.S., effective on the first day of its fiscal year immediately succeeding such determination Charlotte’s Web will no longer meet the definition of a foreign private issuer, which may have adverse consequences on Charlotte’s Web’s ability to raise capital in private placements or Canadian prospectus offerings. In addition, the loss of Charlotte’s Web’s foreign private issuer status would result in Charlotte’s Web becoming subject to U.S. domestic reporting requirements and, as such, Charlotte’s Web would be subject to the increased reporting and disclosure requirements imposed on U.S. domestic reporting companies, likely resulting in increased audit, legal and administration costs and a significant diversion of Charlotte’s Web’s time and resources. These increased costs may significantly affect Charlotte’s Web’s business, financial condition and results of operations.

Significant Obligations of a Public Company

Charlotte’s Web incurs significant legal, accounting, insurance and other expenses as a result of being a public company, which may negatively impact its performance and could cause its results of operations and financial condition to suffer. Compliance with applicable securities laws in Canada and the rules of the TSX constitutes a significant expense, including legal and accounting costs, and makes some activities more time-consuming and costly. Reporting obligations as a public company and Charlotte’s Web’s anticipated growth may place a strain on Charlotte’s Web’s financial and management systems, processes and controls, as well as on personnel.

Financial Reporting and Other Public Company Requirements

Charlotte’s Web is subject to reporting and other obligations under applicable Canadian securities laws and rules of any stock exchange on which the Charlotte’s Web Common Shares are listed, including NI 52-109. These reporting and other obligations place significant demands on Charlotte’s Web’s management, administrative, operational and accounting resources. If Charlotte’s Web is unable to accomplish any such necessary objectives in a timely and effective manner, its ability to comply with financial reporting obligations and other rules applicable to reporting issuers could be impaired. Moreover, any failure to maintain effective internal controls could cause Charlotte’s Web to fail to satisfy its reporting obligations or result in material misstatements in its financial statements. If Charlotte’s Web cannot provide reliable financial reports or prevent fraud, its reputation and operating results could be materially adversely affected which could also cause investors to lose confidence in Charlotte’s Web’s reported financial information, which could result in a reduction in the trading price of the Charlotte’s Web Common Shares.

Charlotte’s Web does not expect that its disclosure controls and procedures and internal controls over financial reporting will prevent all error or fraud. A control system, no matter how well-designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within an organization are detected. The inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by individual acts of certain persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all.

Regulatory and Oversight Authorities

Charlotte’s Web’s auditors (former and current) are subject to standard review by the Canadian Public Accountability Board and similar oversight bodies and regulatory authorities. Such reviews could result in Charlotte’s Web being required to amend prior financial reporting.

Impact on Resales into the U.S.

The Charlotte’s Web Common Shares have not been, and may never be, registered under the 1933 Securities Act. As such, the Charlotte’s Web Common Shares may be offered only to non-U.S. persons (as defined in Regulation S) outside the U.S. in transactions exempt from the registration requirements of the Securities Act in reliance on Regulation S, to qualified institutional buyers (as defined in Rule 144A under the 1933 Securities Act) in the U.S.

H-55

pursuant to Rule 144A under the 1933 Securities Act, or otherwise in transactions that are exempt from the registration requirements set forth under the 1933 Securities Act. Accordingly, the Charlotte’s Web Common Shares may be “restricted securities” as defined in Rule 144 under the 1933 Securities Act. The Charlotte’s Web Common Shares may not be able to be offered, sold or delivered in the U.S. or to, or for the account or benefit of, any U.S. person, unless the transfer is registered under the 1933 Securities Act. Charlotte’s Web has no current intention to register the Charlotte’s Web Common Shares under the 1933 Securities Act. If Charlotte’s Web does not register the Charlotte’s Web Common Shares under the 1933 Securities Act, its shareholders will face restrictions in re-sale of the Charlotte’s Web Common Shares, particularly in the U.S. or to U.S. persons. The Charlotte’s Web Common Shares may bear a legend describing restrictions on transfer to U.S. persons and prohibiting hedging transactions in the Charlotte’s Web Common Shares unless in compliance with the 1933 Securities Act.

Risks Related to Non-Compliance with Regulation S Under the 1933 Securities Act

Charlotte’s Web Common Shares may be offered and sold in an offshore transaction pursuant to Rule 902 of the 1933 Securities Act, and such Charlotte’s Web Common Shares may qualify as Category 1 securities under Rule 903 of Regulation S. Should the SEC determine that Charlotte’s Web did not comply with the requirements of Regulation S in respect of such an offering, the secondary market in the Charlotte’s Web Common Shares could be adversely affected. In such case, Charlotte’s Web may be required to register its Charlotte’s Web Common Shares with the SEC, which would entail significant expense to Charlotte’s Web and a significant amount of time on behalf of Charlotte’s Web’s directors and senior management. Furthermore, Charlotte’s Web and its directors could also be subject to criminal, civil or administrative proceedings.

Influence of the Significant Shareholders

Charlotte’s Web has a small number of shareholders who own, in the aggregate, approximately a 25% equity interest of Charlotte’s Web on a non-diluted basis. As a result, although such shareholders may not have any agreement to act in concert, such shareholders have the ability to exercise significant influence over matters submitted to the shareholders for approval, whether subject to approval by a majority of the shareholders or subject to a class vote or special resolution.

Limited Control Over Charlotte’s Web’s Operations

Holders of the Charlotte’s Web Common Shares have limited control over changes in Charlotte’s Web’s policies and operations, which increases the uncertainty and risks of an investment in Charlotte’s Web. The Charlotte’s Web Board determines major policies, including policies regarding financing, growth, debt capitalization and any dividends to shareholders. Generally, the Charlotte’s Web Board may amend or revise these and other policies without a vote of the holders of the Charlotte’s Web Common Shares. Holders of the Charlotte’s Web Common Shares only have a right to vote, as a class, in the limited circumstances described elsewhere in this Appendix . The Charlotte’s Web Board’s broad discretion in setting policies and the limited ability of holders of the Charlotte’s Web Common Shares to exert control over those policies increases the uncertainty and risks of an investment in Charlotte’s Web.

Working Capital and Future Issuances

Charlotte’s Web may issue additional Charlotte’s Web Common Shares in the future which may dilute a shareholder’s holdings in Charlotte’s Web. The Charlotte’s Web Articles permit the issuance of an unlimited number of Charlotte’s Web Common Shares, an unlimited number of Charlotte’s Web Proportionate Voting Shares, and an unlimited number of preferred shares issuable in series, and shareholders have no pre-emptive rights in connection with any further issuances. The directors of Charlotte’s Web have the discretion to determine the provisions attaching to the Charlotte’s Web Common Shares and the Charlotte’s Web Proportionate Voting Shares and the price and the terms of issue of further Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares.

Additional equity financing, including pursuant to an at-the-market offering, may be dilutive to shareholders and could contain rights and preferences superior to those of the Charlotte’s Web Common Shares. Debt financing may involve restrictions on Charlotte’s Web’s financing and operating activities. Debt financing may be convertible into other securities of Charlotte’s Web which may result in immediate or resulting dilution. In either case, additional financing

H-56

may not be available to Charlotte’s Web on acceptable terms or at all. If Charlotte’s Web is unable to raise additional funds as needed, the scope of its operations or growth may be reduced and, as a result, Charlotte’s Web may be unable to fulfil its long-term goals. In this case, investors may lose all or part of their investment. Any default under such debt instruments could have a material adverse effect on Charlotte’s Web, its business or the results of operations.

Securities or Industry Analysts

The trading market for Charlotte’s Web Common Shares could be influenced by the research and reports that industry and/or securities analysts may publish about Charlotte’s Web, its business, the market or competitors. If any of the analysts who may cover Charlotte’s Web’s business change their recommendation regarding the Charlotte’s Web Common Shares adversely, or provide more favourable relative recommendations about its competitors, the share price would likely decline. If any analyst who may cover Charlotte’s Web’s business were to cease coverage or fail to regularly publish reports on Charlotte’s Web, it could lose visibility in the financial markets, which in turn could cause the share price or trading volume to decline.

Return on Charlotte’s Web Common Shares is not Guaranteed

There is no guarantee that the Charlotte’s Web Common Shares will earn any positive return in the short term or long term. A holding of Charlotte’s Web Common Shares is speculative and involves a high degree of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. A holding of Charlotte’s Web Common Shares is appropriate only for holders who have the capacity to absorb a loss of some or all of their holdings.

Dilution

The offering price of Charlotte’s Web Common Shares may significantly exceed the net tangible book value per share of the Charlotte’s Web Common Shares. Accordingly, a purchaser of Charlotte’s Web Common Shares may incur immediate and substantial dilution of his, her or its investment. If outstanding options and warrants to purchase Charlotte’s Web Common Shares are exercised or securities convertible into Charlotte’s Web Common Shares are converted, additional dilution will occur. Charlotte’s Web may sell additional Charlotte’s Web Common Shares or other securities that are convertible or exchangeable into Charlotte’s Web Common Shares in subsequent offerings or may issue additional Charlotte’s Web Common Shares or other securities to finance future acquisitions.

Charlotte’s Web cannot predict the size or nature of future sales or issuances of securities or the effect, if any, that such future sales and issuances will have on the market price of the Charlotte’s Web Common Shares. Sales or issuances of substantial numbers of Charlotte’s Web Common Shares or other securities that are convertible or exchangeable into Charlotte’s Web Common Shares, or the perception that such sales or issuances could occur, may adversely affect prevailing market prices of the Charlotte’s Web Common Shares. With any additional sale or issuance of Charlotte’s Web Common Shares or other securities that are convertible or exchangeable into Charlotte’s Web Common Shares, investors will suffer dilution to their voting power and economic interest in Charlotte’s Web. Furthermore, to the extent holders of Charlotte’s Web’s stock options or other convertible securities convert or exercise their securities and sell the Charlotte’s Web Common Shares they receive, the trading price of the Charlotte’s Web Common Shares on the TSX may decrease due to the additional amount of Charlotte’s Web Common Shares available in the market.

INTEREST OF EXPERTS

Since September 7, 2019, Charlotte’s Web’s auditors are Ernst & Young LLP, located at Suite 4800, 370 17th Street, Denver, Colorado, Canada 80202. Ernst & Young LLP is independent with respect to Charlotte’s Web within the meaning of the CPA Code of Professional Conduct of the Chartered Professional Accountants of Ontario. Prior to September 7, 2019, Charlotte’s Web’s auditors were MNP LLP, located at 111 Richmond Street West, Suite 300, Toronto, Ontario, Canada M5H 2G4. During its time as auditor for Charlotte’s Web, MNP LLP was independent with respect to Charlotte’s Web within meaning of the CPA Code of Professional Conduct of the Chartered Professional Accountants of Ontario. Ernst & Young LLP and MNP LLP have performed the audits in respect of certain financial statements incorporated by reference herein.

H-57

Frost Brown Todd LLC (Lexington, Kentucky) acted as U.S. regulatory counsel to Charlotte’s Web in respect of certain matters. To the knowledge of Charlotte’s Web, Frost Brown Todd LLC, together with its members and employees, as a group, beneficially owns, directly or indirectly, less than 1% of the outstanding securities of Charlotte’s Web.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

Certain of Charlotte’s Web’s directors, officers and promoters, namely Adrienne Elsner, David Panter, Jacques Tortoroli, James (Shane) Hoyne, Jared Stanley, Joel Stanley, John Held, Paul Lanham, Russell Hammer, Tony True and William West, and its external auditor Ernst & Young LLP (US), reside outside of Canada. Each of these directors, officers and promoters has appointed DLA Piper (Canada) LLP, 2800 Park Place, 666 Burrard St, Vancouver, British Columbia, Canada V6C 2Z7, as agent for service of process. Potential investors are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person that resides outside of Canada, even if the party has appointed an agent for service of process.

INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Other than as disclosed in this Information Circular or in any of the documents incorporated by reference herein, Charlotte’s Web is not aware of any material interests, direct or indirect, by way of beneficial ownership of securities or otherwise, of any director, executive officer or any shareholder of Charlotte’s Web holding more than 10% of the Charlotte’s Web Common Shares, or any associate or affiliate of any of the foregoing, in any transaction within the three most recently completed financial years or during the current financial year, or any proposed or ongoing transaction of Charlotte’s Web, which has or will materially affect Charlotte’s Web.

PROMOTERS

Joel Stanley, a director and employee of Charlotte’s Web and Jared Stanley, a director and employee of Charlotte’s Web, may be considered promoters of Charlotte’s Web within the meaning of Canadian securities laws. As of the date hereof, these individuals, either directly or indirectly, own, control or direct the number of Charlotte’s Web Common Shares and Charlotte’s Web Proportionate Voting Shares of Charlotte’s Web set forth in the table below. Other than as described below, neither of these individuals currently own any options to purchase Charlotte’s Web Proportionate Voting Shares or Charlotte’s Web Common Shares.

Name of Promoter

Charlotte’s Web Common Shares owned and Charlotte’s Web Proportionate Voting Shares owned (and Charlotte’s Web Common Share equivalent), controlled or directed, directly or indirectly

Joel Stanley

486,208 Charlotte’s Web Common Shares 10,003.370 Charlotte’s Web Proportionate Voting Shares (4,001,348 Charlotte’s Web Common Share equivalent)

Jared Stanley

450,000 Charlotte’s Web Common Shares 10,242.215 Charlotte’s Web Proportionate Voting Shares (4,096,886 Charlotte’s Web Common Share equivalent)

Joel Stanley and Jared Stanley have each entered into an employment agreement with Charlotte’s Web. Pursuant to Joel Stanley’s agreement, he is entitled to receive annual compensation of US$225,000 from Charlotte’s Web. Pursuant to Jared Stanley’s agreement, he is entitled to receive annual compensation of US$325,000 from Charlotte’s Web. In connection with his role as Chief Cultivation Officer of Charlotte’s Web, Jared Stanley was granted 12,751 restricted stock awards and 52,608 stock options; each restricted stock award vests into one Charlotte’s Web Common Share, and each stock option is exercisable into one Charlotte’s Web Common Share at an exercise price of CDN$6.76. Other than as set forth herein, neither Joel Stanley nor Jared Stanley is entitled to any additional money, property, contracts, options or rights of any kind from Charlotte’s Web or its subsidiary.

I-1

APPENDIX I INFORMATION CONCERNING CHARLOTTE’S WEB FOLLOWING

COMPLETION OF THE ARRANGEMENT

NOTICE TO READER

Unless the context indicates otherwise, capitalized terms which are used in this Appendix I and not otherwise defined in this Appendix I have the meanings given to such terms under the heading “Glossary of Terms” in the Information Circular.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements contained in this Appendix I, and in certain documents incorporated by reference into this Appendix I, constitute forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) or financial outlooks within the meaning of applicable Canadian securities laws. Such forward-looking statements relate to future events or Charlotte’s Web’s future performance. Readers are cautioned that actual results may vary. See “General Matters - Caution Regarding Forward-Looking Statements” in the Information Circular. Readers should also carefully consider the matters and cautionary statements discussed under the heading “Risk Factors” in the Circular, and under the heading “Risk Factors” in this Appendix I and the Charlotte’s Web AIF.

OVERVIEW

On completion of the Arrangement, Charlotte’s Web will own all of the outstanding Abacus Shares. After completion of the Arrangement, the business and operations of Abacus will be managed and operated as a subsidiary of Charlotte’s Web. Charlotte’s Web expects that the business and operations of Charlotte’s Web and Abacus will be consolidated and head office of Abacus will be located at Charlotte’s Web’s head office, at 1600 Pearl Street, Suite 300, Boulder, Colorado, United States 80302, and its registered and records office will be located at 100 King Street West, Suite 6000, Toronto, ON M5X 1E2.

DIRECTORS AND EXECUTIVE OFFICERS OF CHARLOTTE’S WEB FOLLOWING COMPLETION OF THE ARRANGEMENT

The directors and officers of Charlotte’s Web at the time of completion of the Arrangement are expected to remain the directors and officers of Charlotte’s Web following completion of the Arrangement. All of the directors and officers of Abacus and its subsidiaries will tender their resignation on the Effective Date; however, certain members of Abacus’ management may be retained by Charlotte’s Web following the Effective Date pursuant to their existing employment agreements or new employment agreements to be entered into at or prior to the Effective Date. Commencing on the Effective Date, it is anticipated that Perry Antelman will be employed by Charlotte’s Web in the role of Executive Vice President, Web and President, Topicals.

DESCRIPTION OF SHARE CAPITAL

The authorized share capital of Charlotte’s Web following completion of the Arrangement will continue to be as described in “Appendix H – Information Concerning Charlotte’s Web” and the rights and restrictions of the Charlotte’s Web Common Shares will remain unchanged. The issued share capital of Charlotte’s Web will change as a result of the consummation of the Arrangement, to reflect the issuance of the Charlotte’s Web Common Shares contemplated in connection with the Arrangement.

Assuming conversion of all outstanding securities of Abacus, on the Effective Date, existing Abacus Securityholders would own approximately 14.7% of the outstanding Charlotte’s Web Common Shares (assuming conversion of all outstanding Charlotte’s Web Proportionate Voting Shares) and existing Charlotte’s Web shareholders would own

I-2

approximately 85.3% of the outstanding Charlotte’s Web Common Shares (assuming conversion of all outstanding Charlotte’s Web Proportionate Voting Shares), based on the number of securities of Charlotte’s Web and Abacus issued and outstanding as of March 20, 2020.

On completion of the Arrangement, based on the number of Charlotte’s Web Common Shares issued outstanding on the date of this Information Circular (and assuming conversion of all outstanding Charlotte’s Web Proportionate Voting Shares), it is expected that on the Effective Date, the total number of Charlotte’s Web Common Shares issued and outstanding will be 127,240,187 on a non-diluted basis.

SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following selected unaudited pro forma condensed consolidated financial information of Charlotte’s Web following completion of the Arrangement has been derived from the unaudited pro forma condensed consolidated financial statements of Charlotte’s Web after giving effect to the Arrangement, included as Schedule A to Appendix I attached to this Information Circular. The unaudited pro forma condensed consolidated statement of financial position as of December 31, 2019 gives pro forma effect to completion of the Arrangement as if it were completed as of December 31, 2019. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2019 gives pro forma effect to completion of the Arrangement as if it were completed on January 1, 2019.

The unaudited pro forma condensed consolidated financial statements of Charlotte’s Web following completion of the Arrangement have been compiled from underlying financial statements of Charlotte’s Web and Abacus prepared in accordance with IFRS to illustrate the effect of the Arrangement. Adjustments have been made to prepare the unaudited pro forma condensed consolidated financial statements of Charlotte’s Web, which adjustments are based on certain assumptions. Both the adjustments and the assumptions made in respect thereof are described in the notes to the unaudited pro forma condensed consolidated financial statements.

The following selected unaudited pro forma financial information and the unaudited pro forma condensed consolidated financial statements (included in Schedule A to Appendix I attached to this Information Circular) are presented for illustrative purposes only and are not necessarily indicative of: (i) the operating or financial results that would have occurred had the Arrangement actually occurred at the dates contemplated by the notes to the unaudited pro forma condensed consolidated financial statements; or (ii) the results expected in future periods. Readers should review the unaudited pro forma condensed consolidated financial information together with the (i) audited consolidated financial statements of Charlotte’s Web as at and for the year ended December 31, 2019; and (ii) the audited consolidated financial statements of Abacus as at and for the year ended December 31, 2019. See the unaudited pro forma condensed consolidated financial statements of Charlotte’s Web following completion of the Arrangement which gives effect to the Arrangement included as Schedule A to Appendix I attached to this Circular.

Statement of financial position:

Unaudited Pro Forma Financial Information As at December 31, 2019

(US$000’s) Current assets 169,122 Total assets 304,339 Current liabilities 33,799 Total liabilities 73,861 Shareholders’ equity 230,478

Income statement:

Unaudited Pro Forma Financial Information For the year ended December 31, 2019 (US$000’s, except per share amounts)

Revenue 110,117 Net loss (32,334) Loss per share - basic (0.28) Loss per share - diluted (0.28)

I-3

AUDITORS, TRANSFER AGENT AND REGISTRAR

The auditors of Charlotte’s Web following completion of the Arrangement will continue to be Ernst & Young LLP and the transfer agent and registrar for the Charlotte’s Web Shares will continue to be Odyssey Trust Company at its principal office in Calgary, Alberta.

RISK FACTORS

Risks currently affecting the businesses of Charlotte’s Web and Abacus

Upon completion of the Arrangement, Charlotte’s Web will continue to face many risks that Charlotte’s Web currently faces with respect to its business and affairs as set out in “Appendix H – Information Concerning Charlotte’s Web” and in other documents incorporated by reference herein.

Upon completion of the Arrangement, Abacus will be a wholly-owned subsidiary of Charlotte’s Web and will continue to face the same risks that Abacus currently faces with respect to its business and affairs as described in “Appendix G – Information Concerning the Corporation”.

Integration of Abacus

The value of the Arrangement will depend, in part, on Charlotte’s Web’s ability to realize the anticipated benefits and synergies from the potential completion of the Arrangement and integration of Abacus into the businesses of Charlotte’s Web. Upon completion of the Arrangement, Charlotte’s Web may not be able to successfully integrate and combine the operations, personnel and technology infrastructure of Abacus with its operations. If integration is not managed successfully, Charlotte’s Web may experience interruptions in its business activities, deterioration in its employee and customer relationships, increased costs of integration and harm to its reputation, all of which could have a material adverse effect on the business, financial condition and results of operations of Charlotte’s Web. Charlotte’s Web may experience difficulties in combining corporate cultures, maintaining employee morale and retaining key employees. The integration of Abacus may also impose substantial demands on management. There is no assurance that Abacus will be successfully integrated in a timely manner.

The challenges involved in the integration of Abacus may include, among other things, the following:

the necessity of coordinating both geographically disparate and geographically overlapping organizations;

retaining key personnel, including addressing the uncertainties of key employees regarding their future;

integrating Abacus into Charlotte’s Web’s accounting system and adjusting Charlotte’s Web’s internal control environment to cover the operations of Abacus;

integration of information technology systems and resources;

performance shortfalls relative to expectations at one or both of the businesses as a result of the diversion of management’s attention to the integration of Abacus; and

unplanned costs required to integrate Abacus with Charlotte’s Web’s existing business.

The consummation of the Arrangement may pose special risks, including one-time write-offs, restructuring charges and unanticipated costs. Although Charlotte’s Web, Abacus and their respective advisors have conducted due diligence on the various operations, there can be no guarantee that Charlotte’s Web will be aware of any and all liabilities of Abacus. As a result of these factors, it is possible that certain benefits expected from the consummation of the Arrangement may not be realized. Any inability of management to successfully integrate the operations could have a material adverse effect on the business, financial condition and results of operations of Charlotte’s Web.

I-4

Failure to Execute the Business Strategy

Following completion of the Arrangement, the management team of Charlotte’s Web will be tasked with implementing a business plan that would focus on capturing additional market share in the CBD market. There can be no assurance that the Charlotte’s Web management team will be successful in implementing the business strategy. The Charlotte’s Web management team may experience difficulties in effecting key strategic goals. The performance of Charlotte’s Web’s operations after completion of the Arrangement could be adversely affected if the management team cannot implement the stated business strategy effectively and certain benefits expected from the Arrangement may not be realized.

Unaudited Pro Forma Consolidated Financial Information

The unaudited pro forma condensed consolidated financial information included in this Information Circular is presented for illustrative purposes only to show the effect of the Arrangement, and should not be considered to be an indication of the financial condition or results of operations of Charlotte’s Web’s financial condition or results of operations following completion of the Arrangement. For example, the pro forma condensed consolidated financial information has been prepared using the consolidated historical financial statements of Charlotte’s Web and Abacus and does not represent a financial forecast or projection.

In addition, certain adjustments and assumptions have been made regarding Charlotte’s Web after giving effect to the Arrangement. The information upon which these adjustments and assumptions have been made is preliminary, and these types of adjustments and assumptions are difficult to make with complete accuracy and other factors may affect Charlotte’s Web’s results of operations or financial condition following completion of the Arrangement.

In preparing the pro forma condensed consolidated financial information contained in this Information Circular, Charlotte’s Web and Abacus have given effect to, among other items, completion of the Arrangement and the issuance of Charlotte’s Web Common Shares. However, the pro forma financial information does not reflect all costs that are expected to be incurred by Charlotte’s Web in connection with the Arrangement. For example, the impact of any incremental costs incurred in integrating Charlotte’s Web and Abacus is not reflected in the pro forma condensed consolidated financial information. See also the notes to the unaudited pro forma condensed consolidated financial information of Charlotte’s Web and Abacus included as Schedule A to Appendix I attached to this Information Circular.

Accordingly, the historical and pro forma condensed consolidated financial information included in this Information Circular does not necessarily represent Charlotte’s Web’s results of operations and financial condition had Charlotte’s Web and Abacus operated as a combined entity during the periods presented, or of Charlotte’s Web’s results of operations and financial condition following completion of the Arrangement. The actual financial condition and results of operations of Charlotte’s Web following completion of the Arrangement may not be consistent with, or evident from, the pro forma financial information. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect Charlotte’s Web’s financial condition or results of operations following completion of the Arrangement. Any potential decline in Charlotte’s Web’s financial condition or results of operations may cause a significant decrease in the price of Charlotte’s Web Common Shares.

Issuance and future sale of Charlotte’s Web Common Shares

Following completion of the Arrangement, Charlotte’s Web may issue equity securities to finance its activities, including in order to finance acquisitions. If Charlotte’s Web were to issue additional equity securities, the ownership interest of Charlotte’s Web shareholders may be diluted and some or all of Charlotte’s Web’s financial measures on a per share basis could be reduced. Moreover, as Charlotte’s Web’s intention to issue additional equity securities becomes publicly known, Charlotte’s Web’s share price may be materially adversely affected.

Failure to Comply with Applicable Laws

Charlotte’s Web and Abacus are each subject to the provisions of the US Foreign Corrupt Practices Act and the Corruption of Foreign Public Officials Act (Canada). The foregoing Laws prohibit companies and their intermediaries

I-5

from making improper payments to officials for the purpose of obtaining or retaining business. In addition, such Laws require the maintenance of records relating to transactions and an adequate system of internal controls over accounting. There can be no assurance that either Party’s internal control policies and procedures, compliance mechanisms or monitoring programs will protect it from recklessness, fraudulent behavior, dishonesty or other inappropriate acts or adequately prevent or detect possible violations under applicable anti-bribery and anti-corruption legislation. A failure by Charlotte’s Web or Abacus to comply with anti-bribery and anti-corruption legislation could result in severe criminal or civil sanctions, and may subject Charlotte’s Web or Abacus to other liabilities, including fines, prosecution, potential debarment from public procurement and reputational damage, all of which could have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of Charlotte’s Web following completion of the Arrangement. Investigations by Governmental Entities could have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of Charlotte’s Web following completion of the Arrangement.

Charlotte’s Web or Abacus are also subject to a wide variety of Laws relating to hemp, environment, health and safety, taxes, employment, labor standards, money laundering, terrorist financing and other matters in the jurisdictions in which each operates. A failure by either of Charlotte’s Web or Abacus to comply with any such legislation prior to completion of the Arrangement could result in severe criminal or civil sanctions, and may subject Charlotte’s Web or Abacus to other liabilities, including fines, prosecution and reputational damage, all of which could have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of Charlotte’s Web following completion of the Arrangement. The compliance mechanisms and monitoring programs adopted and implemented by either of Charlotte’s Web or Abacus prior to completion of the Arrangement may not adequately prevent or detect possible violations of such applicable Laws. Investigations by Governmental Entities could also have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of Charlotte’s Web following completion of the Arrangement.

I-A-1

SCHEDULE A TO APPENDIX I

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

All currency amounts, except for per share information, or unless otherwise specified, are expressed in United States dollars (“USD” or “$”) which is the presentation currency of Charlotte’s Web.

The following unaudited pro forma condensed consolidated financial information of Charlotte’s Web (“Pro Forma Information”) is based on the separate historical financial statements of Charlotte’s Web and Abacus after giving effect to the acquisition of Abacus by Charlotte’s Web pursuant to the Arrangement, and based upon the assumptions and adjustments described in the accompanying notes to the Pro Forma Information. The unaudited pro forma condensed consolidated statement of financial position of Charlotte’s Web as of December 31, 2019 is presented as if the Arrangement had occurred on December 31, 2019. The unaudited pro forma condensed consolidated income statement of Charlotte’s Web for the year ended December 31, 2019 is presented as if the Arrangement had occurred on January 1, 2019. The historical consolidated financial statements have been adjusted to reflect factually supportable items that are directly attributable to the Arrangement.

The preparation of the Pro Forma Information and related adjustments required management to make certain assumptions and estimates. The Pro Forma Information should be read together with:

the accompanying notes to the Pro Forma Information;Charlotte’s Web’s audited consolidated financial statements and accompanying notes as of and forthe year ended December 31, 2019, found on SEDAR at sedar.com; andAbacus’ audited historical consolidated financial statements and accompanying notes as of and forthe year ended December 31, 2019, found on SEDAR at sedar.com.

The Pro Forma Information has been prepared for illustrative purposes only and are based on estimates using information available at this time. The Pro Forma Information shown therein is not necessarily indicative of what the past financial position and results of operations of the combined company would have been nor indicative of the financial position and results of operations of the post-Arrangement periods. The Pro Forma Information does not give consideration to the impact of possible revenue enhancements, expense efficiencies, strategy modifications, asset dispositions or other actions that may result from the Arrangement.

To produce the Pro Forma Information, a preliminary purchase price allocation for the Arrangement was made using Charlotte’s Web’s best estimates of fair value, which are dependent upon certain valuation and other analyses that have not yet been performed. As a result, the unaudited pro forma purchase price adjustments related to the Arrangement are preliminary and subject to further adjustments as additional information becomes available and as additional analyses are performed during the applicable measurement period. The results of the valuations may result in material adjustments to the preliminary estimated purchase price allocation. The unaudited pro forma accounting for the business combination has been made solely for the purpose of preparing the accompanying unaudited pro forma condensed combined financial statements.

In connection with the plan to integrate the operations of Charlotte’s Web and Abacus following the completion of the Arrangement, Charlotte’s Web anticipates that nonrecurring charges will be incurred. Charlotte’s Web is not able to determine the timing, nature, and amount of these charges prior to the Arrangement. However, these charges will affect the results of operations of the combined company following the completion of the Arrangement, in the period in which they are incurred.

I-A-2

UNAUDITED PRO FORMA CONDENSED STATEMENT OF FINANCIAL POSITION OF CHARLOTTE'S WEBAs of December 31, 2019

(In thousands of United States dollars)

Charlotte's Web AbacusPro Forma

Adjustments NotesPro FormaCombined

ASSETSCurrent assets:

Cash 68,553$ 22,192$ (6,677)$ 4(a) 84,068$Trade and other receivables, net 5,462 3,693 4(b) 9,155Inventories 64,054 1,498 4(b) 65,552Other current assets 8,286 2,061 4(b) 10,347

146,355 29,444 (6,677) 169,122Non current assets:

Property and equipment, net 42,949 843 4(b) 43,792Deferred tax assets 30,417 4,548 4(b) 34,965Other long term assets 3,221 2,328 4(b) 5,549Goodwill and intangible assets 50,911 4(c) 50,911

222,942$ 37,163$ 44,234$ 304,339$

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:

Accounts payable 8,798$ 2,844$ $ 4(b) 11,642$Accrued liabilities and other current liabilities 7,882 1 7,883Derivative financial liability 1,338 4(b) 1,338Current cultivation liabilities 10,803 10,803Current lease obligations 1,945 188 4(b) 2,133

29,428 4,371 33,799Non current liabilities:

Long term cultivation liabilities 14,289 14,289Long term note payable 3 3Long term lease obligations 22,116 246 4(b) 22,362Warrant liability 3,408 3,408

69,244 4,617 73,861

Shareholders' equity 153,698 32,546 (6,677) 4(a)50,911 4(c) 230,478

222,942$ 37,163$ 44,234$ 304,339$

I-A-3

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

1. Basis of Pro Forma Presentation

The unaudited pro forma condensed consolidated statement of financial position of Charlotte’s Web as of December 31, 2019 and the unaudited pro forma consolidated income statement of Charlotte’s Web for the year ended December 31, 2019 are based on the historical financial statements of Charlotte’s Web and Abacus after giving effect to the Arrangement and the assumptions and adjustments described in the accompanying notes. It does not reflect cost savings or operating synergies expected to result from the Arrangement, the costs to achieve these cost savings or operating synergies, or any disposition of assets that may result from the integration of the operations of the two companies.

The Arrangement will be accounted for under the Arrangement method of accounting in accordance with IFRS 3 Business Combinations (“IFRS 3”). In accordance with IFRS 3, the acquirer classifies and designates assets acquired and liabilities assumed based on the contractual terms, economic conditions, operating and accounting policies and other pertinent conditions existing at the Arrangement date. Acquired intangible assets must be recognized and measured at fair value in accordance with the principles if it is separable or arises from other contractual rights, irrespective of whether the acquiree had recognized the asset prior to the business combination occurring. The excess of the Arrangement consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Changes in deferred tax asset valuation allowances and income tax uncertainties, if any, after the Arrangement date will generally affect income tax expense. Subsequent to the completion of the Arrangement, Charlotte’s Web and Abacus will finalize an integration plan, which may affect how the assets acquired, including intangible assets, will be utilized by the combined company.

The unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the consolidated results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

UNAUDITED PRO FORMA INCOME STATEMENT(In thousands of United States dollars, except per share amounts)

Charlotte'sWeb Abacus

Pro FormaAdjustment

s NotesPro FormaCombined

Revenue 94,594$ 15,523$ $ 110,117$

Cost of sales, exclusive of depreciation and amortization 43,992 7,735 51,727 ####

Depreciation and amortization 3,967 231 4,198

Selling, general and administrative expense 71,440 24,975 145 4(d) 96,560

Operating loss (24,805) (17,418) (145) (42,368) ####

Financing costs 326 605 931 ####

Interest income (994) (316) (1,310) ####

Other income (loss), net (2,928) 3,271 343 ####

Loss before taxes (21,209) (20,978) (145) (42,332) ####

Income tax benefit (5,642) (4,356) (9,998) ####

Net loss (15,567)$ (16,622)$ (145)$ (32,334)$ ####

Loss per share basic (0.16)$ (0.85)$ 4(e) (0.28)$Loss per share diluted (0.16)$ (0.75)$ 4(e) (0.28)$

I-A-4

2. Accounting Policies

Following the Arrangement, Charlotte’s Web will perform a more comprehensive review of accounting policies of Abacus, to determine if differences exist between Charlotte’s Web’s and Abacus’s accounting policies and the related financial statement presentation. As a result of that review, Charlotte’s Web may identify additional differences that, when confirmed, could have a material impact on this unaudited pro forma consolidated financial information.

3. Arrangement Consideration

Under the Arrangement Agreement, Charlotte’s Web proposes to acquire all of the issued and outstanding Subordinate Voting Shares of Abacus, after conversion of all outstanding Proportionate Voting Shares of Abacus into Subordinate Voting Shares. Under the terms of the Arrangement Agreement, Abacus Shareholders will receive 0.85 of a Charlotte’s Web Common Share for each Abacus Share held. The estimated total equity consideration, based upon the Abacus Shares outstanding at December 31, 2019 and Charlotte’s Web’s Common Share price as of April 30, 2020, was calculated to be approximately $83.5 million.

4. Unaudited Pro Forma and Arrangement Accounting Adjustments

The unaudited pro forma financial information is not necessarily indicative of what the financial position and results from operations actually would have been had the Arrangement been completed at the date indicated and includes adjustments which are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post- Arrangement periods. The unaudited pro forma financial information does not give consideration to the impact of expense efficiencies, synergies, integration costs, asset dispositions, transaction costs or other actions that may result from the Arrangement.

The descriptions related to these preliminary adjustments are as follows:

(a) Represent estimated nonrecurring expenses that result directly from the transaction and that will be includedin the income of Charlotte’s Web within the next 12 months after the transaction.

(b) The assets acquired and liabilities assumed in a business combination are measured at their acquisition datefair values (IFRS 3.18). If an asset or liability has a quoted price in an active market (for example, listedshares), this price is used as fair value. However, few assets and even fewer liabilities have such quotedprices. Fair value then needs to be estimated using a valuation technique. However, estimating fair valuescan be a complex exercise requiring considerable management judgement and use of valuation specialists.Management has not had sufficient access to the Abacus books and record to perform an estimate of suchfair values. Adjustments to record the fair value of the assets to be acquired is subject to Charlotte’s Web’spost-closing review of the Arrangement. Final amounts could have a material impact on this Pro FormaInformation.

(c) Adjustment reflects the preliminary estimated adjustment as a result of the Arrangement related to goodwilland intangible assets. Goodwill represents the excess of the consideration transferred over the preliminaryfair value of the asset acquired and liabilities assumed. Acquired intangible assets must be recognized andmeasured at fair value if they are separable or arises from other contractual rights, irrespective of whether theacquiree had recognized the asset prior to the business combination occurring. Management has not hadsufficient access to the Abacus books and record to perform an estimate of intangible asset fair values.Adjustments to record the fair value of intangible assets are subject to Charlotte’s Web’s post-closing reviewof the Arrangement and accordingly, no proforma adjustment for amortization expense related to acquireddefinite -lived intangibles has been made. Final amounts could have a material impact on this Pro FormaInformation. The preliminary pro forma adjustment to goodwill and intangibles is calculated as follows:

I-A-5

(d) Adjustment reflects new compensation arrangements executed with one key executive in connection with thebusiness combination, resulting in a $145,000 increase in the annual compensation for this executive fromtheir previous compensation, which is reflected in the pro forma statement of operations.

(e) Weighted average shares of 114,830,981 were used for the pro forma combined earnings per sharecalculation. This calculation was based on the sum of the Charlotte’s Web historical weighted average sharesoutstanding at December 31, 2019 of 96,539,194 and the Charlotte’s Web Common Shares assumed to havebeen issued at January 1, 2019 of 18,342,042 in connection with the Arrangement.

(In thousands of United States dollars, except share and per share amounts)

12/31/2019Abacus Shares 21,578,873Exchange Ratio 85%Converted Charlotte's Web Shares 18,342,042

Charlotte's Web Closing PriceApril 30, 2020 (usd) 4.55$

Total estimated consideration(in thousands) 83,457$

Fair value of pro form net assets acquiredAssets acquired 37,163Liabilities assumed (4,617)

32,546$

Pro forma adjustment goodwill andintagible assets 50,911$

I-A-6

5. Consolidated Capitalization

The following table sets forth (i) Charlotte’s Web’s capitalization at December 31, 2019, and (ii) Charlotte’s Web’s pro forma consolidated capitalization after giving effect to the Arrangement (as if it had closed on December 31, 2019) and certain related adjustments.

Description Authorized Outstanding as at

December 31, 2019

Outstanding as at December 31, 2019 (after giving

effect to the Arrangement, as if it had closed on December 31,

2019) Charlotte’s Web Common Shares

Unlimited 69,253,544 87,595,586

Charlotte’s Web Proportionate Voting Shares

Unlimited 95,342 95,342

Share Capital - US$123,927,00 US$174,838,000

Options(1) - 4,251,343 5,708,915

Founders Options - 799,948 799,948

Restricted Stock Awards - 114,266 114,266

Charlotte’s Web Warrants - 2,500,000 4,392,879

Broker Warrants(2) - 1,110 1,110

Stock Appreciation Rights - - 126,540 Line of Credit US$10,000,000 Nil Nil

Notes: (1) Reflects the Charlotte’s Web Common Share equivalent into which options are exercisable.(2) Broker warrants to purchase Charlotte’s Web Common Shares issued under Charlotte’s Web’s final long form

prospectus dated August 23, 2018

J-1

SUMMARY COMPARISON OF RIGHTS OF HOLDERS OF CHARLOTTE’S WEB COMMON SHARES

AND ABACUS SHARES

Following is a summary of certain differences between the BCBCA and the OBCA, but it is not intended to be a comprehensive review of the two statutes. Reference should be made to the full text of both statutes and the regulations thereunder for particulars of any differences between them, and Shareholders should consult their own legal or other professional advisors with regard to all of the implications of the Arrangement which may be of importance to them.

Charter Documents

Under the BCBCA, the charter documents consist of a “notice of articles,” which sets forth, among other things, the name of the corporation and the amount and type of authorized capital, and “articles” which govern the management of the corporation. The notice of articles is filed with the Registrar of Companies under the BCBCA, while articles are filed only with the corporation’s registered and records office. A public company is required to file the “notice of articles” and “articles” on its SEDAR profile at www.sedar.com.

Under the OBCA, a corporation’s charter documents consist of “articles of incorporation,” which set forth the name of the corporation and the amount and type of authorized capital, and the “by-laws,” which govern the management of the corporation. The articles are filed with the Director under the OBCA and the by-laws are filed with the corporation’s registered office, or at another location designated by the corporation’s directors. A public company is required to file its “articles of incorporation” and its “by-laws” on its SEDAR profile at www.sedar.com.

Ability to Set Necessary Levels of Shareholder Consent

Under the BCBCA, a company, in its articles, can establish levels for various shareholder approvals (other than those prescribed by the BCBCA). The percentage of votes required for a “special resolution” can be specified in the articles and may be no less than two-thirds and no more than three-quarters of the votes cast. The OBCA does not provide for flexibility on shareholder approvals, which are either ordinary resolutions passed by a majority of the votes cast or, where specified in the OBCA, special resolutions which must be passed by two-thirds of the votes cast.

Amendments to the Charter Documents of a Corporation

Changes to the articles of a corporation under the BCBCA will be effected by the type of resolution specified in the articles of a corporation, which, for many alterations, including change of name, consolidation, creation of new classes or series of shares or alterations to the articles, could provide for approval solely by a resolution of the directors. In the absence of anything in the articles, most corporate alterations will require a special resolution of the shareholders to be approved by not less than two-thirds of the votes cast by the shareholders voting on the resolution. Alteration of the special rights and restrictions attached to issued shares requires, subject to the requirements set forth in the corporation’s articles, approval by a special resolution of the holders of the class or series of shares affected. A proposed amalgamation or continuation of a corporation out of the jurisdiction generally requires that shareholders approve the adoption of the amalgamation agreement or the continuance by way of a special resolution.

Under the OBCA, certain amendments to the charter documents of a corporation require a resolution passed by not less than two-thirds of the votes cast by the shareholders voting on the resolution authorizing the amendments and, where certain specified rights of the holders of a class or series of shares are affected by the amendments differently than the rights of the holders of other classes or series of shares, such holders are entitled to vote separately as a class or series, whether or not such class or series of shares otherwise carry the right to vote. A resolution to amalgamate an OBCA corporation requires a special resolution passed by the holders of each class or series of shares, whether or not such shares otherwise carry the right to vote, if such class or series of shares are affected differently.

J-2

Change of Name and Consolidation

Under the BCBCA, if specified in a company’s articles, may be approved by a directors’ resolution. The OBCA provides that a special resolution is required in order to change a company’s name or to consolidate or split its issued and outstanding capital.

Sale of Business or Assets

Under the BCBCA, the directors of a corporation may sell, lease or otherwise dispose of all or substantially all of the undertaking of the corporation only if it is in the ordinary course of the corporation’s business or with shareholder approval authorized by special resolution. Under the BCBCA, a special resolution requires the approval of a “special majority”, which means the majority specified in a corporation’s articles, if such specified majority is at least two-thirds and not more than by three-quarters of the votes cast by those shareholders voting in person or by proxy at a general meeting of the corporation. If the articles do not contain a provision stipulating the special majority, then a special resolution is passed by at least two-thirds of the votes cast on the resolution.

The OBCA requires approval of the holders of two-thirds of the shares of a corporation represented at a duly called meeting to approve a sale, lease or exchange of all or substantially all of the property of the corporation that is other than in the ordinary course of business of the corporation. Holders of shares of a class or series, whether or not they are otherwise entitled to vote, can vote separately only if that class or series is affected by the sale, lease or exchange in a manner different from the shares of another class or series.

Rights of Dissent and Appraisal

The BCBCA provides that shareholders, including beneficial holders, who dissent from certain actions being taken by a corporation, may exercise a right of dissent and require the corporation to purchase the shares held by such shareholder at the fair value of such shares. The dissent right is applicable where the corporation proposes to:

(a) alter the articles to alter restrictions on the powers of the corporation or on the business it is permitted to carry on;

(b) adopt an amalgamation agreement;

(c) approve an amalgamation under Division 4 of Part 9 of the BCBCA;

(d) approve an arrangement, the terms of which arrangement permit dissent;

(e) authorize or ratify the sale, lease or other disposition of all or substantially all of the corporation’s undertaking; or

(f) authorize the continuation of the corporation into a jurisdiction other than British Columbia.

In certain circumstances, shareholders may also be entitled to dissent in respect of a resolution if dissent is authorized by such resolution, or if permitted by court order.

The OBCA contains a similar dissent remedy to that contained in the BCBCA, although the procedure for exercising this remedy is different. Subject to specified exceptions, dissent rights are available where the corporation resolves to:

(a) amend its articles to add, remove or change restrictions on the issue, transfer or ownership of shares of a class or series of the shares of the corporation;

(b) amend its articles to add, remove or change any restriction upon the business or businesses that the corporation may carry on or upon the powers that the corporation may exercise;

(c) amalgamate with another corporation;

J-3

(d) be continued under the laws of another jurisdiction; or

(e) sell, lease or exchange all or substantially all its property.

Oppression Remedies

Under the OBCA a registered shareholder, beneficial shareholder, former registered shareholder or beneficial shareholder, director, former director, officer or former officer of a corporation or any of its affiliates, or any other person who, in the discretion of a court, is a proper person to seek an oppression remedy, and in the case of an offering corporation, the Ontario Securities Commission, may apply to a court for an order to rectify the matters complained of where in respect of a corporation or any of its affiliates:

(a) any act or omission of a corporation or its affiliates effects or threatens to effect a result;

(b) the business or affairs of a corporation or its affiliates are or have been or are threatened to be carried on or conducted in a manner; or

(c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner,

that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation. On such an application, the court may make such order as it sees fit, including but not limited to, an order restraining the conduct complained of.

The oppression remedy under the BCBCA is similar to the remedy found in the OBCA, with a few differences. Under the OBCA, the applicant can complain not only about acts of the corporation and its directors but also acts of an affiliate of the corporation and the affiliate’s directors, whereas under the BCBCA, the shareholder can only complain of oppressive conduct of the corporation. Under the BCBCA the applicant must bring the application in a timely manner, which is not required under the OBCA, and the court may make an order in respect of the complaint if it is satisfied that the application was brought by the shareholder in a timely manner. As with the OBCA, the court may make such order as it sees fit, including an order to prohibit any act proposed by the corporation. Under the OBCA a corporation is prohibited from making a payment to a successful applicant in an oppression claim if there are reasonable grounds for believing that (a) the corporation is, or after the payment, would be unable to pay its liabilities as they become due, or (b) the realization value of the corporation’s assets would thereby be less than the aggregate of its liabilities; under the BCBCA, if there are reasonable grounds for believing that the corporation is, or after a payment to a successful applicant in an oppression claim would be, unable to pay its debts as they become due in the ordinary course of business, the corporation must make as much of the payment as possible and pay the balance when the corporation is able to do so.

Shareholder Derivative Actions

Under the BCBCA, a shareholder, defined as including a beneficial shareholder and any other person whom the court considers to be an appropriate person to make an application under the BCBCA, or a director of a corporation may, with leave of the court, bring a legal proceeding in the name and on behalf of the corporation to enforce an obligation owed to the corporation that could be enforced by the corporation itself, or to obtain damages for any breach of such an obligation. An applicant may also, with leave of the court, defend a legal proceeding brought against a corporation.

A broader right to bring a derivative action is contained in the OBCA than is found in the BCBCA, and this right extends to former shareholders, directors or officers of a corporation or its affiliates, and any person who, in the discretion of the court, is a proper person to make an application to court to bring a derivative action. In addition, the OBCA permits derivative actions to be commenced in the name and on behalf of a corporation or any of its subsidiaries. The complainant must provide the directors of the corporation or its subsidiary with 14 days’ notice of the complainant’s intention to apply to the court to bring a derivative action, unless all of the directors of the corporation or its subsidiary are defendants in the action.

J-4

Requisition of Meetings

The BCBCA provides that one or more shareholders of a corporation holding not less than 5% of the issued voting shares of the corporation may give notice to the directors requiring them to call and hold a general meeting which meeting must be held within 4 months. Subject to certain exceptions, if the directors fail to provide notice of a meeting within 21 days of receiving the requisition, the requisitioning shareholders, or any one or more of them holding more than 2.5% of the issued shares of the corporation that carry the right to vote at general meetings may send notice of a general meeting to be held to transact the business stated in the requisition.

The OBCA permits the holders of not less than 5% of the issued shares of a corporation that carry the right to vote to require the directors to call and hold a meeting of the shareholders of the corporation for the purposes stated in the requisition. Subject to certain exceptions, if the directors fail to provide notice of a meeting within 21 days of receiving the requisition, any shareholder who signed the requisition may call the meeting.

Form and Solicitation of Proxies, Information Circular

Under the BCBCA, the management of a public corporation, concurrently with sending a notice of meeting of shareholders, must send a form of proxy to each shareholder who is entitled to vote at the meeting as well as an information circular containing prescribed information regarding the matters to be dealt with at the meeting. The required information is substantially the same as the requirements that apply to the corporation under applicable securities laws. The BCBCA does not place any restriction on the method of soliciting proxies.

The OBCA also contains provisions prescribing the form and content of notices of meeting and information circulars. Under the OBCA, a person who solicits proxies, other than by or on behalf of management of the corporation, must send a dissident’s proxy circular in prescribed form to each shareholder whose proxy is solicited and certain other recipients. Pursuant to the OBCA a person may solicit proxies without sending a dissident’s proxy circular if either (i) the total number of shareholders whose proxies solicited is 15 or fewer (with two or more joint holders being counted as one shareholder), or (ii) the solicitation is, in certain prescribed circumstances, conveyed by public broadcast, speech or publication.

Place of Shareholders’ Meetings

The BCBCA requires all meetings of shareholders to be held in British Columbia unless: (i) a location outside the province of British Columbia is provided for in the articles; (ii) the articles do not restrict the corporation from approving a location outside of the province of British Columbia for holding of the general meeting and the location of the meeting is approved by the resolution required by the articles for that purpose or by ordinary resolution if no resolution is required for that purpose by the articles; or (iii) if the location for the meeting is approved in writing by the registrar before the meeting is held.

The OBCA provides that, subject to the articles and any unanimous shareholder agreement, meetings of shareholders may be held either inside or outside Ontario as the directors may determine, or in the absence of such a determination, at the place where the registered office of the corporation is located.

Directors’ Residency Requirements

The BCBCA provides that a public corporation must have at least three directors but does not have any residency requirements for directors.

The OBCA requires that at least 25% of directors be resident Canadians, unless the corporation has less than four directors, in which case at least one director must be a resident Canadian.

Removal of Directors

The BCBCA provides that the shareholders of a corporation may remove one or more directors by a special resolution or by any other method specified in the articles. If holders of a class or series of shares have the exclusive right to

J-5

elect or appoint one or more directors, a director so elected or appointed may only be removed by a separate special resolution of the shareholders of that class or series or by any other method specified in the articles.

The OBCA provides that the shareholders of a corporation may by ordinary resolution at an annual or special meeting remove any director or directors from office. An ordinary resolution under the OBCA requires the resolution to be passed, with or without amendment, at the meeting by at least a majority of the votes cast. The OBCA further provides that where the holders of any class or series of shares of a corporation have an exclusive right to elect one or more directors, a director so elected may only be removed by an ordinary resolution at a meeting of the shareholders of that class or series.

Meaning of “Insolvent”

Under the BCBCA, for purposes of the insolvency test that must be passed for the payment of dividends and purchases and redemptions of shares, “insolvent” is defined to mean when a corporation is unable to pay its debts as they become due in the ordinary course of its business. Unlike the OBCA, the BCBCA does not impose a net asset solvency test for these purposes. For purposes of proceedings to dissolve or liquidate, the definition of “insolvent” from federal bankruptcy legislation applies.

Under the OBCA, a corporation may not pay dividends or purchase or redeem its shares if there are reasonable grounds for believing (i) it is or would be unable to pay its liabilities as they become due; or (ii) it would not meet a net asset solvency test. The net asset solvency tests for different purposes vary somewhat.

Reduction of Capital

Under the BCBCA, capital may be reduced by special resolution or court order. A court order is required if the realizable value of the corporation’s assets would, after the reduction of capital, be less than the aggregate of its liabilities.

Under the OBCA, capital may be reduced by special resolution but not if there are reasonable grounds for believing that, after the reduction, (i) the corporation would be unable to pay its liabilities as they become due; or (ii) the realizable value of the corporation’s assets would be less than its liabilities.

Shareholder Proposals

The BCBCA includes a more detailed regime for shareholders’ proposals than the OBCA. For example, a person submitting a proposal must have been the registered or beneficial owner of one or more voting shares for at least two years before signing the proposal. In addition, the proposal must be signed by shareholders who, together with the submitter, are registered or beneficial owners of (i) at least 1% of the corporation’s voting shares, or (ii) shares with a fair market value exceeding an amount prescribed by regulation (at present, C$2,000).

The OBCA allows shareholders entitled to vote or a beneficial owner of shares that are entitled to be voted to submit a notice of a proposal.

Compulsory Acquisition

The OBCA provides a right of compulsory acquisition for an offeror that acquires 90% of the target securities pursuant to a take-over bid or issuer bid, other than securities held at the date of the bid by or on behalf of the offeror.

The BCBCA provides a substantively similar right although there are differences in the procedures and process. Unlike the OBCA, the BCBCA provides that where an offeror does not use the compulsory acquisition right when entitled to do so, a securityholder who did not accept the original offer may require the offeror to acquire the securityholder’s securities on the same terms contained in the original offer.

J-6

Investigation/Appointment of Inspectors

Under the BCBCA, a corporation may appoint an inspector by special resolution. Shareholders holding at least 20% of the issued shares of a corporation may apply to the court for the appointment of an inspector. The court must consider whether there are reasonable grounds for believing there has been oppressive, unfairly prejudicial, fraudulent, unlawful or dishonest conduct.

Under the OBCA, shareholders can apply to the court for the appointment of an inspector. Unlike the BCBCA, the OBCA does not require an applicant to hold a specified number of shares.

Dividends

Under the BCBCA, a company may pay dividends to its shareholders by shares or money, unless the company is insolvent or the payment of the dividends would render the company insolvent.

Under the OBCA, a company may not pay dividends if the company is, or would after the payment be, unable to pay its liabilities as they become due, or the realizable value of the company’s assets would thereby be less than the aggregate of its liabilities and stated capital of all classes.

ABACUS HEALTH PRODUCTS, INC 25 John A Cummings Way | Woonsocket, Rhode Island 02895 P: 416.479.9547 E: investorrelations@abacushp.com

Download the latest about Abacus Health Products, Inc. at: investorrelations@abacushp.com Abacus Health Products, Inc. is traded on the CSE under the symbol ABCS

If you have any questions or require any assistance in executing your proxy or voting instruction form, please call Gryphon Advisors Inc. at:

North American Toll-Free Number: 1.833.461.3643

Outside North America, Banks, Brokers and Collect Calls: 1.416.661.6592

Email: inquiries@gryphonadvisors.ca

North American Toll-Free Facsimile: 1.877.218.5372

Facsimile: 1.416.214.3224