6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 30, 2020

Commission File Number: 333-229744

EMERALD HEALTH THERAPEUTICS, INC.
(Translation of Registrant’s name into English)

210 - 800 West Pender Street
Vancouver, British Columbia V6C 1J8
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

[ X ] Form 20-F [   ] Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [   ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [   ]

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 to this Form 6-K of Emerald Health Therapeutics, Inc. (the “Company”) are hereby incorporated by reference as exhibits to the Registration Statement on Form F-10 (File No. 333-229744) of the Company, as amended or supplemented.

EXHIBITS

99.1	Condensed Consolidated Interim Financial Statements for the Three and Nine Months Ended September 30, 2020 and 2019
99.2	Management's Discussion and Analysis for the Three and Nine Months Ended September 30, 2020
99.3	Certification of Interim Filings - CEO
99.4	Certification of Interim Filings - CFO

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Emerald Health Therapeutics, Inc. (Registrant)
Date: November 30, 2020	By:	/s/ Dr. Avtar Dhillon
		Name: Dr. Avtar Dhillon
		Title: Executive Chairman

EX-99.1

Exhibit 99.1

EMERALD HEALTH THERAPEUTICS, INC.

Condensed Interim Consolidated Financial Statements

(Unaudited)

For the three and nine months ended September 30, 2020 and 2019

(In Canadian Dollars)

Table of Contents

Condensed Interim Consolidated Statements of Financial Position	2
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss	3
Condensed Interim Consolidated Statements of Changes in Equity	4
Condensed Interim Consolidated Statements of Cash Flows	5

Notes to the Condensed Interim Consolidated Financial Statements

Note 1	Nature and Continuance of Operations	6	Note 11	Convertible Debenture	20
Note 2	Significant Accounting Policies and Judgements	6	Note 12	Share Capital	20
Note 3	Accounts Receivable	9	Note 13	Share-based Compensation	22
Note 4	Biological Assets	9	Note 14	Warrants	24
Note 5	Inventory	11	Note 15	Leases	25
Note 6	Property, Plant and Equipment	12	Note 16	Revenue	26
Note 7	Acquisitions	13	Note 17	General and Administrative Expenses	26
Note 8	Intangible Assets	14	Note 18	Segmented Information	26
Note 9	Investment in Joint Venture	15	Note 19	Financial Instruments	28
Note 10	Related Party Transactions	18	Note 20	Capital Management	29
			Note 21	Subsequent Events	30

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

		September 30			December 31
		2020			2019
ASSETS
Current
Cash and cash equivalents (Note 2 (f))	$	418		$	2,525
Accounts receivable (Note 3)		1,557			1,925
Biological assets (Note 4)		1,571			4,159
Inventory (Note 5)		7,765			6,588
Prepaid expenses		219			327
Investment in joint venture - held for sale (Note 9)		68,250			-
Due from related parties (Note 10)		207			201
Total current assets		79,987			15,725
Plant and equipment (Note 6)		36,649			41,400
Plant under construction (Note 6)		8,795			8,407
Deposits on materials and equipment		531			886
Refundable deposits		196			196
Intangible assets (Note 8)		3,921			19,526
Right-of-use assets (Note 15)		3,824			5,628
Goodwill		169			169
Long-term investment		473			81
Investment in joint venture (Note 9)		-			64,603
Total non-current assets		54,558			140,896
TOTAL ASSETS	$	134,545		$	156,621
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	14,401		$	10,941
Deferred payment (Note 7(b)(i))		9,000			7,818
Payable to joint venture (Note 9)		-			710
Due to related parties (Note 10)		3,541			6,218
Total current liabilities		26,942			25,687
Lease liability (Note 15)		4,198			5,944
CEBA loan (Note 2(b))		40			-
Convertible debenture (Note 11)		23,197			21,823
TOTAL LIABILITIES	$	54,377		$	53,454
SHAREHOLDERS' EQUITY
Share capital (Note 12)		248,601			237,151
Warrants (Note 14)		1,718			2,449
Convertible debt reserves (Note 11)		383			383
Contributed surplus		29,908			28,146
Accumulated deficit		(199,283	)		(164,196	)
TOTAL SHAREHOLDERS' EQUITY		81,327			103,933
Non-controlling interest		(1,159	)		(766	)
TOTAL LIABILITIES AND EQUITY	$	134,545		$	156,621

Nature and continuance of operations (Note 1)
Events after the reporting period (Note 21)

On behalf of the Board of Directors:

/s/ Punit Dhillon	/s/ Jim Heppell
Director	Director

The accompanying notes form an integral part of these condensed interim consolidated financial statements

2

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

		Three months			Three months			Nine months			Nine months
		ended			ended			ended			ended
		September 30			September 30			September 30			September 30
		2020			2019			2020			2019
Revenue
Sales (Note 16)	$	4,311		$	9,718		$	10,750		$	17,398
Excise taxes		938			420			2,007			1,351
Net revenue		3,373			9,298			8,743			16,047
Cost of sales
Cost of goods sold		2,498			8,264			6,384			15,683
Production costs		2,177			1,412			3,596			2,869
Amortization of Health Canada license (Note 8)		29			920			458			2,760
Inventory write-down (Note 5)		1,819			2,824			2,874			2,824
Loss (gain) on changes in fair value of biological assets (Note 4)		2,339			433			825			(545	)
Gross margin		(5,489	)		(4,555	)		(5,394	)		(7,544	)
Expenses
General and administrative (Note 17)		2,732			4,338			7,410			11,821
Sales and marketing		287			1,201			1,222			3,252
Research and development		267			1,179			975			3,413
Depreciation and amortization (Note 6, 8 and 15)		349			429			1,420			925
Share-based payments (Note 13)		755			2,993			2,585			11,437
		4,390			10,140			13,612			30,848
Loss from operations		9,879			14,695			19,006			38,392
Share of loss (income) from joint venture (Note 9)		520			1,202			(4,497	)		(19,099	)
Interest and other income		(29	)		(221	)		(851	)		(1,024	)
Finance costs and other expenses (Note 7(b)(i) and 11)		1,531			2,489			3,954			3,030
Impairment of assets (Note 6 and 8)		112			-			17,175			-
Loss on disposal of equipment		32			-			235			-
Loss on settlement of deferred payment		-			-			-			864
Loss on dilution of joint venture ownership (Note 9)		-			-			850			-
Fair value changes in financial assets (Note 19)		(387	)		101			(392	)		204
Loss before income taxes		11,658			18,266			35,480			22,367
Deferred income tax recovery		-			(805	)		-			(805	)
NET LOSS AND COMPREHENSIVE LOSS		11,658			17,461			35,480			21,562
Net loss and comprehensive loss attributable to:
Emerald Health Therapeutics, Inc.		11,491			17,253			35,087			20,971
Non-controlling interest (Note 7(a)(i))		167			208			393			591
		11,658			17,461			35,480			21,562
Net loss per common share
Basic and diluted		0.06			0.12			0.19			0.15
Weighted average number of common shares outstanding
Basic and diluted		200,336,735			150,623,580			188,925,204			146,209,650

The accompanying notes form an integral part of these condensed interim consolidated financial statements

3

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

	Share Capital					Warrants
																				Total			Non-
	# of					# of						Contributed			Convertible		Accumulated			Shareholders'			Controlling			Total
	Shares		Amount			Warrants			Amount			Surplus			Debt Reserves		Deficit			Equity			Interest			Equity
Balance, January 1, 2020	160,986,373	$	237,151			26,470,671		$	2,449		$	28,146		$	383	$	(164,196	)	$	103,933		$	(766	)	$	103,167
Shares issued on prospectus offering (Note 12)	21,696,178		4,935			-			-			-			-		-			4,935			-			4,935
Shares issued on at-the-market offering (Note 12)	1,312,500		287			-			-			-			-		-			287			-			287
Share issued on settlement of related party transaction (Note 10)	9,713,666		2,914			-			-			(97	)		-		-			2,817			-			2,817
Share issued on settlement of convertible debt interest	4,894,055		1,009			-			-			-			-		-			1,009			-			1,009
Warrants issued on prospectus offering (Note 12 and 14)	-		-			21,696,178			164			-			-		-			164			-			164
Shares issued on restricted share unit vesting	175,000		726			-			-			(726	)		-		-			-			-			-
Shares issued on warrant exercises (Note 12 and 14)	6,250,000		1,958			(6,250,000	)		(895	)		-			-		-			1,063			-			1,063
Share issuance costs	-		(379	)		-			-			-			-		-			(379	)		-			(379	)
Share-based payments (Note 13)	-		-			-			-			2,585			-		-			2,585			-			2,585
Net loss and comprehensive loss	-		-			-			-			-			-		(35,087	)		(35,087	)		(393	)		(35,480	)
Balance, September 30, 2020	205,027,772	$	248,601		$	41,916,849		$	1,718		$	29,908		$	383	$	(199,283	)	$	81,327		$	(1,159	)	$	80,168
Balance, January 1, 2019	141,443,116	$	204,792			8,411,764		$	4,360		$	14,202		$	-	$	(52,856	)	$	170,498		$	-		$	170,498
Adoption of IFRS 16	-		-			-			-			-			-		(199	)		(199	)		-			(199	)
Balance, January 1, 2019, as restated	141,443,116		204,792			8,411,764			4,360			14,203			-		(53,055	)		170,299			-			170,299
Shares issued on at-the-market offering (Note 12)	5,936,500		18,768			-			-			-			-		-			18,768			-			18,768
Warrants issued on convertible debentures	-		-			12,500,000			1,791			-			-		-			1,791			-			1,791
Convertible debt reserves	-		-			-			-			-			383		-			383			-			383
Acquisition of Verdelite Sciences Inc.	2,129,707		8,199			-			-			-			-		-			8,199			-			8,199
Acquisition of Emerald Health Naturals Inc.	-		-			-			-			-			-		-			-			4,802			4,802
Shares issued on stock option exercises (Note 13)	1,898,143		3,339			-			-			(2,195	)		-		-			1,144			-			1,144
Share issuance costs	-		(877	)		-			-			-			-		-			(877	)		-			(877	)
Share-based payments (Note 13)	-		-			-			-			11,437			-		-			11,437			-			11,437
Net loss and comprehensive loss	-		-			-			-			-			-		(20,971	)		(20,971	)		(591	)		(21,562	)
Balance, September 30, 2019	151,407,466	$	234,222			20,911,764		$	6,151		$	23,444		$	383	$	(74,027	)	$	190,173		$	4,211		$	194,384

The accompanying notes form an integral part of these condensed interim consolidated financial statements

4

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

		Nine months			Nine months
		ended			ended
		September 30			September 30
		2020			2019
Operating activities
Net loss	$	(35,480	)	$	(21,562	)
Items not involving cash
Depreciation		3,851			4,253
Loss (gain) on changes in fair value of biological assets		825			(545	)
Fair value changes in financial assets		(392	)		204
Inventory write-down		2,874			2,824
Share-based payments		2,585			11,437
Share of income from joint venture		(4,497	)		(19,099	)
Interest and accretion expense		2,556			577
Deferred income tax recovery		-			(805	)
Impairment of assets		17,176			-
Loss on disposal of asset		218			-
Loss on dilution of joint venture ownership		850			-
Loss on settlement of deferred payment		-			864
Changes in non-cash operating working capital
Accounts receivable		368			(2,548	)
Due from related parties		(6	)		867
Prepaid expenses		108			128
Inventory and biological assets		(1,905	)		(13,234	)
Accounts payable and accrued liabilities		5,517			3,767
Due to related parties		139			8,018
Net cash flows used in operating activities		(5,213	)		(24,854	)
Investing activities
Investment in joint venture (Note 9)		(710	)		(15,280	)
Acquisition of asset (Note 7)		(519	)		(1,100	)
Deposits on material and equipment		(93	)		1,410
Sale of plant and equipment		43			-
Purchase of plant and equipment		(782	)		(20,369	)
Purchase of intangible assets		(313	)		(1,562	)
Net cash flows used in investing activities		(2,374	)		(36,901	)
Financing activities
Payment of lease liabilities		(363	)		(362	)
Repayment on long-term debt		-			(2,503	)
Repayment of deferred payment		-			(8,000	)
Proceeds from prospectus offering		5,100			18,768
Proceeds from at-the-market offering		287			-
Proceeds from convertible debenture financing		-			24,217
Proceeds from CEBA loan (Note 2(b))		40			-
Share issuance costs		(380	)		(877	)
Purchase warrants exercises		1,063			-
Stock option exercises		-			1,144
Interest paid		(267	)		(285	)
Net cash flows provided by financing activities		5,480			32,102
Decrease in cash and cash equivalents		(2,107	)		(29,653	)
Cash and cash equivalents, beginning of year		2,525			36,042
Cash and cash equivalents, end of period	$	418		$	6,389
Supplemental Information:
Fair value of shares issued to settle outstanding loan amount and trade payables (Note 10)	$	2,914		$	-
Fair value of shares issued to settle interest on convertible debentures (Note 11)	$	1,009		$	-
Fair value of shares issued to settle portion of deferred payment	$	-		$	8,199

The accompanying notes form an integral part of these condensed interim consolidated financial statements

5

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

1. Nature and Continuance of Operations

Emerald Health Therapeutics, Inc. (the "Company"), was incorporated pursuant to the Business Corporations Act (British Columbia) on July 31, 2007. The Company is classified as a Tier 1 Venture Issuer on the TSX Venture Exchange (the "TSXV”), with its common shares listed under the trading symbol “EMH.” The Company is also traded on the OTCQX, with its common shares listed under the trading symbol “EMHTF.”

The Company’s registered and records office is at Suite 2500 – 666 Burrard Street, Vancouver, British Columbia, V6C 2X8.

The Company’s principal business is the production, distribution, and sale of cannabis products in Canada, pursuant to the Cannabis Act (Canada) (the “Cannabis Act”).

These condensed interim consolidated financial statements have been prepared by management on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at September 30, 2020, the Company had not yet achieved profitable operations, had a loss for the nine months ended September 30, 2020 of $35,480 and accumulated losses since inception of $199,283. As at September 30, 2020, the Company had $418 in cash and cash equivalents. Subsequent to the quarter ended September 30, 2020, the Company completed the sale of its 41.28% interest in Pure Sunfarms Corp. for consideration of $79,900 on November 2, 2020. On the date of closing, the Company received a cash payment of $60,000 and received a secured promissory note in the principal amount of $19,900 (the “Note”). The Note will mature six months from the date of closing and bears interest of 12% per annum. This cash injection into the Company will help the continuing operations. The receipt of the $60,000 first payment provides the Company with positive working capital and cash on hand sufficient to fund planned operations.

2. Significant Accounting Policies and Judgements

a) Basis of Presentation and Measurement

The condensed interim consolidated financial statements of the Company have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”) using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the IASB. Unless otherwise noted, all amounts are presented in thousands of Canadian dollars, except share and per share data. These condensed interim financial statements were authorized for issue by the Audit Committee on November 25, 2020.

These condensed interim consolidated financial statements do not include all disclosures normally provided in annual financial statements and should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019. Accordingly, accounting policies, estimates, and judgements applied are the same as those applied in the Company’s financial statements for the year ended December 31, 2019, unless otherwise indicated. The Company assesses its accounting estimates and judgements every reporting period. During the period, the Company applied an accounting policy for government grants in regard to the Canadian Emergency Wage Subsidy (“CEWS”) and the Canadian Emergency Business Account (“CEBA”).

6

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

b) Government Grants

Government grants are recognized where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The CEWS and the CEBA are recognized as government grants. The Company applied for and received the CEWS, which provides a 75% wage subsidy effective March 15, 2020. During the nine months ended September 30, 2020, the Company determined that it had qualified for this subsidy, it applied for and received $787. The Company has recognized the $787 as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

On May 26, 2020, the Company obtained $40 in revolving credit from the Government of Canada under the CEBA COVID-19 Economic Response Plan. The funding is granted in the form of an interest-free revolving credit line of which up to $40 may be drawn. On January 1, 2021, any balance remaining on the revolving credit line will automatically convert to a non-revolving term loan. Effective January 1, 2023, any outstanding balance on the term loan shall bear interest at a rate of 5% per annum. The term loan matures on December 31, 2025. If 75% of the outstanding balance of the non-revolving term loan is repaid on or before December 31, 2022, the remaining 25% of the balance shall be forgiven.

c) Change in Estimates – Biological Assets

During the three months ended September 30, 2020, the Company revised its estimates used in determining the average selling price per gram. One of the inputs used in determining the biological assets fair value less cost to sell was applied prospectively. Previously, the Company used the average retail price per gram of dried cannabis net of costs to sell for the period for all strains of cannabis sold at the finished good stage. The Company has revised its model to use the average wholesale market price per gram of dried bulk cannabis, based on quality (Tetrahydrocannabinol % and terpene profile). See Note 4.

d) COVID-19 Estimation Uncertainty

During the three and nine months ended September 30, 2020, the global financial markets have been negatively impacted by the novel Coronavirus (“COVID-19”), which was declared a pandemic by the World Health Organization on March 11, 2020. This has led to significant global economic uncertainty, and the current outbreak of COVID-19 could have a material adverse effect on the Company’s operations and the operations of the Company’s suppliers and customers. At this time, the Company has not had any stoppages related to the production and sales of its cannabis, however, this could change based on future developments. The Company has taken what it believes to be appropriate safety precautions at its facilities to safeguard the health of its employees including remote work plans and additional protective measures on site, and there have been no outbreaks to date at any of the Company's facilities. The extent to which COVID-19 impacts the Company’s operations will depend on future developments, which continue to be highly uncertain and cannot be predicted with confidence.

In addition, it is possible that estimates in the Company’s financial statements will change in the near term as a result of COVID-19 and the effect of any such changes could be material, which could result in, among other things, impairment of long-lived assets including intangibles. The Company is closely monitoring the impact of the pandemic on all aspects of its business.

7

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

e) Basis of Consolidation

These condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated on consolidation. Subsidiaries are all entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The subsidiaries of the Company at September 30, 2020 include the following:

	Ownership Interest	Ownership Interest
	as at September 30	as at December 31
Name of Entity	2020	2019
Emerald Health Therapeutics Canada Inc. (EHTC)	100%	100%
Emerald Health Naturals Inc. (Naturals)	51%	51%
Avalite Sciences Inc. (Avalite)	100%	100%
Pure Sunfarms Corp. (Pure Sunfarms) (Note 21)	41.3%	46.5%
Verdélite Sciences Inc. (Verdélite)	100%	100%
Verdélite Property Holdings Inc.	100%	100%

f) Cash and Cash Equivalents

Cash and cash equivalents are financial assets and the carrying amounts approximate fair value. Cash and cash equivalents include cash and redeemable short-term investment certificates held at major financial institutions as follows:

		September 30	December 31
	Interest Rate %	2020	2019
		$	$
GIC - Maturing February 5, 2020	1.50%	-	200
GIC - Maturing September 11, 2020	2.25%	-	30
GIC - Maturing February 3, 2021	1.50%	102	-
GIC - Maturing March 11, 2022	0.50%	31	-
Total		133	230

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EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

3. Accounts Receivable

The Company’s accounts receivable are comprised of:

	September 30	December 31
	2020	2019
	$	$
Goods and services tax refund receivable	-	1,181
Trade receivables	1,534	697
Other receivables	23	47
	1,557	1,925

Credit risk is generally limited for receivables from government bodies, which generally have low default risk, and medical sales direct to patients, where payment is required prior to the delivery of goods. Credit risk for non-government wholesale customers is assessed on a case-by-case basis and a provision is recorded where required. As at September 30, 2020, 69% of the Company’s trade receivables are from two provincial government bodies.

4. Biological Assets

The Company’s biological assets consist of cannabis seeds and cannabis plants. Changes in the Company’s biological assets are as follows:

	September 30		December 31
	2020		2019
	$		$
Carrying amount, beginning of year	4,159		1,089
Effect of unrealized changes in fair value of biological assets	825		3,703
Biological assets purchased	-		197
Biological asset expensed in research and development	-		(169	)
Deduct net abnormal plant destruction costs	(1,759	)	-
Transferred to inventory upon harvest	(1,654	)	(661	)
Carrying amount, end of period	1,571		4,159

During the three months ended September 30, 2020 the Company had to cull $1,759 worth of plants. This has been recorded as a loss on changes in fair value of biological assets.

As at September 30, 2020, included in the carrying amount of biological assets is $84 (December 31, 2019 -$85) in seeds and $1,487 (December 31, 2019 - $4,074) in live plants. The following inputs and assumptions are categorized within Level 3 on the fair value hierarchy, and are subject to volatility and several uncontrollable factors, which could significantly affect the fair value of the biological assets in future periods:

9

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

Inputs and assumptions	Description
Average market price per gram	Represents the the average wholesale market price per gram of dried bulk cannabis, based on quality (Tetrahydrocannabinol % and terpene profile).
Average attrition rate	Represents the weighted average number of plants culled at each stage of production.
Average yield per plant	Represents the average number of grams of dried cannabis inventory expected to be harvested from each cannabis plant. Based on historical yields.
Average cost per plant	Represents costs incurred to grow plants at different stages of the production cycle.
Stage of completion in the production process	Calculated by taking the weighted average number of days in production over a total average grow cycle of approximately 14 to 16 weeks based on location and strain.
Production costs are capitalized to biological assets and include all direct and indirect costs relating to biological transformation. Costs include direct costs of production, such as labour, growing materials, as well as indirect cost s such as indirect labour, quality control costs, depreciation on production equipment, and overhead expenses including rent and utilities.

The following table highlights the sensitivities and impact of changes in significant assumptions on the fair value of biological assets. As noted above in Note 2(c), the Company previously used the average retail price per gram of dried cannabis net of costs to sell for the period for all strains of cannabis sold at the finished good stage. The Company has revised its model to use the average wholesale market price per gram of dried bulk cannabis, based on quality (Tetrahydrocannabinol % and terpene profile).

		Range of inputs					Impact of fair value
Significant inputs & assumptions		September 30, 2020		December 31, 2019	Sensitivity		September 30, 2020	December 31, 2019
Average market price per gram less cost to sell	$	1.14	$	3.26	Increase/decrease of $1 per gram (000's)	$	448	$	1,031
Weighted average yield (gram per plant)		116.55		92.13	Increase/decrease by 10 gram per plant (000's)	$	9	$	365

As of September 30, 2020, the weighted average stage of growth for the biological assets was 54% (December 31, 2019 – 45%). The average number of days from the point of propagation to harvest is 109 days.

The Company’s estimates are, by their nature, subject to change and changes in the significant assumptions will be reflected in the gain or loss on biological assets in future periods.

10

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

5. Inventory

The Company’s inventory is comprised of:

	September 30	December 31
	2020	2019
	$	$
Dried bulk cannabis and packaged inventory	4,818	3,545
Cannabis oils	2,378	2,465
Supplies and consumables	569	578
	7,765	6,588

During the three and nine months ended September 30, 2020, inventory expensed to cost of goods sold was $2,498 and $6,384, respectively (September 30, 2019 - $8,264 and $15,683). The fair value change in biological assets included in cost of sale during the three and nine months ended September 30, 2020 was a loss of $2,339 and $825 (September 30, 2019 - (loss) gain of $(433) and $545).

During the three months and nine months ended September 30, 2020, a write-off of $1,819 and $2,874 respectively, were recognized for dried cannabis and packaged inventory (September 30, 2019 - $2,824 for the three and nine months) related to product deterioration and limited remaining shelf life. Included in this amount for the three and nine months ended September 30, 2020, is $420 of direct and indirect labour costs that were over and above product standard costs and were not capitalized into inventory.

11

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

6. Property, Plant and Equipment

The Company’s property, plant and equipment continuity is as follows:

					Production, Lab
				Leasehold	and Growing				Other
	Land	Buildings		Improvement	Equipment		Computers		Equipment	Total
	$	$		$	$		$		$	$
Costs:
Balance, December 31, 2018	476	12,014		1,682	2,688		270		861	17,991
Acquired Through Naturals	-	-		34	-		13		66	113
Additions	-	20,612		758	4,203		73		526	26,172
Balance, December 31, 2019	476	32,626		2,474	6,891		356		1,453	44,276
Additions	-	-		-	163		4		7	303
Disposals	-	-		-	(107	)	(13	)	-	(120	)
Impairment (Note 8)	-	(2,354	)	-	-		-		-	(2,354	)
Balance, September 30, 2020	476	30,401		2,474	6,947		347		1,460	42,105
					Production, Lab
				Leasehold	and Growing				Other
	Land	Buildings		Improvement	Equipment		Computers		Equipment	Total
	$	$		$	$		$		$	$
Accumulated Depreciation:
Balance, December 31, 2018	-	154		155	548		76		92	1,025
Additions	-	554		364	654		99		180	1,851
Balance, December 31, 2019	-	708		519	1,202		175		272	2,876
Additions	-	982		433	929		72		198	2,614
Disposals	-	-		-	(28	)	(6	)	-	(34	)
Balance, September 30, 2020	-	1,690		952	2,103		241		470	5,456
					Production, Lab
				Leasehold	and Growing				Other
	Land	Buildings		Improvement	Equipment		Computers		Equipment	Total
	$	$		$	$		$		$	$
Net book value:
September 30, 2020	476	28,711		1,522	4,844		106		990	36,649
December 31, 2019	476	31,918		1,955	5,689		181		1,181	41,400

Depreciation relating to manufacturing equipment and production facilities is initially expensed into production costs and then capitalized into inventory, and expensed to cost of sales upon the sale of goods. For the three and nine months ended September 30, 2020, $717 and $1,924 (September 30, 2019 - $272 and $493) of depreciation was recognized in cost of sales.

12

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

Plant under construction

During 2019, Phase 1 of construction on the Company’s new self-constructed production facility located in Metro Vancouver, British Columbia was completed. $14,343 was transferred from plant under construction to property, plant and equipment and began to be amortized. As at September 30, 2020, $8,795 of expenditures were capitalized to plant under construction relating to Phase 2 of the facility (December 31, 2019 - $8,407).

7. Acquisitions

a) Acquisitions completed during the year ended December 31, 2019

(i) Emerald Health Naturals

On January 10, 2019, the TSXV approved the Company’s agreement with Emerald Health Bioceuticals, Inc. (“EHB”), an entity with common directors, to form Naturals. Naturals holds the Canadian distribution rights to EHB’s product line which focuses on health and wellness products that tap into the bodies Endocannabinoid System through the use of non cannabis-based ingredients. The Company controls Naturals and it has been consolidated, with a non-controlling interest recognized for the EHB owned portion.

b) Acquisitions completed during the year ended December 31, 2018

(i) Verdélite Sciences Inc.

On May 30, 2019, the Company renegotiated the terms of the remaining $15,000 payable to the Vendors. $5,000 cash was paid in June 2019, with subsequent monthly payments of $1,000 commencing mid July through to mid November 2019, with a final payment of $5,000 plus accrued interest due on December 16, 2019. Interest on the full $15,000 balance began accruing May 31, 2019 at a rate of 10% per annum and accrues until such time as the entire balance is repaid. The amount outstanding as at September 30, 2020 was $9,000.

On July 31, 2020, the Company announced that they had entered into a share purchase agreement (the “Agreement”) in respect to the sale of the Company’s wholly-owned subsidiaries, Verdélite and Verdélite Property Holdings, Inc. (“Verdélite Property” and, together with Verdélite, the “Subsidiaries”). The Subsidiaries together own and operate a premium 88,000 square foot craft cannabis production indoor facility (the “Facility”) in St. Eustache, Québec.

Pursuant to the Agreement, the purchaser will purchase all of the issued and outstanding shares of the Subsidiaries in consideration for a cash purchase price of $21,000 subject to a 90-day working capital adjustment and certain other adjustments (the "Transaction"). The Agreement was negotiated at arm's length.

On the closing of the Transaction, the Subsidiaries will become wholly-owned subsidiaries of the purchaser, and the purchaser will continue the business of the Subsidiaries. Following closing of the Transaction, the Company will continue to sell its own products into the Québec market, subject to certain limited restrictions, and retains exclusive rights to its recently launched Souvenir^TM brand.

The purchase price will be subject to a $750 holdback for the working capital adjustment and as an indemnity for certain pre-existing litigation. The Agreement contains representations and warranties,

13

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

covenants, conditions and indemnities for the benefit of each of the parties as are customary for transactions of this nature. Completion of the Transaction is subject to the completion of a number of conditions, including obtaining applicable consents and approval of the purchaser’s shareholders.

As a result of this, the Company assessed the Verdélite assets for impairment as at June 30, 2020 (Note 8).

8. Intangible Assets

The Company’s intangible assets continuity is as follows:

		Extraction	Health Canada		Computer
	Patents	Assets	Licence		Software	Total
Cost:	$	$	$		$	$
Balance, December 31, 2018	369	-	89,026		194	89,589
Acquired through Naturals (Note 7(a)(i))	89	-	149		11	249
Additions	344	370	-		1,031	1,745
Impairment	-	-	(65,122	)	-	(65,122	)
Balance, December 31, 2019	802	370	24,053		1,236	26,461
Additions	34	-	-		44	78
Impairment	-	-	(14,821	)	-	(14,821	)
Balance, September 30, 2020	836	370	9,232		1,280	11,718
		Extraction	Health Canada		Computer
	Patents	Assets	Licence		Software	Total
Accumulated amortization:	$	$	$		$	$
Balance, December 31, 2018	-	-	2,917		60	2,977
Additions	-	-	3,679		279	3,958
Balance, December 31, 2019	-	-	6,596		339	6,935
Additions	-	-	458		404	862
Balance, September 30, 2020	-	-	7,054		743	7,797
		Extraction	Health Canada		Computer
	Patents	Assets	Licence		Software	Total
Net book value:	$	$	$		$	$
September 30, 2020	836	370	2,178		537	3,921
December 31, 2019	802	370	17,457		897	19,526

14

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

On July 31, 2020, the Company announced that it had entered into a share purchase agreement relating to the sale of the Verdélite assets. The Company’s intention to sell the asset at June 30, 2020, as well as the continued decline in stock price and market capitalization of the Company were indicators of impairment at June 30, 2020. As a result of these factors, management evaluated its cash generating units (“CGU”) for impairment. It was determined that the Verdélite CGU was impaired at June 30, 2020. Taking into account the Company’s intention to sell the asset, the fair value less costs of disposal of Verdélite approximates its value in use at June 30, 2020, given that the value in use consists mainly of the net disposal proceeds. Management concluded that the carrying value was higher than the recoverable amount and recorded an impairment loss of $17,063. Management allocated the impairment loss based on the relative carrying amounts of the CGU’s assets at the impairment date which resulted in an impairment of $14,709 being allocated to the intangible assets and $2,354 being allocated to the building (production facility) of the Verdélite CGU.

Subsequent to the nine months ended September 30, 2020, the Company decreased the activity at Naturals. As a result of this, management evaluated the Naturals CGU and determined that certain assets of the CGU were impaired, resulting in an impairment of $112 that was recorded against certain licenses held by the subsidiary.

9. Investment in Joint Venture – Held For Sale

The Company’s investment in Pure Sunfarms is as follows:

	$
Balance at December 31, 2019	64,603
Equity adjustment due to change of ownership	(850	)
Share of income	4,497
Balance at September 30, 2020	68,250

15

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

Summarized financial information for Pure Sunfarms is set out below:

	September 30		December 31
	2020		2019
	$		$
Non current assets	154,664		141,117
Current assets (a)	100,060		82,340
Total assets	254,724		223,457
Non current liabilities	53,853		26,558
Current liabilities	38,065		60,116
Total liabilities	91,918		86,674
(a) includes cash and cash equivalents	9,023		9,555
	Nine months ended		Nine months ended
	September 30		September 30
	2020		2019
	$		$
Sales	53,533		71,548
Cost of Sales (b)	32,027		18,785
Gross margin before fair value changes	21,506		52,763
Change in fair value of biological asset	3,271		(15,025	)
Gross margin	18,234		67,788
Selling, general and administrative expenses	9,090		7,454
Income from operations	9,144		60,334
Other (income) loss	(4,585	)	723
Income before taxes	13,729		59,611
Provision for income taxes	3,707		13,404
Net income	10,022		46,207
(b) includes $2,668 of amortization expense (September 30, 2019   $1,791)
Net Income	10,022		46,207
Elimination of transactions with the Company	2,518		(3,765	)
Fair value adjustment	(2,559	)	(4,243	)
Net income from Joint Venture for equity accounting purposes	9,981		38,199
Emerald's share of income from Joint Venture (1)	4,497		19,099

⁽¹⁾ During the year ended December 31, 2019, the Company's share of income from the Joint Venture was 50% up until November 18, 2019. Subsequently, the Company’s share of ownership decreased to 46.47%. During the nine months ended September 30, 2020, the Company's share of income from the Joint Venture was 46.47% up until February 29, 2020. Subsequently, share of ownership dropped to 42.60% up until March 31, 2020 and to 41.28% in April 2020. As at September 30, 2020 the Company's share of income from the Joint Venture was 41.28%.

16

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

A reconciliation of the summarized financial information to the carrying amount of the investment in Pure Sunfarms is set out below:

	September 30		December 31
	2020		2019
	$		$
Total net assets of Pure Sunfarms	162,806		136,784
Ownership interest held by the Company	67,207		65,105
Cumulative adjustments carried forward	480		2,669
Fair value adjustment recognized during the period	(1,106	)	(3,563	)
Elimination of transactions with the Company during the period	1,149		(128	)
Transaction costs cumulative	520		520
Carrying amount of the investment	68,250		64,603

As at September 30, 2020, Pure Sunfarms has not issued dividends. As a privately held company, there are no quoted market prices available for the shares of Pure Sunfarms.

On March 6, 2020, the Company completed a Settlement Agreement (the “Settlement Agreement”) with its Joint Venture partner. Pursuant to the Settlement Agreement, the Supply Agreements (collectively, the "Supply Agreements") entered into between the Company and Pure Sunfarms dated December 21, 2018 (the “2018 Supply Agreement”), which was for the 40% supply provision by Pure Sunfarms to the Company in 2019, at a guaranteed price for 2019, and dated March 29, 2019, which was for the 25% supply provision by Pure Sunfarms, at a guaranteed price adjusted on a semi-annual basis to the Company from 2020 to the end of 2022, respectively, were both terminated effective as of December 31, 2019, and the Company was released from all previous, current, and future obligations, liabilities and payments thereunder. The termination of the Supply Agreements removed the uncertainty regarding the potential obligation of the Company to make any payments to Pure Sunfarms under the terms of those Agreements and provided the Company with full flexibility regarding future access to, and supply of, wholesale cannabis. In exchange, the Company forfeited all amounts due from Pure Sunfarms pursuant to a shareholder’s loan of $13,000 plus accrued interest of $1,062 that the Company previously advanced to Pure Sunfarms. This was effective as of December 31, 2019.

On March 6, 2020, also as part of the Settlement Agreement, the Company issued a promissory note to Pure Sunfarms in the amount of $952 which bears interest at a rate of 6.2% per annum and will mature on the earlier of (a) December 31, 2020; (b) the Company ceasing to be a shareholder of Pure Sunfarms; or (c) the acquisition by any party of a majority of the outstanding shares of the Company. The principal amount is the amount owed by the Company to Pure Sunfarms as remittance for bulk sales under the 2018 Supply Agreement.

As part of the Settlement Agreement the Company also transferred 2.5% of its Pure Sunfarms equity to Village Farms. The Parties agreed that the $8,000 provided by Village Farms to Pure Sunfarms in 2020 was to be converted into additional common shares of Pure Sunfarms. Upon completion of this conversion and the other transactions referred to above, the Company’s share of income dropped to a 42.60% equity interest.

In April 2020, the Company announced that its Joint Venture had expanded its credit facility with its existing lender to $59,000 including accordion provisions of $20,000. The expanded credit facility (the “Credit Facility”) consists of a $7,500 revolving operating loan (the “Revolver”) and a $12,500 term loan (the “New Term Loan”), in addition to its existing $19,000 term loan (the “Existing Term Loan”). The New Term Loan

17

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

is specifically designated for the 1.1 million square foot Delta 2 greenhouse while the Existing Term Loan is specifically designated for the 1.1 million square foot Delta 3 greenhouse. The $7,500 Revolver and the $12,500 New Term Loan include an accordion provision that allows the Joint Venture to request additional lender commitments of up to an additional $7,500 and $12,500, respectively, subject to an additional lender entering the syndicate on or before May 30, 2020. Each of the components of the Credit Facility, including the existing term loan, mature on February 7, 2022. As part of this transaction, Village Farms completed an additional investment in the Joint Venture of $8,000, which reduced the Company’s equity position in the Joint Venture by 1.32% to 41.28%.

On July 1, 2020, the Company announced that its Joint Venture had further expanded its Credit Facility to its full $59,000 capacity with the completion of the Credit Facility’s accordion feature. The Credit Facility now consists of a $15,000 revolving operating loan and a $25,000 New Term Loan, in addition to its $19,000 Existing Loan. The New Term Loan is specifically designated for the 1.1 million square foot Delta 2 greenhouse while the Existing Term Loan is specifically designated for the 1.1 million square foot Delta 3 greenhouse facility. Each of the components of the Credit Facility, including the Existing Term Loan, mature on February 7, 2022.

On November 2, 2020, the Company completed a share purchase agreement (the “PSF Share Purchase Agreement”) with its Joint Venture partner, see Note 21 for details surrounding the sale. Due to the stage of the sale negotiations as of September 30, 2020, the Company determined that the Joint Venture met the criteria for IFRS 5 Non-current Asset held for Sale. Therefore, the Company measured the Joint Venture at the lower of its’ carrying amount and fair value less costs to sell. The carrying amount of the Joint Venture was the lower value, so this amount has been disclosed as a current asset on the statement of financial position.

10. Related Party Transactions

With Emerald Health Sciences Inc.

As of the nine months ended September 30, 2020, Emerald Health Sciences Inc. (“Sciences”) held an aggregate of 39,401,608 Common Shares, representing 20% (December 31, 2019 – 29,687,942 shares, representing 18%) of the issued and outstanding Common Shares and it also held 9,099,706 (December 31, 2019 – 9,099,706) common share purchase warrants of the Company.

Sciences charged the Company $Nil during the three and nine months ended September 30, 2020 (September 30, 2019 - $875 and $2,975) for services related to financing, business development, research and development, investor relations and acquisition activities. On October 1, 2019, the Company and Sciences amended the previously disclosed third amended and restated independent contractor agreement pursuant to which Sciences provided certain management services to the Company. No services were provided by Sciences in the three and nine months ended September 30, 2020. The amount owing at September 30, 2020 is $1,673 (December 31, 2019 - $1,846). This amount is included in the due to related parties caption on the condensed interim consolidated statements of financial position and is non-interest bearing. As at September 30, 2020, Sciences owed the Company $37 (December 31, 2019 – $31) for invoices paid on behalf of Sciences. This amount is included in the due from related parties caption on the condensed interim consolidated statements of financial position and is non-interest bearing.

In July 2019, the Company amended a previous loan agreement with Sciences pursuant to which Sciences agreed to loan up to $15,000 to the Company, in amounts and at times agreed to by the parties. Amounts loaned bear interest at 12% per annum and are repayable on demand. On January 31, 2020, the Company settled its outstanding balance related to the loan agreement and accrued loan interest totalling $794 as well as its outstanding balance related to trade payables for hemp purchased totalling $2,023, by way of

18

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

issuance of shares for debt. The Company issued 9,713,666 common shares of the Company at a deemed price of $0.29 per Common Share.

On May 27, 2020, the Company announced that it had terminated certain related party agreements pertaining to its cannabis cultivation operation in Metro Vancouver. Previously existing rights and continuing usage of the land and its cultivation operation in Metro Vancouver are unaffected by these terminations. Both the sublease agreement and cultivation agreement with Sciences were previously announced on October 4, 2019. The Company and Sciences agreed not to pursue the transactions contemplated by such agreements and agreed to terminate both the sublease agreement and the cultivation agreement in May 2020. The Company did not make any payments to Sciences under either the sublease agreement or the cultivation agreement. The Company’s previously existing rights related to the 12-acre parcel that was subject to the sublease agreement and the cultivation agreement are unaffected by these terminations.

On July 15, 2020, the Company announced that it had terminated certain related party agreements pertaining to consulting services and a loan facility. Sciences and the Company entered into an independent contractor agreement on May 1, 2015, as amended from time to time (the “Consulting Agreement”), and a loan agreement on August 25, 2015, as amended from time to time (the “Loan Agreement”). Sciences and the Company agreed to terminate the Consulting Agreement and Loan Agreement.

With the Company’s Joint Venture

As of September 30, 2020, Pure Sunfarms owes the Company $170 (December 31, 2019 - $170) for expenditures made on behalf of the Joint Venture. As at September 30, 2020, the Company owes to Pure Sunfarms $991 (December 31, 2019 - $957), of which $986 ($952 principle and $34 interest) is for a promissory note that was issued on March 6, 2020 as part of the Settlement Agreement with the Company’s Joint Venture. The note bears interest at a rate of 6.2% per annum, and will mature on the earlier of (a) December 31, 2020; (b) the Company ceasing to be a shareholder of Pure Sunfarms; or (c) the acquisition by any party of a majority of the outstanding shares of the Company. The principal amount is the amount owed by the Company to Pure Sunfarms as remittance for bulk sales under the 2018 Supply Agreement.

With a Company Controlled by the Company’s Executive Chairman

During the year ended December 31, 2017, the Company entered into a 30-year lease with a company (the “Landlord”) that is controlled by Avtar Dhillon, MD, the Executive Chairman of the Company with respect to land in Metro Vancouver, British Columbia on which the Company is constructing its new production facility. The lease amount was determined by an independent valuation, and was approved the non-conflicted directors of the Company. During the three and nine months ended September 30, 2020, the Company paid to the Landlord $99 and $269 (September 30, 2019 - $85 and $255) in rent. The Landlord was reimbursed by the Company for $Nil during the three and nine months ended September 30, 2020 (September 30, 2019 - $10 and $189) for development fees and services related to construction of the Company’s new facility. As at September 30, 2020, the Company recognized lease liabilities of $3,526 (December 31, 2019 - $3,554) relating to the land in Metro Vancouver with a corresponding right of use asset.

With a Company Whose CEO is Also a Director of the Company

The Company holds 1,666,667 common shares and 1,666,667 common share purchase warrants of Avricore Health Inc. (“Avricore”, formerly VANC Pharmaceuticals Inc.). Naturals holds 3,030,303 common share purchase warrants of Avricore. Subsequent to September 30, 2020, the Company sold its shares in Avricore, see Note 21.

19

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

With a Company Whose President is Also a CEO of the Subsidiary

Naturals owes to GAB Innovations, Inc. $47 (December 31, 2019 - $93) for expenditures made on behalf of Naturals.

Remuneration of directors and key management of the Company

	For the three	For the three	For the nine	For the nine
	months ended	months ended	months ended	months ended
	September 30 2020	September 30 2019	September 30 2020	September 30 2019
	$	$	$	$
Wage and short term benefits	366	506	1,271	1,067
Share-based compensation (Note 13)	395	1,966	1,194	4,819
	761	2,472	2,465	5,886

The remuneration awarded to directors and to senior key management including the Executive Chairman, the Chief Executive Officer and President, the Chief Financial Officer, and the Chief Commercial Officer includes the following expenses recognized during the period:

Included in Due to Related Parties on the condensed interim consolidated statements of financial position at September 30, 2020 is $584 (December 31, 2019 - $50) due to related parties with respect to key management personnel and expense reimbursements and are non-interest bearing.

These transactions are recorded at the amounts agreed upon between the two parties.

11. Convertible Debenture

During the nine months ended September 30, 2020, interest expense of $384 which had accrued during the year ended December 31, 2019, was settled with the issuance of 1,322,627 common shares of the Company. Also during the nine months ended September 30, 2020, interest expense of $625 which had accrued during the six months ended June 30, 2020, was settled with the issuance of 3,571,428 common shares of the Company.

During the three and nine months ended September 30, 2020, interest expense of $315 and $939, and accretion expense of $467 and $1,374 were recorded.

12. Share Capital

Authorized

• Unlimited number of Common Shares without par value

• Unlimited number of preferred shares without par value, issuable in series

Issued

• 205,027,772 Common Shares (December 31, 2019 – 160,986,373)

• Nil preferred shares (December 31, 2019 – Nil)

20

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

During the nine months ended September 30, 2020, the outstanding share capital increased by 44,041,399 Common Shares due to the following transactions:

• The Company filed a prospectus supplement in connection with an at-the-market equity program (“ATM Program”) that it established with GMP Securities L.P. (the “Agent”) in the three months ended March 31, 2019. In connection with the ATM Program, the Company entered into an equity distribution agreement with the Agent. The ATM Program allows the Company to issue Common Shares from treasury having an aggregate gross sales price of up to $39,000 to the public from time to time, at the Company’s discretion, at the prevailing market price when issued on the TSXV or on any other marketplace for the common shares in Canada. The ATM Program is effective until the earlier of April 13, 2021 or completion of the sale of the maximum amount of shares thereunder. Sales of Common Shares will be made through “at-the-market distributions” as defined in National Instrument 44-102 – Shelf Distributions on the TSXV or on any other existing marketplace for the common shares in Canada. The Common Shares will be distributed at the prevailing market prices at the time of the sale and, as a result, prices may vary among purchasers and during the period of distribution. During the nine months ended September 30, 2020 the Company did not issue any Common Shares in connections with the ATM Program. This ATM Program was cancelled in August 2020 with the establishment of a new ATM Program;

• On August 13, 2020, the Company announced that it had established an at-the-market equity program (“new ATM Program”) that allows the Company to issue common shares from treasury having an aggregate gross sales price of up to $3,250 to the public from time to time at the Company’s discretion, at the prevailing market price when issued. The new ATM Program is effective until the earlier of April 13, 2021 and completion of the sale of the maximum amount of shares thereunder and will be activated from time to time at the Company’s discretion if and when required based on the Company’s working capital requirements and capital expenditures and relative cost of other funding options. During the quarter 1,312,500 common shares were issued under the new ATM Program for gross proceeds of $287;

• Issued 9,713,666 Common Shares with a value of $2,914 to settle an outstanding loan amount and trade payables with Sciences (see Note 10);

• Issued 4,894,055 Common Shares with a value of $1,009 to settle outstanding interest on the convertible debentures (see Note 11);

• During February 2020, the Company closed a private placement resulting in the issuance of 10,344,827 units at a price of $0.29 per unit, for gross proceeds of $3,000. Each unit consisted of one Common Share and one common share purchase warrant. The warrants were valued using the residual value method at $164 (Note 14);

• During April 2020, 175,000 restricted stock units vested triggering the issuance of 175,000 Common Shares for no cash proceeds;

• On April 9, 2020, the Company amended the terms of certain common share purchase warrants that were originally issued on September 9, 2019 (the “September Warrants”). An aggregate of 12,500,000 September Warrants were initially issued at an exercise price of $2.00 per Common Share of the Company in connection with a $25,000 convertible debenture financing. The Company amended the exercise price of the September Warrants such that: 6,250,000 September Warrants will have an exercise price of $0.17 per Common Share (the "$0.17 Warrants"). If, at any time prior to the expiry date of the $0.17 Warrants, the closing market price of the Common Shares on the TSXV is greater than $0.2125 for 10 consecutive trading days, the Company may deliver a notice to the holder of the $0.17 Warrants accelerating the expiry date of the $0.17 Warrants to the date that is 30 days following the date of such notice; and 6,250,000 Warrants will have an exercise price of $0.21 per Common Share (the "$0.21 Warrants"). If, at any time prior to the expiry date of the $0.21 Warrants, the closing market price of the Common Shares on the TSXV is greater than $0.2625 for 10 consecutive trading days, the Company may deliver a notice to the holder of the $0.21 Warrants

21

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

accelerating the expiry date of the $0.21 Warrants to the date that is 30 days following the date of such notice (collectively, the “Warrant Repricing”). All other provisions of the September Warrants will remain the same and will still expire on September 9, 2021. Upon TSXV approval, the holders of the $0.17 Warrants immediately exercised all such warrants for proceeds of $1,063 to the Company; and

• During June 2020, the Company closed a private placement resulting in the issuance of 11,351,351 units at a price of $0.185 per unit, for gross proceeds of $2,100. Each unit consisted of one Common Share and one common share purchase warrant. The warrants were valued using the residual value method at $Nil (Note 14).

13. Share-Based Compensation

(a) Stock Options

The Board of Directors has the discretion to determine to whom options will be granted, the number and exercise price of such options and the terms and time frames in which the options will vest and be exercisable. The exercise price of the options must be no less than the closing market price of the Common Shares on the day preceding the grant. The maximum number of common shares issuable upon the exercise or redemption and settlement of all awards granted shall not exceed 10% of the issued and outstanding shares at the time of granting of such award less the number of shares reserved for issuance under all other security based compensation arrangements of the Company. The following types of awards can be issued: stock options, share appreciation rights, restricted share units and other performance awards.

The following table summarizes the stock options that remain outstanding as at September 30, 2020:

			Weighted Average
	Stock Options		Exercise Price
	#		$
Balance at December 31, 2018	9,894,211		2.31
Granted	6,615,500		3.77
Forfeited	(2,564,934	)	3.77
Exercised	(1,563,143	)	0.74
Balance at December 31, 2019	12,381,634		2.99
Granted	9,877,500		0.24
Forfeited	(3,187,472	)	2.88
Expired	(1,500,000	)	0.45
Balance at September 30, 2020	17,571,662		1.68

During the nine months ended September 30, 2020, the Company granted 9,877,500 stock options to employees, directors and consultants. The stock options granted had exercise prices between $0.17 and $0.32, have expiry dates of five years. Stock options issued to employees and consultants vest over three years and stock options issued to directors vest either immediately, or over twelve months. The weighted average fair value of the stock options granted was $0.14. There were no options exercised during the three and nine months ended September 30, 2020.

22

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

The fair values of the options granted during the nine months ended September 30, 2020 and 2019 were determined on the date of the grant using the Black-Scholes option pricing model with the following assumptions:

		September 30		September 30
		2020		2019
Risk free interest rate		0.25% - 1.65%		1.29% - 1.85%
Expected life of options (years)		2.59		2.78
Expected annualized volatility		93.07% - 104.54%		95.99% - 105.68%
Expected dividend yield		Nil		Nil
Weighted average Black Scholes value of each option	$	0.14	$	2.36

Volatility was determined by using the historical volatility of the Company. The expected life in years represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on Canada government bonds with a remaining term equal to the expected life of the options.

Incentive stock options outstanding and exercisable at September 30, 2020 are summarized as follows:

	Outstanding			Exercisable
			Weighted		Weighted
Range of		Remaining	average		average
exercise		contractual	exercise		exercise
prices	Quantity	life (years)	price	Quantity	price
$			$		$
0.165 - 0.29	8,970,000	4.60	0.24	3,364,711	0.21
0.30 - 1.16	1,210,000	1.70	0.64	1,015,000	0.70
1.17 - 1.47	843,662	3.60	1.26	758,662	1.24
1.48 - 3.69	1,556,750	3.28	2.80	965,250	2.87
3.70 - 4.60	4,766,250	3.17	4.18	3,391,250	4.18
4.61 - 5.69	225,000	2.42	5.68	168,750	5.68
	17,571,662	3.82	1.68	9,663,623	2.10

The Company recorded share-based compensation expense related to the stock options of $532 and $1,843 for the three and nine months ended September 30, 2020 (September 30, 2019 - $2,495 and $10,258).

23

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

(b) Restricted Share Units (“RSUs”)

The Board of Directors has the discretion to determine to whom restricted share units (“RSUs”) will be granted, the number granted, and the terms and time frames in which the RSUs will vest and be settled.

			Weighted average
			fair value per
	Number of RSUs		unit at issue
	#		$
Balance at December 31, 2018	830,000		3.74
Granted	475,000		4.15
Settled	(355,000	)	4.27
Forfeited	(280,000	)	2.06
Balance at December 31, 2019	670,000		4.46
Granted	550,000		0.27
Settled	(175,000	)	4.15
Forfeited	(65,152	)	3.25
Balance at September 30, 2020	979,848		2.24

During the three and nine months ended September 30, 2020, the Company issued 550,000 RSUs to various employees and consultants, that vest 375,000 on February 6, 2021 and 175,000 on August 3, 2021 and settle in Common Shares. The Company recorded share-based compensation expense related to the RSUs of $223 and $742 for the three and nine months ended September 30, 2020 (September 30, 2019 – $498 and $1,178).

14. Warrants

For details of the issuance of warrants see Note 12.

		Weighted
	Number of	Average
	Warrants	Exercise Price
	#	$
Balance at December 31, 2018	8,411,764	2.92
Issued in September 2019	12,500,000	0.17
Issued in November 2019	4,385,965	0.75
Issued in December 2019	5,172,942	0.39
Expired	(4,000,000)	5.20
Balance at December 31, 2019	26,470,671	0.42
Issued in February 2020	10,344,827	0.39
Exercised in April 2020	(6,250,000)	0.17
Issued in June 2020	11,351,351	0.27
Balance at September 30, 2020	41,916,849	0.41
Expiry:
September 2021	6,250,000	0.17
November 2021	4,411,764	0.85
June 2023	11,351,351	0.27
November 2024	4,385,965	0.75
December 2024	5,172,942	0.39
February 2025	10,344,827	0.39
Balance at September 30, 2020	41,916,849	0.41

24

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

15. Leases

The Company’s leases consist primarily of land, office space, as well as miscellaneous production and other equipment. Information about the right-of-use assets and associated lease liabilities are seen below.

a) Right-of-Use Assets

	Land	Buildings		Equipment		Total
	$	$		$		$
Costs:
Balance, applied January 1, 2019	3,634	1,372		178		5,184
Additions	-	1,774		21		1,795
Disposals	-	-		(38	)	(38	)
Balance, applied December 31, 2019	3,634	3,146		161		6,941
Additions	-	57		-		57
Disposals	-	(1,774	)	-		(1,774	)
Balance, September 30, 2020	3,634	1,429		161		5,224
Accumulated Depreciation:
Balance, applied January 1, 2019	182	450		22		654
Additions	121	518		20		659
Balance, applied December 31, 2019	303	968		42		1,313
Additions	91	396		33		520
Disposals	-	(433	)	-		(433	)
Balance, September 30, 2020	394	931		75		1,400
Carrying value:
September 30, 2020	3,240	498		86		3,824
December 31 2019	3,331	2,178		119		5,628

b) Lease Liabilities

The following table reconciles the opening and ending balances of the lease liabilities:

	$
Lease liabilities recognized at December 31, 2019	5,944
Lease additions	57
Lease renewals	(83	)
Lease disposals	(1,358	)
Lease payments	(629	)
Interest incurred	267
Balance, September 30, 2020	4,198

25

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

The Company expects the following maturities of its undiscounted lease liabilities:

Contractual Undiscounted Cash Flows:
	$
Within 1 year	652
1 <3 years	1,027
3 <5 years	665
Over 5 years	6,960
Balance, September 30, 2020	9,304

For the three and nine months ended September 30, 2020, amounts of $52 and $168 respectively, (September 30, 2019 - $10 and $28) have been recorded in operating costs for the Company related to variable lease payments, and amounts relating to short term leases, and leases for low value assets.

16. Revenue

A summary of the Company’s sales by product line is provided in the table below:

	For the three	For the three	For the nine	For the nine
	months ended	months ended	months ended	months ended
	September  30 2020	September  30 2019	September  30 2020	September  30 2019
	$	$	$	$
Dried Cannabis	3,595	7,855	7,839	12,920
Cannabis Oils	695	1,781	2,775	4,296
Other	21	82	136	182
Total	4,311	9,718	10,750	17,398

17. General and Administrative Expenses

	For the three	For the three	For the nine	For the nine
	months ended	months ended	months ended	months ended
	September 30 2020	September 30 2019	September 30 2020	September 30 2019
	$	$	$	$
Professional, director and consulting fees	1,416	1,387	2,631	3,780
Corporate communications and media	54	345	198	1,330
Wages and benefits	775	1,625	3,000	4,254
Office and general	487	781	1,496	2,013
Travel and accommodations	-	200	85	444
Total	2,732	4,338	7,410	11,821

18. Segmented Information

Operating segments are components of the Company that engage in business activities which generate revenues and incur expenses (including intercompany revenues and expenses related to transactions conducted with other components of the Company). The operations of an operating segment are distinct and the operating results are regularly reviewed by the chief operating decision maker (“CODM”), the Company’s CEO, for the purposes of resource allocation decisions and assessing its performance. Reportable segments are Operating segments whose revenues or profit/loss or total assets exceed ten percent or more of those of the combined entity.

26

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

Key measures used by the CODM to assess performance and make resource allocation decisions include sales, income (loss) from operations and net (loss) income. The Company's operating results are divided into two reportable segments. The two reportable segments are (i) Cannabis; and (ii) Other. The Company primarily operates in the Cannabis segment.

	Cannabis		Other		Total
	$		$		$
For the three months ended September 30, 2020
Sales	4,290		21		4,311
Interest and other income	16		13		29
Loss from operations	(6,251	)	(3,628	)	(9,879	)
Net loss and comprehensive loss	(7,615	)	(4,043	)	(11,658	)
Share of income (loss)  from joint venture	(520	)	-		(520	)
For the nine months ended September 30, 2020
Sales	10,668		82		10,750
Interest and other income	729		122		851
Loss from operations	(8,836	)	(10,170	)	(19,006	)
Net loss and comprehensive loss	(23,640	)	(11,840	)	(35,480	)
Share of income (loss)  from joint venture	4,497		-		4,497
	Cannabis		Other		Total
	$		$		$
For the three months ended September 30, 2019
Sales	9,636		82		9,718
Interest and other income	692		(471	)	221
Loss from operations	(6,143	)	(8,552	)	(14,695	)
Net loss and comprehensive loss	(9,364	)	(8,097	)	(17,461	)
Share of income (loss)  from joint venture	(1,202	)	-		(1,202	)
For the nine months ended September 30, 2019
Sales	17,222		176		17,398
Interest and other income	644		380		1,024
Loss from operations	(20,248	)	(18,144	)	(38,392	)
Net loss and comprehensive loss	(3,960	)	(17,602	)	(21,562	)
Share of income (loss)  from joint venture	19,099		-		19,099

27

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

19. Financial Instruments

Financial instruments are measured either at fair value or at amortized cost.

The carrying value of the cash and cash equivalents, accounts receivable (excluding statutory receivable balances), due from related parties, refundable deposits, accounts payable and accrued liabilities, current portion of long-term debt, deferred payment, payable to joint venture and amounts due to related parties, approximate the fair value because of the short-term nature of these instruments. These are carried at amortized cost.

The Company’s financial instruments that are recorded at fair value are presented in the following table:

	Fair Value Measurement
	Level 1	Level 2	Level 3	Total
As at September 30, 2020	$	$	$	$
Financial Assets
Long-term investments	250	223	-	473
As at December 31, 2019
Financial Assets
Long-term investments	50	31	-	81

Fair Value Hierarchy

Financial instruments recorded at fair value are classified using a hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels of hierarchy are:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and

Level 3 - Inputs for the asset or liability that are not based on observable market data.

The Company is exposed to varying degrees to a variety of financial instrument related risks:

Currency risk

The Company’s functional and presentation currency is the Canadian dollar and major purchases are transacted in Canadian dollars. As a result, the Company’s exposure to foreign currency risk is minimal.

Credit risk

Credit risk is the risk of an unexpected loss to the Company if a customer or third-party to a financial instrument fails to meet its contractual obligations. The Company’s maximum exposure to credit risk as at September 30, 2020 is the carrying value of its financial assets. The Company’s cash and redeemable short-term investment certificates are largely held in large Canadian financial institutions. The Company maintains cash deposits with Schedule A financial institutions, which from time to time may exceed

28

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

federally insured limits. With regards to receivables, the Company is not exposed to significant credit risk as the Company’s sales are to government bodies or are typically paid at the time of the transaction. The Company provides credit to some of its customers in the normal course of business.

Interest rate risk

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial assets and liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company does not hold any financial liabilities with variable interest rates. The Company does maintain bank accounts and redeemable short-term investment certificates which earn interest at variable rates, but it does not believe it is currently subject to any significant interest rate risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities. The Company’s ability to continue as a going concern is dependent on management’s ability to raise required funding through future equity issuances and through short term borrowing. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments. Please refer to Note 1 for discussion on the Company’s ability to cover its current liabilities.

COVID-19

The spread of COVID-19 is expected to have a material adverse effect on global and regional economies, and continues to negatively impact stock markets, including the trading price of the Company’s shares. The adverse effects on the economy, the stock market, and the Company’s share price could adversely impact the Company’s ability to raise capital, or its ability to pursue other strategic initiatives.

20. Capital Management

As at September 30, 2020, the capital structure of the Company consists of $134,545 (December 31, 2019 - $156,621) in shareholders’ equity and debt.

The Company’s objective when managing its capital is to ensure sufficient equity financing to fund its planned operations in a way that maximizes the shareholder return given the assumed risks of its operations. The Company considers shareholders’ equity as capital. Through the ongoing management of its capital, the Company will modify the structure of its capital based on changing economic conditions. In doing so, the Company may issue new shares. Annual budgeting is the primary tool used to manage the Company’s capital. Updates are made as necessary to both capital expenditure and operational budgets in order to adapt to changes in risk factors, proposed expenditure programs and market conditions.

29

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2020 and 2019

(Unaudited – Amounts reflected in thousands of Canadian dollars, except share and per share amounts)

21. Subsequent Events

Share Purchase Agreement for Sale of Pure Sunfarms

On November 2, 2020, the Company completed the sale of its 41.28% interest in its Joint Venture, Pure Sunfarms for consideration of $79,900. Pursuant to the PSF Share Purchase Agreement, the Company sold its 36,958,500 common shares to its Joint Venture Partner, representing all of the remaining shares of Pure Sunfarms not previously held by the Company’s Joint Venture partner, for an aggregate purchase price of $79,900 (the "Purchase Price"). The Company received $60,000 of the Purchase Price in cash at closing and acquired a secured promissory note to the Company in the principal amount of $19,900 (the "Note"). The Note will mature in six months from the date hereof, is secured against a certain number of common shares of Pure Sunfarms held by the Joint Venture partner and bears interest at a rate of 12% per annum. In addition, the Company's obligations under a promissory note in the principal amount of $952 that the Company had issued to PSF on March 6, 2020, have been settled without any payment.

Sale of Shares in Avricore

On October 5, 2020, the Company sold its 1,666,667 common shares in Avricore for $206.

Settlement of Convertible Debentures

On November 24, 2020, the Company fully prepaid in cash all amounts owing under the Convertible Debentures issued to certain Canadian institutional accredited investors (the “Debentureholders”) by the Company on September 9, 2019 (see Note 11). As a result, the Convertible Debentures are now terminated, and the Company has no further obligations thereunder.

The Convertible Debentures were due to mature on September 9, 2021, with no right for the Company to prepay amounts owing. However, the Debentureholders consented to the early repayment of all amounts owing under the Convertible Debentures in exchange for payment of a consent fee of $82 (the “Consent Fee”). A total of $25,568 in cash was paid by the Company to the Debentureholders, representing $25,000 in principal repayment, $486 in accrued interest and the Consent Fee.

30

EX-99.2

Exhibit 99.2

TABLE OF CONTENTS
Overview	12
Disclosure of Outstanding Share Data	20
Summary of Quarterly Results	21
Results of Operations of	22
Additional Disclosure for Venture Issuers Without Significant Revenue	28
Liquidity and Capital Resources	28
Operating, Investing and Financing Activities	30
Financial Risk Management	30
Measurement Uncertainty and Impairment Assessments	31
Transactions with Related Parties	31
Proposed Transactions	33
Critical Accounting Policies and Estimates	33
Changes in Accounting Standards not yet Effective	33
Off-Balance Sheet Arrangements	33
Risks and Uncertainties	33
Forward-Looking Statements	35

Management's Discussion and Analysis

The following MD&A is prepared as of November 25, 2020 and is intended to assist the understanding of the results of operations and financial condition of the Company.

This MD&A should be read in conjunction with the unaudited condensed interim consolidated financial statements and accompanying notes of the Company for the three and nine months ended September 30, 2020, which have been prepared in accordance with IAS 34 – Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”) and the annual consolidated financial statements for the years ended December 31, 2019, 2018, and 2017 which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB. This MD&A contains forward-looking statements that are subject to risk factors set out in a cautionary note contained herein. All figures are in Canadian dollars unless otherwise noted.

Additional information related to the Company is available on its website at www.emeraldhealth.ca. Other information related to the Company, including the Company's most recent Annual Information Form ("AIF") and financial statements referred to herein are available on the Canadian Securities Administrator's website at www.sedar.com.

Overview

Emerald Health Therapeutics, Inc. (the "Company"), was incorporated pursuant to the Business Corporations Act (British Columbia) on July 31, 2007. The Company is classified as a Tier 1 Venture Issuer on the TSX Venture Exchange (the "TSXV”), with its common shares listed under the trading symbol “EMH.” The Company is also traded on the OTCQX, with its common shares listed under the trading symbol “EMHTF.”

The Company owns:

(a)	100% of the shares of EHTC, a British Columbia-based licence holder under the Cannabis Act (Canada) (the "Cannabis Act");
(b)	100% of the shares of Verdélite Sciences, Inc. (formerly, Agro-Biotech Inc.) ("Verdélite"), a Québec-based licence holder under the Cannabis Act;
(c)	100% of the shares of Verdélite Property Holdings, Inc. (formerly, Agro-Biotech Property Holdings Inc.) ("Verdélite Holdings"), a Québec-based holding corporation that owns the Verdélite facility (as defined below); and
(d)	51% of the shares of Emerald Health Naturals Inc. ("EHN"), a joint venture between the Company and Emerald Health Bioceuticals, Inc. ("EHB").

The Company, through EHTC, also holds:

100% of the shares of Avalite Sciences Inc. (formerly Northern Vine Canada Inc.) ("Avalite"), a British Columbia-based licenced dealer under the provisions of the Controlled Drugs and Substances Act (Canada) (the "CDSA") and a licence holder under the Cannabis Act.

- 12 -

On March 9, 2020 the Company entered into a letter of intent contemplating the sale of its indirect interest in Avalite. As of the date hereof no formal sale agreement has been signed and this transaction has not closed.

On July 30, 2020 the Company entered into a share purchase agreement with Quinto Resources Inc. in respect of the sale of the Company's interest in Verdélite and Verdélite Holdings as discussed below under “Development of Business in the nine months ended September 30, 2020”. As of the date hereof this transaction has not closed.

On November 2, 2020, the Company completed the sale of its 41.28% of the shares of Pure Sunfarms Corp. (the "Joint Venture"), as discussed below in the “Development of Business after the Reporting Period” section.

Coronavirus

In December 2019, the novel Coronavirus (“COVID-19”) emerged in Wuhan, China, and has since spread throughout the world. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. In response to this, global reactions have led to significant restrictions on travel, quarantines, temporary business closures and a general reduction in consumer activity. Sales of the Company's products for the adult use recreational market are primarily with government bodies, which continue to offer end customers online ordering and home delivery options. Consumer market retail stores are generally permitted to remain open subject to adhering to the required social distancing measures. All of the Company’s facilities in Canada continue to be operational at full capacity and the Company continues to work closely with local, provincial and national government authorities to ensure that it is following the required protocols and guidelines related to COVID-19 within each region. Although none of the Company's facilities have to date been subject to any closures, the Company cannot provide assurance that there will not be disruptions to its operations in the future. Refer to the “Risk Factors” section below for further discussion on the potential impacts of COVID-19.

The Company continues to closely monitor the rapid evolution of COVID-19 with a focus on the jurisdictions in which the Company operates. During this period of uncertainty, it is the Company’s priority to safeguard the health and safety of its personnel, support and enforce government actions to slow the spread of COVID-19, and continually assess and mitigate the risks to its business operations. The Company has taken responsible measures to reduce risks and maximize the safety of staff working at all of its facilities. This includes working remotely, reorganizing physical layouts, adjusting schedules to improve physical distancing, implementing extra health screening measures for employees, and applying rigorous standards for personal protective equipment. The Company continues to maintain regular communications with legal and government representatives, suppliers, customers and business partners to identify and monitor any potential risks to our ongoing operations.

COVID-19 impact on near term operations

The impact of the COVID-19 pandemic on the drivers of growth in the Canadian consumer market is difficult to forecast. While the Company is optimistic about the total accessible market size of Canadian consumer cannabis over time, the variables related to the pandemic make the short-term growth of the market, and the Company’s revenue expectations difficult to project. Due to the uncertainty, magnitude and duration of the pandemic, COVID-19 impacts on the Company’s operations and financial results, continue to be highly uncertain and cannot be predicted with confidence.

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Development of Business in the nine months ended September 30, 2020

Highlights

• Entered into a share purchase agreement for the sale of the Company’s interest in the Joint Venture, in consideration for $79.90 million

• Launched its Québec brand, Souvenir™

• Announced and shipped the first batches of its new nanoemulsion-based Fast Action Spray THC product line

• Shipped its first harvest of premium cannabis from its Metro Vancouver greenhouse

• In partnership with STENOCARE, received Swedish Medicines Agency approval to provide medical cannabis oil to patients

• Completed prospectus offerings raising $5.10 million in gross proceeds

• Extinguished $3.92 million of debt in exchange for issuance of shares

• Signed a Letter of Intent for the sale of Avalite with Sigma Analytical Services Inc.

• Entered into a share purchase agreement for the sale of Verdélite Sciences and Verdélite Holdings, together, in consideration for a cash purchase price of $21.0 million

• At-the-market program (“ATM Program”) financing raised $0.29 million

On January 31, 2020, the Company settled $2.82 million (the "Debt") of the aggregate debt owed by the Company to Emerald Health Sciences Inc. (“Sciences”), a control person of the Company, in exchange for the issuance of 9,713,666 Common Shares of the Company (each, a "Debt Share") at a deemed value of $0.29 per Debt Share (the "Debt Settlement"). The Debt consisted of: (i) $0.80 million owed to Sciences pursuant to a previously disclosed loan agreement between the parties; and (ii) $2.02 million owed to Sciences pursuant to a previously disclosed hemp supply agreement in which Emerald received approximately 135,000 kg of product. The Debt Settlement was approved by the independent members of the board of directors of the Company.

In lieu of the remaining portion of a private placement announced on December 16, 2019 (the "December 2019 Private Placement"), on February 6, 2020, the Company closed the initial tranche of a prospectus offering by issuing 7,596,551 units to certain accredited investors at a price of $0.29 per unit for aggregate gross proceeds of $2.20 million. Each unit consisted of one Common Share and one common share purchase warrant. Each warrant entitles the holder thereof to acquire one Common Share at a price of $0.385 per Common Share until February 6, 2025. In the event that the closing sale price of the Common Shares on the TSXV, or such other principal exchange on which the Common Shares are then trading, is greater than $0.75 per Common Share for a period of ten consecutive trading days at any time, the Company may accelerate the expiry date of the warrants by giving written notice to the holder thereof and in such case the warrants will expire on the 15th day after the date on which such notice is given by the Company.

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Also on February 6, 2020 an additional 1,322,627 Common Shares were issued to certain accredited investors at a deemed price of $0.29 per Common Share to settle interest in the amount of $0.38 million accrued to December 31, 2019 on the Company's outstanding convertible debentures (the "Convertible Debentures").

On February 14, 2020, the Company closed the final tranche of a prospectus offering by issuing 2,748,276 units to certain accredited investors at a price of $0.29 per unit for aggregate gross proceeds of $0.80 million. Each unit consists of one Common Share and one common share purchase warrant. Each warrant will entitle the holder thereof to acquire one Common Share at a price of $0.385 per Common Share until February 14, 2025 and is subject to the same acceleration provisions as the warrants which were issued on February 6, 2020.

On March 9, 2020, the Company announced that it had signed a letter of intent under which Sigma Analytical Services Inc. (“Sigma”), a full-service Good Manufacturing Practices (“GMP”)-compliant testing laboratory for cannabis, hemp, and derived products, may acquire Avalite’s cannabis analytical testing operation. The companies also intend to establish a preferred partner relationship. The execution of definitive agreements is subject to due diligence and board approval of both companies. Completion of the transaction will be subject to a number of conditions including settlement of final documentation and receipt of applicable regulatory and third-party approvals. As of the date hereof no formal sale agreement has been signed and this transaction has not closed. The parties remain in negotiations regarding final terms of the proposed sale.

On April 9, 2020, the Company amended the terms of the 12,500,000 common share purchase warrants originally issued on September 9, 2019 (the "September 2019 Warrants") in connection with the issuance of the Convertible Debentures. The exercise price of the September 2019 Warrants was amended from the original exercise price of $2.00 per Common Share such that:

• 6,250,000 September 2019 Warrants had an exercise price of $0.17 per Common Share (the "$0.17 Warrants"); and

• 6,250,000 September 2019 Warrants have an exercise price of $0.21 per Common Share (the "$0.21 Warrants"). If, at any time prior to the expiry date of the $0.21 Warrants, the closing market price of the Common Shares on the TSXV is greater than $0.2625 for 10 consecutive trading days, the Company may deliver a notice to the holder of the $0.21 Warrants accelerating the expiry date of the $0.21 Warrants to the date that is 30 days following the date of such notice.

Holders of the $0.17 Warrants immediately exercised all such warrants after the amendment for gross proceeds to the Company of $1.06 million. The $0.21 Warrants remain outstanding and expire on September 9, 2021.

On April 29, 2020, the Company announced its new nanoemulsion-based Fast Action Spray product line, an important step in the Company’s Cannabis 2.0 strategy and a unique offering in the Canadian cannabis marketplace. This unique formulation is expected to offer advantages over existing formats of cannabis consumption in terms of convenience and predictability of consumption. The product line will consist of CBD and THC cannabinoids mixed with specific terpenes and flavorings.

On May 8, 2020, the Company announced that its had issued an aggregate of 1,500,000 stock options to directors at an exercise price of $0.165 per common share for a period of five years. The options vested immediately.

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On May 27, 2020, the Company announced that it had terminated the previously disclosed sublease agreement ("Sublease Agreement") and cultivation agreement ("Cultivation Agreement") pertaining to its cannabis cultivation operation in Metro Vancouver with Sciences, a control person of the Company. Previously existing rights and continuing usage of the land and its cultivation operation in Metro Vancouver are unaffected by these terminations. The Company confirms that no payments were made to Sciences under either the Sublease Agreement or the Cultivation Agreement. The Company's previously existing rights related to the 12-acre land parcel that was subject to the Sublease Agreement and Cultivation Agreement are unaffected by these terminations.

On June 2, 2020, the Company announced that it had closed a prospectus offering pursuant to which the Company issued 11,351,351 units to certain institutional accredited investors at a price of $0.185 per unit for total gross proceeds of $2.1 million. Each unit consisted of one Common Share of the Company and one Common Share purchase warrant. Each warrant entitles the holder thereof to acquire one additional Common Share at a price of $0.27 per Common Share until June 2, 2023. In the event that the closing sale price of the Common Shares on the TSXV, or such other principal exchange on which the Common Shares are then trading, is greater than $0.40 per Common Share for a period of 10 consecutive trading days at any time after the closing of the Offering, the Company may accelerate the expiry date of the warrants by giving written notice to the warrant holders and in such case the warrants will expire on the 15th day after the date on which such notice is given by the Company.

On June 23, 2020, the Company announced the launch of its new Souvenir™ cannabis brand in the province of Québec. The Souvenir™ brand, which is focused on bringing unique offerings to the Québec market at a competitive price point, saw its first distribution through the Société Québécoise du cannabis (“SQDC”) at the end of June in both SQDC retail and online stores.

On July 15, 2020, the Company announced the termination of certain related party agreements pertaining to consulting services and a loan facility with Sciences. These agreements consisted of an independent contractor agreement entered on May 1, 2015, as amended from time to time (the “Consulting Agreement”), and a loan agreement entered on August 25, 2015, as amended from time to time (the “Loan Agreement”). Sciences and the Company have agreed to terminate the Consulting Agreement and Loan Agreement effective July 15, 2020. In addition, the Company’s 51%-owned joint venture, EHN, and Avricore Health Inc. (“Avricore”, then named VANC Pharmaceuticals, Inc.) terminated a supply and distribution agreement that was entered into on April 15, 2018, effective immediately.

On July 31, 2020, the Company announced that it had entered into a share purchase agreement with Quinto Resources Inc. (“Quinto”) dated July 30, 2020 (the "Quinto SPA”) in respect of the sale of the Company’s wholly-owned subsidiaries, Verdélite and Verdélite Holdings (together the “Subsidiaries”). The Subsidiaries together own and operate the premium 88,000 square foot craft cannabis production indoor facility (the “Facility”) in St. Eustache, Québec.

Pursuant to the Quinto SPA, Quinto has agreed to purchase all of the issued and outstanding shares of the Subsidiaries in consideration for a cash purchase price of $21.00 million, subject to a 90-day working capital adjustment and certain other adjustments (the "Quinto Transaction"). The Quinto SPA was negotiated at arm's-length.

Upon closing of the Quinto Transaction, the Subsidiaries will become wholly-owned subsidiaries of Quinto and Quinto will continue the business of the Subsidiaries. Following closing of the Quinto Transaction, the

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Company will continue to sell its own products into the Québec market, subject to certain limited restrictions, and will retain exclusive rights to its recently launched Souvenir™ brand.

The purchase price will be subject to a $0.75 million holdback for the working capital adjustment and as an indemnity for certain pre-existing litigation. The Quinto SPA contains representations and warranties, covenants, conditions and indemnities for the benefit of each of the parties as are customary for transactions of this nature. Completion of the Quinto Transaction is subject to the completion of a number of conditions, including obtaining applicable consents and approval of the purchaser’s shareholders. Pursuant to the Quinto SPA, the closing date was required to occur on or before August 31, 2020. To date certain closing conditions have not been satisfied by Quinto, including receipt by Quinto of required stock exchange and shareholder approvals. As a result, the transaction has not yet closed, and the Company has no certainty as to when or if such closing conditions will be satisfied. The Company is entitled to terminate the Quinto SPA in the event that closing has not occurred prior to August 31, 2020. The Company has not yet exercised this right and is currently in negotiations with Quinto as to a potential extension of the closing date.

On August 3, 2020, the Company announced that it had issued an aggregate of 3,800,000 stock options to employees, consultants and directors at an exercise price of $0.21 per common share for a period of five years. Options issued to the directors will vest over twelve months, while all other stock options will vest 25% on the date of grant and 25% on the first three anniversaries of the date of grant. The Company also granted an aggregate of 175,000 restricted share units to certain employees. The restricted share units will vest one year from the grant date and convert into common shares of the Company at a fair market value of $0.21 per common share.

On August 13, 2020, the Company announced that it had established a new ATM Program pursuant to an equity distribution agreement with Eight Capital, as underwriter, that allows the Company to issue common shares from treasury having an aggregate gross sales price of up to $3.25 million to the public from time to time at the Company’s discretion, at the prevailing market price when issued. The ATM Program will expire on the earlier of April 13, 2021 and completion of the sale of the maximum amount of shares thereunder and will be activated from time to time at the Company’s discretion if and when required based on the Company’s working capital requirements and capital expenditures and relative cost of other funding options. During the three months ended September 30, 2020, an aggregate of 1,312,500 common shares were sold by the Company under the new ATM Program for gross proceeds of $0.29 million.

On August 31, 2020, the Company announced the launch of its Fast Action SYNC™ Nano cannabis spray products for adult-use. The Company’s Fast Action SYNC™ 15 Nano THC contains 15 mg/ml of THC, natural citrus flavouring and limonene terpene. Ontario, Saskatchewan and Alberta have received initial shipments of the Fast Action SYNC™ 15 Nano THC. Additionally, the Company launched its Fast Action SYNCMED CBD Nano Spray into the medical market in July.

On September 8, 2020, the Company announced that it had entered into a share purchase agreement (the "SPA") with Village Farms International, Inc. ("Village Farms") in respect of the sale of the Company's interest in the Joint Venture that was established between the Company and Village Farms in 2017, in which the Company held a 41.28% interest.

Pursuant to the SPA, which was negotiated at arm’s length, Village Farms agreed to purchase 36,958,500 common shares in the authorized share structure of the Joint Venture, representing all of the remaining

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shares of the Joint Venture not held by Village Farms, for an aggregate purchase price of $79.90 million (the "Transaction"). A minimum of $60.00 million of the purchase price was required to be paid in cash at closing. In addition, $0.95 million of the Company's obligations under a promissory note that the Company had issued to the Joint Venture on March 6, 2020, may be settled or the purchase price will be increased accordingly. The remainder of the purchase price was to be settled pursuant to the issuance by Village Farms at closing of a secured promissory note to the Company (the "Note"). The Note will mature six months after closing and will be secured against a certain number of common shares of the Joint Venture held by Village Farms and will bear interest at a rate of 12% per annum.

On September 10, 2020, the Company in partnership with STENOCARE A/S announced that they have received special approval from the Swedish Medicines Agency to provide medical cannabis oil to Swedish patients who have applied via their doctor to use such products for treatment purposes. STENOCARE, located in Denmark, is a leading supplier of prescription-based medical cannabis products for patient treatment to help them improve quality of life. The Company will not sell directly to consumers but will supply STENOCARE with its medical cannabis products for Denmark and other markets such as Sweden.

On September 16, 2020, the Company closed its transaction with the holders of the Convertible Debentures to settle accrued interest on the Convertible Debentures to June 30, 2020 in the amount of $0.63 million by issuing an additional 3,571,428 common shares of the Company at a deemed value of $0.175 per share.

Development of Business after the Reporting Period

Highlights

• Completed the sale of the Company’s interest in the Joint Venture receiving $60.00 million cash and a secured six-month promissory note in the principal amount of $19.90 million bearing 12% interest per annum

• Received a standard processing license for the Metro Vancouver greenhouse facility

• Shipped the first batches of its new nanoemulsion-based Fast Action Spray CBD product line

• Launched flavoured cannabis oils, expanding its SYNC™ product line

• Early repayment in full of the Convertible Debentures

• Sale of Avricore shares

On October 5, 2020, the Company sold its 1,666,667 common shares in Avricore for $0.21 million.

On October 13, 2020, the Company received a newly issued Standard Processing License from Health Canada for its 78,000 square foot organic-certified greenhouse facility in Metro Vancouver. The Processing License expands on the site’s existing cultivation licence to grow and produce bulk dried cannabis, to now also permit the processing of consumer-ready dried product formats at its purpose-built cannabis production facility. It also provides the opportunity to manufacture and package products derived from cannabis, including concentrates and other products created through new product development efforts.

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On October 19, 2020, the Company expanded its SYNC™ product line with the launch of new uniquely flavoured CBD cannabis oil products. The Company made its first product shipments to British Columbia, Saskatchewan and Nova Scotia, with following shipments to Alberta, Manitoba and Newfoundland. The product launch consisted of two CDB products.

The Company also announced the initial shipments of the Fast Action SYNC™ 15 Nano CBD had been received by British Columbia and Saskatchewan. SYNC™ 15 Nano CBD Fast Action Spray contains approximately 15 mg/g of CBD, with all-natural lemon flavouring and limonene terpene. Limonene has been scientifically demonstrated to impart a mellowing (anxiolytic¹) yet uplifting (anti-depressive¹) effect.

On November 2, 2020, the Company completed the sale of its 41.28% interest in the Joint Venture to Village Farms for consideration of $79.90 million.

Pursuant to the Transaction, Village Farms purchased 36,958,500 common shares in the authorized share structure of the Joint Venture, representing all of the remaining shares of Pure Sunfarms not held by Village Farms. Village Farms paid $60.00 million in cash at closing and issued the Note to the Company. The Note will mature in six months from the date of closing, is secured against a certain number of common shares of Pure Sunfarms held by Village Farms and bears interest at a rate of 12% per annum. In addition, the Company's obligations under a promissory note in the principal amount of $0.95 million that the Company had issued to the Joint Venture on March 6, 2020, have been settled without any payment.

On November 24, 2020, the Company fully prepaid in cash all amounts owing under the Convertible Debentures issued to certain Canadian institutional accredited investors (the “Debentureholders”) by the Company on September 9, 2019. As a result, the Convertible Debentures are now terminated, and the Company has no further obligations thereunder. The Convertible Debentures were due to mature on September 9, 2021, with no right for the Company to prepay amounts owing. However, the Debentureholders consented to the early repayment of all amounts owing under the Convertible Debentures in exchange for payment of a consent fee of $0.08 million (the “Consent Fee”). A total of $25.57 million in cash was paid by the Company to the Debentureholders, representing $25.00 million in principal repayment, $0.49 million in accrued interest and the Consent Fee.

For the remainder of 2020, the Company intends to focus its efforts on:

• Production and Processing – The focus is on delivering high-quality consumer products to the recreational and medical markets while leveraging internal expertise to support increased sales revenue.

• New Product Development – The Company intends to continue developing intellectual property as the second phase of recreational cannabis products become permissible in Canada. Specifically, development is focused on differentiated, novel and value-added products for its health and wellness, medical and adult-use recreational customers. These products are expected to be formulated and designed to provide distinctive benefits and improve outcomes for its customers, such as greater biovailability and defined dose parameters that align with the Company’s core strategy of enhancing health and wellness through modulation of the Endocannabinoid System.

¹ Baron, Eric P. DO. (2018, May 9). Medicinal Properties of Cannabinoids, Terpenes, and Flavonoids in Cannabis, and Benefits in Migraine, Headache, and Pain: An Update on Current Evidence and Cannabis Science. Headache Currents

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• Strategic Plan Development & Partnerships – The Company will be completing a comprehensive new strategic plan that will outline key focal points for its business in 2021 and beyond. The Company is also continuing to develop and nurture its strategic partnerships with outsourced extraction and processing companies with a goal of enhancing profitability and leveraging expertise in specific fields.

• Efficiency and Cost Control – The Company completed an internal reorganization, including the reduction of its workforce and other expenditures in the second half of FY2019 and the first half of 2020. The reorganization resulted in material cost savings and helped focus on improving cash flow going forward. The Company intends to continue to pursue efficiencies and seek other opportunities to reduce future expenses.

Licences

The Company holds licences from Health Canada under the Cannabis Act to produce and sell cannabis products in accordance with applicable laws in Canada (the "Licences"). The Company currently indirectly holds a number of licences through its wholly owned direct and indirect subsidiaries, EHTC, Verdélite and Avalite. The licences held by EHTC permit it to cultivate cannabis and produce and sell dried cannabis, cannabis oils, cannabis plants and cannabis seeds; the licences held by Verdélite permit it to cultivate, extract, manufacture, synthesize, test and sell cannabis; the licences held by Avalite permit it to process cannabis and produce cannabis oil for research purposes, and conduct analytical testing; all in accordance with the terms and conditions specified in the applicable Licences and the Cannabis Act.

Disclosure of Outstanding Share Data

The Company’s authorized share capital consists of an unlimited number of Common Shares of which 205,027,772 were issued and outstanding as of September 30, 2020 and 206,160,872 were issued and outstanding as of November 25, 2020.

During the nine months ended September 30, 2020, the Company granted an aggregate of 9,877,500 stock options to directors, employees and consultants. Each option is exercisable into one Common Share for a period of up to five years. The exercise prices at the time of the grants ranged from $0.17 and $0.32 per share. In addition, an aggregate of 550,000 restricted share units were granted during the nine months ended September 30, 2020. These restricted share units vest one year from the grant date and convert into Common Shares of the Company at a fair market value ranging from $0.21 to $0.30 per Common Share.

There were 17,571,662 stock options and 979,848 restricted share units outstanding as of September 30, 2020. As of November 26, 2020, there were 17,446,912 stock options and 979,848 restricted share units outstanding.

There were 41,916,849 warrants outstanding as of September 30, 2020 and 41,916,849 as of November 25, 2020.

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Summary of Quarterly Results

The financial information in the following tables summarizes selected information for the Company for the last eight quarters which was derived from annual financial statements prepared in accordance with IFRS or interim financial statements prepared in accordance with IFRS applicable to the preparation of interim financial statements, IAS 34, Interim Financial Reporting:

(000’s)	2020			2019
	September 30	June 30	March 31	December 31
	($)	($)	($)	($)
Revenue	4,311	3,106	3,333	4,940
Share-based payments	755	844	986	346
Interest and other income	29	809	13	(71)
Share of (loss) income from Joint Venture	(520)	(187)	5,205	492
(Loss) gain on changes in the fair value of the Company’s biological assets	(2,339)	871	644	3,159
Net Loss	(11,658)	(18,943)	(4,879)	(90,344)
Net Loss per share (basic and diluted)	(0.057)	(0.098)	(0.027)	(0.590)

(000’s)	2019			2018
	September 30	June 30	March 31	December 31
	($)	($)	($)	($)
Revenue	9,718	5,070	2,610	1,132
Share-based payments	2,993	6,421	2,023	1,297
Interest and other income	221	165	638	439
Share of (loss) income from Joint Venture	(1,202)	14,489	5,812	1,433
(Loss) gain on changes in the fair value of the Company’s biological assets	(433)	259	719	144
Net Loss	(17,461)	(453)	(3,649)	(13,924)
Net Loss per share (basic and diluted)	(0.121)	(0.003)	(0.026)	(0.100)

Included in the share of income from the Joint Venture for the three months ended September 30, 2020, is a loss of $2.21 million (September 30, 2019 –loss of $8.74 million) on the changes in the fair value of the Joint Venture’s biological assets.

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Results of Operations

Quarter ended September 30, 2020

The net loss for the quarter ended September 30, 2020, was $11.66 million (loss of $0.057 per share), compared to the net loss of $17.46 million (loss of $0.121 per share) for the same quarter in the prior year. Diluted loss per share is the same as basic loss per share as the outstanding options and warrants have an anti-dilutive effect on the loss per share.

Factors contributing to the net loss for the three-month period ended September 30, 2020 include the following:

Revenue

Revenue for the quarter ended September 30, 2020, was $4.31 million compared to $9.72 million for the same period in the prior year. The decrease of $5.41 million is mostly due from a $5.32 million sale of bulk dried cannabis to other licensed producers in the prior period. The revenue for the three months ended September 30, 2020 was impacted by a 10% increase in the adult recreational market sales as compared to the three months ended September 30, 2019. The Company shipped 60% more kilograms of dried flower and flower equivalent compared to the same period of the prior year. However, this increase was offset by a decrease in the average selling price per gram of dried cannabis and dried cannabis equivalent from $6.72 in the quarter ended September 30, 2019 to $3.54 in the current quarter. For the quarter ended September 30, 2020, revenue was comprised of approximately 83% dried product, 16% oils and 1% other, compared to approximately 81% dried product, 18% oils and 1% other in the quarter ended September 30, 2019. During the three months ended September 30, 2020, the Company’s revenues were from the adult recreational market and the medical market, whereas in the comparable three month period ended September 30, 2019, the Company also recorded opportunistic revenues of $5.32 million from the wholesale market.

	Three months ended September 30,
	2020	2019
Average selling price of adult-use dried flower per gram & gram equivalents	$3.54	$6.72
Kilograms sold of adult-use dried flower & kilogram equivalents	862	490
Average selling price of medical dried flower per gram & gram equivalents	$7.06	$8.94
Kilograms sold of medical dried flower & kilogram equivalents	42	74
Total kilograms produced of dried flower	2,459	229

Kilogram and gram equivalent represent the amount of dried flower used to produce the units of oils sold.

Cost of Sales

Cost of goods sold currently consists of four main categories: (i) cost of goods sold expensed from inventory, (ii) production costs, (iii) change in the fair value of biological assets, and (iv) amortization of the Health Canada licences.

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Cost of goods sold represents the deemed cost of inventory that arose from the fair value measurement of biological assets, subsequent post-harvest costs capitalized to inventory, purchased dried cannabis, costs to produce cannabis oils capitalized to inventory (including the deemed cost of dried inventory that arose from the fair value measurement of biological assets that were used to produce cannabis oils), and packaging costs. Cost of goods sold expensed from inventory for the quarters ended September 30, 2020 and September 30, 2019 was $2.50 million and $8.26 million, respectively. The decrease in cost of goods sold in the current period was due to a larger proportion of higher margin product sold and lower cost base of input material expensed by the Company as compared to the prior period. During the quarter ended September 30, 2020 the cost per gram of dried flower was $1.75. The Company does not have comparative information for the quarter ended September 30, 2019 as the Company was not yet in full production.

Production costs include all direct and indirect production related costs, including security, compliance, quality control and quality assurance costs, as well as overhead relating to the cultivation activities. All post harvest inventory production cost in excess of standard cost are not capitalized and recorded as a write-down of inventory. This included $420 of costs during the three months ended September 30, 2020 (September 30, 2019 - $nil). Inventory value in excess of net realizable value are written down as impairment. During the quarter ended September 30, 2020, the Company incurred production costs of $2.18 million versus $1.41 million in the quarter ended September 30, 2019. The Company was able to capitalize a significant amount of costs incurred to inventory during the period as a result of its two facilities being fully operational and harvesting 2,459 kilograms of dried flower and trim during the quarter ended September 30, 2020 as compared to 229 kilograms of dried flower and trim for the same period in the prior year.

During the three months ended September 30, 2020, the Company recognized $0.94 million (September 30, 2019 - $0.42 million) in excise taxes. The excise tax attributable to medical sales was absorbed by the Company as a cost and not passed on to the end patients.

The change in biological assets for the quarter ended September 30, 2020 was a loss of $2.34 million compared to a loss of $0.43 million in the same quarter of the prior year. The increased loss is substantially due to a change in estimates used for fair value less costs to sell (“FVLCS”) used as an input in the valuation of biological assets at the end of the quarter ended September 30, 2020. Previously, the Company used the average NRV of packaged finished good for sale in the recreational dry flower cannabis market. During the quarter ended September 30, 2020, the Company used the average NRV of bulk dry flower cannabis. Also included in this loss amount is $1.76 million resulting from a cull of plants during the three months ended September 30, 2020 compared to $nil in the same quarter of the prior year.

The amortization of the Health Canada licence represents the amortization of an acquired licence that is recorded at cost less accumulated amortization. Amortization will be expensed as a cost of sales and the unamortized balance will remain on the Company’s balance sheet as an intangible asset. Amortization of the licence is recognized on a straight-line basis irrespective of either production or sale of cannabis from that facility.

The Company measures biological assets consisting of cannabis plants at fair value less cost to sell up to the point of harvest, which becomes the basis for the cost of finished goods inventories after harvest. Seeds are measured at fair market value, except for a portion which are restricted with respect to distribution due to the conditions under which they were acquired that are measured at cost. The significant assumptions used in determining the fair value of cannabis plants are as follows: plant attrition

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rate for various stages of development; yield per plant; selling price less costs to sell; percentage of total expected costs incurred to date; and costs incurred for each stage of plant growth.

Gains recognized in the fair value of biological assets are recorded in a manner that decreases the cost of sales. Changes in the fair value of biological assets can be significant during periods of large expansion in the cultivation area. In determining the fair value of cannabis plants, assumptions are used regarding the variability in the average age and number of cannabis plants available at each period end.

Other expenses

General and Administrative – During the quarter ended September 30, 2020, the Company incurred general and administrative expenses of $2.73 million versus $4.34 million for the quarter ended September 30, 2019. The current quarter saw decreased expenses in professional and consulting services, wages and benefits, corporate communications and media and travel and accommodations expense. In the quarter ended September 30, 2020, general and administrative costs included; salaries and benefits of $0.77 million (three months ended September 30, 2019 - $1.62 million), consulting and professional services fees of $1.42 million (three months ended September 30, 2019 - $1.39 million), corporate communication and media expense of $0.05 million (three months ended September 30, 2019 - $0.35 million), office and insurance of $0.49 million (three months ended September 30, 2019 - $0.78 million) and travel and accommodation of $nil (three months ended September 30, 2019 - $0.20 million).

Sales and marketing – In the quarter ended September 30, 2020, the Company incurred sales and marketing expenses of $0.29 million versus $1.20 million in the comparable 2019 prior period. These costs are related to general sales and marketing, patient acquisition, and education expenses. The current period decrease reflects the Company’s focus on cost reduction and the use of internal resources.

Research and development – In the quarter ended September 30, 2020, the Company incurred research and development expenses of $0.27 million (three months ended September 30, 2019 - $1.18 million). These costs related to consulting fees and wages associated with the development of new cannabis products. The substantial decrease in research and development expenditures was related to the amendment of the management agreement with Sciences effective October 1, 2019 (see Related Party Transactions).

Share-based compensation – In the quarter ended September 30, 2020, the Company incurred share-based compensation expenses of $0.76 million versus $2.99 million in the comparable 2019 prior period. The amounts are compensation expenses related to employee, director and consultant incentive stock options and restricted share units which are measured at fair value at the date of grant and expensed over the vesting period. During the current quarter, the Company granted 3,797,500 stock options and 175,000 restricted share units to employees and consultants, compared to 727,500 stock options and nil restricted share units during the same period in 2019. The decrease in share-based compensation is due to the decrease in share price of the Company during the current quarter compared to the same period in 2019.

Share of income from joint venture & #8211; In the quarter ended September 30, 2020, the Company recognized $0.52 million as its share of loss versus $1.20 million as its share of income in the comparable 2019 prior period. Sales for the three months ended September 30, 2020, increased by 362% in provincial (retail) sales and decreased by 51.6% in wholesale selling price compared to the three months ended September 30, 2019. The net average selling price for the three months ended September 30, 2020 was lower than the net average selling price for the three months ended September 30, 2019 by 35.8%. Cost of sales for the three months ended September 30, 2020, had an increase of 96.1%. The third quarter 2020 cost of

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sales includes an inventory write down of $1,042 for distillate inventory. The year over year increase in costs was due to the increase in retail kilograms sold which require incremental packaging, overhead and logistic expenses compare to product sold through the wholesale channel.

Year to Date September 30, 2020

The net loss for the year to date, was $35.48 million (loss of $0.19 per share), compared to the net loss of $21.56 million (loss of $0.15 per share) for the same period in the prior year. The net loss for the period was impacted by a $17.06 million impairment on the Verdélite cash generating unit (“CGU”). Diluted loss per share is the same as basic loss per share as the outstanding options and warrants have an anti-dilutive effect on the loss per share.

Factors contributing to the net loss for the nine-month period ended September 30, 2020 include the following:

	2020	2019
	Nine months ended	Nine months ended
	September 30	September 30
(000’s)	($)	($)
Revenue	10,750	17,398
Share-based payments	2,585	11,437
Interest and other revenue	851	1,024
Share of income from joint venture	4,497	19,099
Net Loss	(35,480)	(21,562)
Net Loss per share (basic and diluted)	(0.19)	(0.15)

Included in the share of gain from the Joint Venture for the year to date, is an unrealized loss of $2.41 million (September 30, 2019 – unrealized gain of $5.39 million) on the changes in the fair value of the Joint Venture’s biological assets.

Revenue

Revenue for the year to date, was $10.75 million compared to $17.40 million for the same period in the prior year. The revenue for the nine months ended September 30, 2020 was impacted by overall market correction in average selling price per gram of dried cannabis and dried cannabis equivalent in the adult-use channel, which decreased from $5.77 in the same period in 2019 to $3.75 in the current period. The Company shipped 50% more kilograms of dried flower and flower equivalent compared to the same period of the prior year. For the nine months ended September 30, 2020, revenue was comprised of approximately 73% dried product, 26% oils and 1% other, compared to approximately 74% dried product, 25% oils and 1% other in the nine months ended September 30, 2019. During the nine months ended September 30, 2020, the Company’s revenues were from the adult recreational market and the medical market, whereas in the comparable nine month period ended September 30, 2019, the Company also recorded opportunistic revenues of $5.84 million from the wholesale market.

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	Nine months ended September 30,
	2020	2019
Average selling price of adult-use dried flower per gram & gram equivalents	$3.75	$5.77
Kilograms sold of adult-use dried flower & kilogram equivalents	2,005	1,337
Average selling price of medical dried flower per gram & gram equivalents	$7.94	$7.89
Kilograms sold of medical dried flower & kilogram equivalents	137	211
Total kilograms produced of dried flower	7,980	669

Kilogram and gram equivalent represent the amount of dried flower used to produce the units of oils sold.

Cost of Sales

Cost of goods sold currently consists of four main categories: (i) cost of goods sold expensed from inventory, (ii) production costs, (iii) change in the fair value of biological assets, and (iv) amortization of the Health Canada licences.

Cost of goods sold represents the deemed cost of inventory that arose from the fair value measurement of biological assets, subsequent post-harvest costs capitalized to inventory, purchased dried cannabis, costs to produce cannabis oils capitalized to inventory (including the deemed cost of dried inventory that arose from the fair value measurement of biological assets that were used to produce cannabis oils), and packaging costs. Cost of goods sold expensed from inventory for the nine months ended September 30, 2020 and September 30, 2019 was $6.38 million and $15.68 million, respectively. The decrease in cost of goods sold in the current period was due to a larger proportion of higher margin product sold and lower cost base of input material expensed by the Company as compared to the prior period. During the nine months ended September 30, 2020 the cost per gram of dried flower was $1.38. The Company does not have comparative information for the nine months ended September 30, 2019 as the Company was not yet in full production.

Production costs include all direct and indirect production related costs, including security, compliance, quality control and quality assurance costs, as well as overhead relating to the cultivation activities. . All post harvest inventory production cost in excess of standard cost are not capitalized and recorded as a write-down of inventory. This included $0.42 million of costs during the three months ended September 30, 2020 (September 30, 2019 - $nil). Inventory value in excess of net realizable value are written down as impairment. During the nine months ended September 30, 2020, the Company incurred production costs of $3.60 million versus $2.87 million in the nine months ended September 30, 2019. The Company was able to capitalize higher production costs incurred to inventory during later in the period as a result of its two facilities being fully operational and harvesting 7,980 kilograms of dried flower and trim during the nine months ended September 30, 2020 as compared to 669 kilograms of dried flower and trim for the same period in the prior year.

During the nine months ended September 30, 2020, the Company also recognized $2.01 million (September 30, 2019 - $1.35 million) in excise taxes. The excise tax attributable to medical sales was absorbed by the Company as a cost and not passed on to the end patients.

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The change in biological assets for the nine months ended September 30, 2020 was a loss of $0.83 million compared to a gain of $0.55 million in the same period of the prior year. The increased loss is substantially due to a change in estimates used for fair value less costs to sell (“FVLCS”) used as an input in the valuation of biological assets at the end of the quarter ended September 30, 2020. Previously, the Company used the average NRV of packaged finished good for sale in the recreational dry flower cannabis market. During the quarter ended September 30, 2020, the Company used the average NRV of bulk dry flower cannabis.

The amortization of the Health Canada licence represents the amortization of an acquired licence that is recorded at cost less accumulated amortization. Amortization will be expensed as a cost of sales and the unamortized balance will remain on the Company’s balance sheet as an intangible asset. Amortization of the licence is recognized on a straight-line basis irrespective of either production or sale of cannabis from that facility.

The Company measures biological assets consisting of cannabis plants at fair value less cost to sell up to the point of harvest, which becomes the basis for the cost of finished goods inventories after harvest. Seeds are measured at fair market value, except for a portion which are restricted with respect to distribution due to the conditions under which they were acquired that are measured at cost. The significant assumptions used in determining the fair value of cannabis plants are as follows: plant attrition rate for various stages of development; yield per plant; selling price less costs to sell; percentage of total expected costs incurred to date; and costs incurred for each stage of plant growth.

Gains recognized in the fair value of biological assets are recorded in a manner that decreases the cost of sales. Changes in the fair value of biological assets can be significant during periods of large expansion in the cultivation area. In determining the fair value of cannabis plants, assumptions are used regarding the variability in the average age and number of cannabis plants available at each period end.

Inventory write-down – During the nine months ended September 30, 2020, a write-down of $2.87 million was recognized for packaged inventory and extracted cannabis oils (September 30, 2019 - $2.82 million) related to product deterioration, limited remaining shelf life and fair market value.

Other expenses

General and Administrative – During the nine months ended September 30, 2020, the Company incurred general and administrative expenses of $7.41 million versus $11.82 million for the nine months ended September 30, 2019. The current period saw decreased expenses in professional and consulting services, wages and benefits, corporate communications and media, office and insurance and travel and accommodations expense. In the nine months ended September 30, 2020, general and administrative costs included; salaries and benefits of $3.00 million (nine months ended September 30, 2019 - $4.25 million), consulting and professional services fees of $2.63 million (nine months ended September 30, 2019 - $3.78 million), corporate communication and media expense of $0.20 million (nine months ended September 30, 2019 - $1.33 million), office and insurance of $1.50 million (nine months ended September 30, 2019 - $2.01 million) and travel and accommodation of $0.08 million (nine months ended September 30, 2019 - $0.45 million).

Sales and marketing – In the nine months ended September 30, 2020, the Company incurred sales and marketing expenses of $1.22 million versus $3.25 million in the comparable 2019 prior period. These costs are related to general sales and marketing, patient acquisition, and education expenses. The current period decrease reflects the Company’s focus on cost reduction and the use of internal resources.

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Research and development – In the nine months ended September 30, 2020, the Company incurred research and development expenses of $0.98 million (nine months ended September 30, 2019 - $3.41 million). These costs related to consulting fees and wages associated with the development of new cannabis products. The substantial decrease in research and development expenditures was related to the amendment of the management agreement with Sciences effective October 1, 2019 (see Related Party Transactions).

Share-based compensation – In the nine months ended September 30, 2020, the Company incurred share-based compensation expenses of $2.59 million versus $11.44 million in the comparable 2019 prior period. The amounts are compensation expenses related to employee, director and consultant incentive stock options and restricted share units which are measured at fair value at the date of grant and expensed over the vesting period. During the nine months ended September 30, 2020, the Company granted 9,877,500 stock options and 550,000 restricted share units to employees and consultants, compared to 6,475,500 stock options and 475,000 restricted share units during the same period in 2019.

Share of income from joint venture – In the nine months ended September 30, 2020, the Company recognized $4.50 million as its share of the income versus $19.10 million in the comparable 2019 prior period.

Interest and other income – In response to COVID-19, the Government of Canada announced the Canada Emergency Wage Subsidy (“CEWS”) program in April 2020. CEWS provides a wage subsidy on eligible remuneration to eligible employers based on certain criteria and during the nine months ended September 30, 2020, the Company determined that it had qualified for this subsidy. The Company applied for and received $0.79 million.

Additional Disclosure for Venture Issuers Without Significant Revenue

As the Company has not shown two years of consecutive significant revenues, it is required to disclose material costs incurred. The following table shows a breakdown:

	For the three	For the three	For the nine	For the nine
	months ended	months ended	months ended	months ended
	September 30,	September 30,	September 30,	September 30,
	2020	2019	2020	2019
(000’s)	($)	($)	($)	($)
Expensed research and development costs	267	1,179	975	3,413
General and administrative expenses	2,732	4,338	7,410	11,821
Purchase of plant and equipment	147	6,271	782	20,369

Liquidity and Capital Resources

The Company continually monitors and manages its cash flow to assess the liquidity necessary to fund operations and capital projects. The Company manages its capital resources and adjusts it to take into account changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital resources, the Company may, where necessary, control the amount of working capital, pursue financing or manage the timing of its capital expenditures. As at September 30, 2020, the Company

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had working capital of $53.05 million, this included the $68.25 million of the investment in the Joint Venture that has been classified as held for sale.

These unaudited condensed interim consolidated financial statements have been prepared by management on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at September 30, 2020, the Company had not yet achieved profitable operations.

As noted above in the “Developments of Business after the Reporting Period” section, on November 2, 2020, the Company completed the sales of its interest in the Joint Venture for consideration of $79.90 million. On the date of closing, the Company received a cash payment of $60.00 million and received the Note in the principal amount of $19.90 million. The Note will mature April 2, 2021 and bears interest of 12% per annum. This cash injection into the Company will help the continuing operations.

Management will continue to closely monitor its cash flows as it purposely shifts away from large-scale, high volume, asset-intense cultivation. The Company intends to direct its resources towards providing defined-scale, high quality dried flower to the premium segment of the market, as well as to focus more on the science-based development of differentiated, high-margin cannabis derivative products. The receipt of the $60.00 million first payment will allow the Company to immediately start reducing debt while maintaining a positive working capital and cash balance.

The Company has not currently committed to any projects which may require significant cash injections. The Company’s second greenhouse facility in Metro Vancouver will require approximately $2.60 million of additional spend in order to complete construction, however as of the date of this MD&A, the timing and continuation of this construction is currently being assessed.

The Company has renegotiated the terms of the payout of the remaining amounts owed to the vendors of Verdélite, pursuant to the Company’s 2018 purchase of Verdélite, on May 30, 2019. The amount outstanding as at the date of this MD&A is $9.25 million.

The Company has also committed to contributing $5.00 million to EHN in exchange for its 51% initial ownership in EHN, of which, $1.89 million has been paid as at September 30, 2020.

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Operating, Investing and Financing Activities

The chart below highlights the Company’s cash flows:

	For the nine months ended	For the nine months ended
	September 30, 2020	September 30, 2019
(000’s)	($)	($)
Net cash (used in) provided by:
Operating activities	(5,213)	(24,854)
Investing activities	(2,374)	(36,901)
Financing activities	5,480	32,102
Decrease in cash	(2,107)	(29,653)

Cash used in operating activities for the nine-month period ended September 30, 2020 was $5.21 million, compared to cash used of $24.85 million in the comparative period of the prior year. The current period amount reflects the decrease in general and administrative, sales and marketing and research and development expenditures, decreases in cash outflows for payments of current liabilities, inventories and decrease in current assets from the comparable 2019 period.

Cash used in investing activities for the nine-month period ended September 30, 2020 was $2.37 million, compared to cash used of $36.90 million during the same period in 2019. During the nine months ended September 30, 2020:

• $0.71 million was used to invest in the Joint Venture;

• $0.52 million was used to invest in EHN;

• $0.83 million was used to purchase equipment for the Company’s various operating facilities; and

• $0.31 million was used in research and development.

Cash provided by financing activities for the nine months ended September 30, 2020 was $5.48 million, compared to cash provided of $32.10 million in the nine months ended September 30, 2019. Cash generated in the current period included $5.39 million in gross proceeds from private placement offerings and at-the-market equity financing commencing September, $1.06 million from the exercise of purchase warrants and $0.04 million in proceeds from the Canadian Emergency Business Account loan. Offsetting this positive source of cash flow was a $0.36 million repayment of lease liabilities and interest, and $0.38 million in share issuance costs and $0.27 million in interest paid.

Financial Risk Management

The Company’s board of directors has overall responsibility for the establishment and oversight of the

Company’s risk management policies on an annual basis. Management identifies and evaluates the Company’s financial risks and is charged with the responsibility of establishing controls and procedures to ensure financial risks are mitigated in accordance with the approved policies.

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Measurement Uncertainty and Impairment Assessments

On July 31, 2020, the Company announced that it had entered into a share purchase agreement relating to the sale of the Verdélite subsidiaries. The Company’s intention to sell the subsidiaries at June 30, 2020, as well as the continued decline in stock price and market capitalization of the Company were indicators of impairment at June 30, 2020. As a result of these factors, management evaluated the Verdélite CGU for impairment at June 30, 2020. Taking into account the Company’s intention to sell the asset, the fair value less costs of disposal of Verdélite approximates it value in use at June 30, 2020, given that the value in use consists mainly of the net disposal proceeds. Management concluded that the carrying value was higher than the recoverable amount and recorded an impairment loss of $17.06 million. Management allocated the impairment loss based on the relative carrying amounts of the CGU’s assets at the impairment date which resulted in an impairment of $14.71 million being allocated to the intangible assets and $2.35 million being allocated to the Building of the Verdélite CGU.

Management continues to review each of its assets for indications of impairment.

Transactions with Related Parties

The Company has entered into transactions with a control person of the Company, a wholly owned subsidiary of such control person, a company controlled by the Company’s Executive Chairman, a company whose CEO is also a director of the Company, and with the Joint Venture.

With Emerald Health Sciences Inc.

On October 4, 2019, the Company announced that it had entered into a Sublease Agreement and a Cultivation Agreement with Sciences. Pursuant to the Sublease Agreement, the Company agreed to sublease 12 acres of land in Metro Vancouver to Sciences for which Sciences agreed to pay the Company rent equal to the amount that the Company pays to the head-landlord for the subleased land. Pursuant to the Cultivation Agreement, Sciences granted the Company the right to cultivate cannabis for the sole benefit of the Company, on the subleased land. In exchange for this right, the Company agreed to waive the amounts payable by Sciences under the Sublease Agreement. On May 27, 2020, the Company announced that it had terminated both the Sublease Agreement and the Cultivation Agreement. No payments were made to Sciences under either the Sublease Agreement or the Cultivation Agreement.

As at September 30, 2020, Sciences held an aggregate of 39,401,608² Common Shares, representing approximately 20% of the issued and outstanding Common Shares and it held 9,099,706 common share purchase warrants of the Company. As at December 31, 2019 Sciences held an aggregate of 29,687,942 Common Shares, representing approximately 18% of the issued and outstanding Common Shares and it held 9,099,706 common share purchase warrants of the Company.

On May 30, 2019, the Company amended a previous loan agreement with Sciences pursuant to which Sciences agreed to loan up to $6 million to the Company, in amounts and at times agreed to by the parties. Amounts loaned bear interest at 10% per annum and are repayable on demand. On July 5, 2019, the loan agreement with Sciences was amended to increase the available loan amount to $15 million and the rate of interest charged was increased to 12%. On January 31, 2020, the Company settled all outstanding principal and accrued interest for a total of $0.80 million with shares for debt at a deemed price of $0.29

² 12,500,000 Common Shares beneficially owned by Sciences have been lent to a third party pursuant to a securities lending agreement entered into by Sciences

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per Common Share. On July 15, 2020, the Company announced that it had terminated the loan agreement with Sciences.

With Subsidiaries of Emerald Health Sciences Inc.

On October 3, 2018, the Company announced that it entered into a research agreement with EH Spain, an institute focused on cannabis research, which will provide its cannabis-industry-leading contract research organization (“CRO”) services to the Company to elucidate the mechanism of action of proprietary formulations and dosage forms that the Company is developing. EH Spain is a wholly-owned subsidiary of Sciences, who is a control person of the Company. To date, the Company has used the CRO services of EH Spain with total costs incurred of €0.02 million.

On October 4, 2019, the Company announced that it had entered into an agreement to amend the purchase price payable by the Company pursuant to the hemp supply agreement dated September 26, 2018 with Emerald Health Hemp Inc. (“EHH”). Pursuant to this amendment, the Company was only required to pay EHH the reasonable and documented costs incurred by EHH in exchange for hemp products. During the year ended December 31, 2019, the Company wrote down $2.02 million of inventory related to hemp harvested that did not meet the quality standards for extraction. On January 31, 2020, the Company settled the trade payables for hemp purchased of $2.02 million with shares for debt at a deemed price of $0.29 per Common Share.

With a company controlled by the Company’s Executive Chairman

In 2017, the Company entered into a 30-year lease with a company (the “Landlord”) that is controlled by Avtar Dhillon, MD, the Executive Chairman of the Company with respect to land in Metro Vancouver, British Columbia on which the Company has built its new production facility. The lease amount of $0.08 million per quarter was determined by an independent valuation. The Landlord also charged the Company $Nil during the nine months ended September 30, 2020 (September 30, 2019 - $0.18 million) for development fees and services related to construction of the Company’s new facility.

With a company whose CEO is also a director of the Company

As at September 30, 2020, the Company held 1,666,667 common shares and 1,666,667 common share purchase warrants of Avricore for investment purposes. The CEO of Avricore is also a director of the Company.

The 1,666,667 common shares represent 2.6% of the issued and outstanding common shares of Avricore at the date of this MD&A. Upon exercise of the common share purchase warrants of Avricore, the Company would hold 3,333,334 common shares of Avricore, representing 5.1% of the issued and outstanding common shares of Avricore.

On July 15, 2020, the Company’s 51%-owned joint venture, EHN, and Avricore terminated a supply and distribution agreement that was entered into on April 15, 2018.

On October 5, 2020, the Company sold its 1,666,667 common shares in Avricore for $0.21 million.

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With the Company’s joint venture

As of September 30, 2020, the Joint Venture owes the Company $0.17 million (September 30, 2019 - $1.08 million) for expenditures made on behalf of the Joint Venture. As of September 30, 2020, the Company owed to the Joint Venture $0.99 million (September 30, 2019 - $1.14 million) for bulk sale and resale as well as storage, logistical, and administrative related fees. Pursuant to the March 6, 2020, Pure Sunfarms settlement agreement, the Company issued a promissory note to the Joint Venture in the amount of $0.95 million. Subsequent to September 30, 2020, the Company completed the Transaction. As part of the Transaction, the Company's obligations under the promissory note was settled without any payment. Refer to “Development of Business after the Reporting Period” for information related to the sale of the interest in the Joint Venture.

Proposed Transactions

There are no material decisions by the Company’s board of directors with respect to any imminent or proposed transactions that have not been disclosed herein.

Critical Accounting Policies and Estimates

The critical accounting policies and estimates are included in each of the notes of the Company’s audited consolidated financial statements for the year ended December 31, 2019, 2018 and 2017. These are the accounting policies and estimates that are critical to the understanding of the business operations and results of operations.

Changes in Accounting Standards not yet Effective

Refer to Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2019, 2018 and 2017 for additional information on several new standards, amendments to standards and interpretations, which are not yet effective. There were no new standards adopted in the nine months ended September 30, 2020 condensed interim consolidated financial statements.

Off-Balance Sheet Arrangements

The Company has not entered into any material off-balance sheet arrangements such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities, derivative financial obligations, or with respect to any obligations under a variable interest equity arrangement.

Risks and Uncertainties

The Company’s actual results may differ materially from those expected or implied by the forward-looking statements and forward-looking information contained in this interim management discussion and analysis due to the proposed nature of the Company’s business and its present stage of development. A non-exhaustive list of risk factors associated with the Company are discussed in detail under the heading “Risk Factors” in the Company’s AIF dated May 13, 2020.

Public Health Crises

The Company's business, operations and financial condition could be materially adversely affected by the outbreak of epidemics, pandemics or other health crises, such as COVID-19. As at the date of this MD&A,

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the global reactions to the spread of COVID-19 which led to, among other things, significant restrictions on travel, quarantines, temporary business closures and a general reduction in consumer activity, which were being eased, are now starting to be re-instated. Provincial governments in the provinces of British Columbia and Quebec, where the Company's facilities are located are starting to re-initiate closures of certain non essential services and restrictions on activities. Each such province has designated the production of cannabis as an essential service and, accordingly, the Company's facilities remained, and still currently remain open and in production, however there can be no certainty that this will remain the case.

The risks to the Company of such public health crises also include risks to employee health and safety and a slowdown or temporary suspension of operations in geographic locations impacted by an outbreak. The Company has taken what it believes to be appropriate safety precautions at its facilities to safeguard the health of its employees including remote work plans and additional protective measures on site, and there have been no outbreaks to date at any of the Company's facilities. However, if an outbreak were to occur, the Company may be required to temporarily close the facility. Any such closure could have a material adverse impact on production and sales. Widespread uncertainty, government restrictions on personal mobility and the other impacts of the COVID-19 crisis on the Company's employees, together with the potential to contract COVID-19 and/or be subject to quarantine may have an impact on the ability or willingness of the Company's employees and those of the Joint Venture to attend their workplace. Although certain administrative functions can be conducted remotely, other functions, such as growth, picking and packaging of the Company’s products and maintenance of the Company's products and facilities cannot be conducted remotely and may be adversely impacted by any resulting decrease in employee availability.

Such public health crises can also result in disruptions and volatility in financial markets and global supply chains as well as declining trade and market sentiment and reduced mobility of people, all of which could impact cannabis product prices, interest rates, credit ratings, credit risk and inflation. In addition, the Company's business may be impacted by supply chain disruptions caused by the COVID-19 crisis, including the delivery of essential imports for the Company's products or the delivery of the Company's products to markets. The COVID-19 crisis may also have a negative impact on consumer demand for the Company's products due to, among other things, economic contraction and the potential closure of vendors of the Company’s products, which could result in reduced revenue to the Company.

While these effects are expected to be temporary, the duration of the disruptions to business and the related financial impact cannot be estimated with any degree of certainty at this time. Although a number of jurisdictions reduced restrictions on businesses during summer of 2020 due to recent resurgences in cases many jurisdictions have re-imposed restrictions of varying degrees. There can be no certainty as to the effectiveness of such restrictions or as to their length. At this point, the extent to which COVID-19 may impact the Company is uncertain; however, it is possible that COVID-19 could have a material adverse effect on the Company's business, results of operations and financial condition.

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Forward-Looking Statements

Certain statements contained in this Management Discussion and Analysis ("MD&A") constitute forward-looking information or forward-looking statements under applicable securities laws (collectively, "forward-looking statements"). These statements relate to future events or future performance, business prospects or opportunities of Emerald Health Therapeutics, Inc. and its subsidiaries (together the "Company" or "Emerald"). All statements other than statements of historical fact may be forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "forecast", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions) are not statements of historical fact and may be "forward-looking statements".

Examples of forward-looking statements in this MD&A include, but are not limited to, statements in respect of: future financings; the expansion of the Company's operations in British Columbia and Québec; the sale of Verdélite and Verdélite Holdings and the settlement of the outstanding amounts in respect to the previous acquisition of these entities; the conversion of the Convertible Debentures; the acceleration of the outstanding common share purchase warrants; the Company's intention to use proceeds of financings to fund the completion of capital projects and potential future expansion and acquisitions, including partnership transactions, for research and development and to expand the Company's existing extraction capabilities, and for working capital and general corporate purposes; potential proceeds from the exercise of the Company's outstanding common share purchase warrants; actions taken by the Company to maintain or adjust its capital structure; management's anticipation of long-term future profitability; the Company's intentions to acquire and/or construct additional cannabis production and manufacturing facilities and to expand the Company's marketing and sales initiatives; benefits received by the Company from its transactions with Sciences, a control person of the Company, and the opportunities that such transactions provide; production at the Company's facilities; the focus of the Company's efforts; the business goals and strategy of the Company; development of products and related research; licence applications and amendments; and the effect that each risk factor will have on the Company.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The reader of these statements is cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties relating to, among others: market price of cannabis; securing product supply; continued availability of capital financing and general economic, market or business conditions; reliance on cultivation, production and sales licences to produce and sell cannabis and cannabis oils issued to the Company under the Cannabis Act and its ability to maintain these licences; regulatory risks relating to the Company's compliance with the applicable law; regulatory approvals for expansion of current production facility, development of new production facilities and greenhouse retrofits by the Company; the Company's reliance on their respective licences to cultivate and sell cannabis under the Cannabis Act and their respective abilities to maintain such licences; Avalite's reliance on its analytical testing licence issued under the Cannabis Act to provide testing of cannabis and its ability to maintain this licence; the Company's ability to execute its multi-phase expansion plan; changes in laws, regulations and guidelines; changes in government; changes in government policy; increased competition in the cannabis market; the limited operating history of the

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Company; the Company's reliance on key persons; failure of counterparties to perform contractual obligations; difficulties in securing additional financing; unfavourable publicity or consumer perception of the cannabis industry; the impact of any negative scientific studies on the effects of cannabis; demand for labour; difficulties in construction or in obtaining qualified contractors to complete greenhouse retrofits; actual operating and financial performance of facilities, equipment and processes relative to specifications and expectations; results of litigation; the Company's ability to develop and commercialize pharmaceutical products; failure to obtain regulatory approval for pharmaceutical products; changes in the Company's over-all business strategy; restrictions of the TSXV on the Company's business; and the Company's assumptions stated herein being correct. See "Risks and Uncertainties" in this MD&A and other factors described in the Company's AIF under the heading "Risk Factors".

The Company believes that the expectations reflected in any forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in, or incorporated by reference into, this MD&A should not be unduly relied upon. These statements speak only as of the date of this MD&A. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. Actual results may differ materially from those expressed or implied by such forward-looking statements.

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EX-99.3

Exhibit 99.3

EMERALD HEALTH THERAPEUTICS, INC.

Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate

I, Riaz Bandali, Chief Executive Officer and President of Emerald Health Therapeutics, Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Emerald Health Therapeutics, Inc. (the “issuer”) for the interim period ended September 30, 2020.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: November 30, 2020

/s/ Riaz Bandali

Riaz Bandali
Chief Executive Officer and President

NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i)	controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii)

a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

EX-99.4

Exhibit 99.4

EMERALD HEALTH THERAPEUTICS, INC.

Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate

I, Jenn Hepburn, Chief Financial Officer of Emerald Health Therapeutics, Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Emerald Health Therapeutics, Inc. (the “issuer”) for the interim period ended September 30, 2020.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: September 30, 2020

/s/ Jenn Hepburn

Jenn Hepburn
Chief Financial Officer

NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i)	controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii)

a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.