Consumers Seek Alternatives to Tobacco as Use Slows

NEW YORK, June 25, 2020 /PRNewswire/ -- According to the World Health Organization (WHO), the leading global risks for mortality in the world are high blood pressure (responsible for 13% of deaths globally), tobacco use (9%), high blood glucose (6%), physical inactivity (6%), and overweight and obesity (5%). Nevertheless, the tobacco industry is a major market, and in some aspects, it is evolving to adapt to a new demographic. Next generation products, such as new forms of e-cigarettes and heated tobacco products, are coming in the market. These products are exhibiting technological innovation and change, which the tobacco industry has not experienced in many decades. Cigarette consumption is growing rapidly in selected markets. E-cigarette sales occur through multiple distribution channels, such as retail stores, vape stores, and online. And, according to data by Grand View Research, the global tobacco market size was valued at USD 849.09 Billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 3.1% from 2020 to 2027. TAAT Lifestyle & Wellness Ltd. (CSE: TAAT), Altria Group, Inc. (NYSE: MO), Philip Morris International Inc. (NYSE: PM), Turning Point Brands, Inc. (NYSE: TPB), 22nd Century Group, Inc. (NYSE: XXII)

The attempts of government to reduce tobacco consumption have seen mixed results. According to the WHO's report from last year, for the first time, the organization projects that the number of males using tobacco is on the decline, indicating a powerful shift in the global tobacco epidemic. "Declines in tobacco use amongst males mark a turning point in the fight against tobacco," said Dr Tedros Adhanom Ghebreyesus, WHO Director-General. "For many years now we had witnessed a steady rise in the number of males using deadly tobacco products. But now, for the first time, we are seeing a decline in male use, driven by governments being tougher on the tobacco industry." Despite the optimistic numbers, progress in meeting the global target set by governments to cut tobacco use by 30% by 2025 remains off track.

TAAT Lifestyle & Wellness Ltd. (CSE: TAAT) announced earlier this week breaking news that, "it is preparing to launch its flagship brand Taat Herb Co., which has developed a tobacco-free and nicotine-free alternative to traditional tobacco cigarettes to be marketed under the Taat brand name. Taat hemp cigarettes are flavoured with naturally-occurring terpenes as well as a proprietary blend of tobacco flavouring which contributes to a user experience emulating that of a traditional cigarette. Taat hemp cigarettes also contain a minimum of 50mg of cannabidiol ("CBD", a non-psychoactive derivative of hemp), which has been shown to impart numerous benefits to tobacco users who wish to quit, including the alleviation of tobacco withdrawals and the overall reduction of tobacco dependency. The Company anticipates that Taat hemp cigarettes will officially be launched in fall 2020. With worldwide tobacco-related deaths now topping eight million fatalities per year¹, it is clear that the time has come to introduce attractive alternatives to traditional cigarettes to encourage and facilitate positive long-term change for tobacco users.

Data from the CDC² indicates that 68% of adult smokers said in 2015 that they wanted to quit smoking, and 55.1% of adult smokers said in 2018 that they had attempted to quit in the past year, though only 7.5% successfully quit smoking in that timeframe. A common approach to quitting smoking is the use of nicotine replacement therapy ("NRT") which has been shown to double a smoker's chances of quitting; however NRT does not mitigate withdrawal symptoms or cravings³. To address this, the user experience of Taat hemp cigarettes has been meticulously engineered to replicate each and every aspect of the experience of smoking traditional cigarettes. This includes an identical packaging format, a scent that matches natural tobacco with no trace odours of hemp, and an enhanced volume of exhaled smoke that resembles smoke exhaled from smoking a tobacco cigarette. By duplicating these seemingly minor attributes as well as satisfying the "hand to mouth" habit, anecdotal responses from users in informal trials of Taat hemp cigarettes have indicated that there are no significant experiential differences between Taat hemp cigarettes and legacy tobacco products. Taat hemp cigarettes are offered in "Original" and "Menthol" flavours.

TAAT LTD founder Joe Deighan is an experienced entrepreneur in the tobacco alternatives space. In 2012, Deighan founded vapourizer liquid producer JJuice LLC ("JJuice") as a result of his passion for the smoking alternative commonly known as "vaping", which was instrumental to Deighan in overcoming his tobacco habit. JJuice was "bootstrapped" with no investor capital, ultimately perfecting a proprietary formula that gained popularity, leading to a presence of JJuice in stores across all 50 U.S. states and in 26 countries internationally, in addition to private label production for other brands. In August 2017, JJuice was acquired from Deighan with no debt by Dallas-based Global Tobacco LLC for the cash sum of US $840,000. As part of this acquisition deal, Deighan was appointed CEO of America Juice Co. ("AJC"), another vapourizer liquid producer for other brands on a private label basis as well as AJC's own in-house brands. While in this role, Deighan was inspired to create a "hemp cigarette", something that did not yet exist on the market. Deighan ultimately elected to pursue this idea independently, leading to resignation from his role as CEO of AJC in June of 2019, and subsequently forming the Company.

The Company's go-to-market plan is currently being finalized with a planned large-scale test sampling of Taat hemp cigarettes on a trial basis in retail storefronts throughout the state of Nevada. At this time, the Company is pursuing relationships with retail and distribution partners with an objective of establishing initial points of sale for Taat hemp cigarettes. Upon the launch of Taat hemp cigarettes, which is expected to occur in Q4 2020, the Company will utilize online channels to facilitate sales. Shortly thereafter, the Company expects that Taat hemp cigarettes will be available in retail stores in select markets in the United States.

More information about TAAT LTD can be found on its website at http://taatusa.com."

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Altria Group, Inc. (NYSE: MO) (Altria Client Services) announced on June 9th that the Food and Drug Administration (FDA) has accepted and filed for substantive review premarket tobacco product applications for 35 on!® products manufactured by Helix Innovations LLC, an Altria joint venture responsible for the global on!® nicotine pouch product portfolio.  To support these applications, Altria submitted over 66,000 pages of documentation, including six primary studies. "We believe the scientific evidence in these applications demonstrates that the marketing of on!® is appropriate for the protection of public health," said Paige Magness, Senior Vice President, Regulatory Affairs for Altria Client Services. "on!® nicotine pouches are a key part of our vision to responsibly lead the transition of adult smokers to a non-combustible future."

Philip Morris International Inc. (NYSE: PM) announced earlier in January, a global collaboration agreement with the leading tobacco and nicotine company in South Korea, KT&G, to commercialize KT&G's smoke-free products outside of the country.  "Our objective is that all adult smokers who would otherwise continue to smoke switch as soon as possible to better alternatives and abandon cigarettes to the benefit of their health, public health and society at large. Further to our ongoing efforts to develop, assess, and commercialize our pipeline of science-based smoke-free alternatives to cigarettes, we are always open to collaboration with third parties on products that complement our already strong portfolio and that we can further enhance. We are delighted that KT&G has chosen PMI to expand the sales of its smoke-free products outside of South Korea. We look forward to working together to provide adult smokers around the world more options to leave cigarettes behind, by offering a portfolio that provides them an ever-broader range of taste, price, and technology choices."

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

22nd Century Group, Inc. (NYSE: XXII), a leading plant biotechnology company focused on reduced nicotine tobacco and hemp/cannabis plant genetics research and development, announced on April 30th that the Company and North Carolina State University ("NCSU"), have completed successful research field trials that have validated new non-GMO (genetically modified organism) methodologies for reducing nicotine in tobacco plants. The research was partially funded by 22nd Century and was conducted by NCSU's Department of Crop and Soil Science with project oversight provided by 22nd Century's R&D team.  "We are very pleased with the outcome of the research field trials completed in collaboration with NCSU, which demonstrate that non-GMO methodologies can be applied reliably to reduce nicotine levels in tobacco plants by up to 99%. To further validate our research, 22nd Century and NCSU will conduct larger scale and more extensive field trials in additional geographies," said Juan Sanchez Tamburrino, Vice President of Research and Development for 22nd Century.

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