In September 2014, 22nd Century’s wholly-owned subsidiary, Botanical Genetics, LLC, entered into a worldwide license agreement with Anandia Laboratories Inc. Under the terms of the agreement, our Company was granted an exclusive sublicense in the United States and a co-exclusive sublicense in the remainder of the world, excluding Canada, to patents and patent applications relating to the cannabis plant that are required for the production of cannabinoids, the major active ingredients in the cannabis plant. The Anandia sublicense continues through the life of the last to expire patent, which is expected to be 2035.

Cannabinoids are a class of diverse naturally-occurring compounds that act on the cannabinoid receptors of human cells. The most notable cannabinoid is THC, the primary psychoactive compound of cannabis. However, there are more than 100 other cannabinoids in the cannabis plant, many of which may have medical applications independently or in combination with other cannabinoids.

Cannabis sativa (marijuana, hemp) has been used for millennia as a source of fiber, food (oil and protein), medicine and as a recreational psychoactive drug. Drug type cannabis (marijuana) that is typically used for medical and recreational purposes contains high levels of THC and is defined as a Schedule 1 narcotic by the Drug Enforcement Agency (DEA). Accordingly, the presence of THC in industrial hemp is one of the biggest challenges facing the industrial hemp industry. Hemp crops are tested for THC levels; under U.S. federal law, crops containing above 0.3% THC are required to be destroyed. Currently, farmers cannot obtain crop insurance to protect against this risk. 22nd Century has developed a solution to this problem by creating industrial hemp plants that contain zero THC. The Company’s ongoing research is product-oriented and focused on developing a range of next generation industrial hemp plants that contain optimized levels of medically important cannabinoids, such as CBD, CBC, and CBG.

In collaboration with the Company’s university research partners, Botanical Genetics is also working to optimize Hemp varieties for various climates around the world. THC-free cannabis is an ideal agricultural crop and an excellent source of medically important cannabinoids. 22nd Century has the exclusive rights to commercialize the plants arising from these collaborative projects in the United States.

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The elimination of cannabinoids in hemp is expected to revitalize the hemp industry worldwide.

22nd Century intends to lead this important effort.