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 August, 2019

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 Form 20-F or Form 40-F.

¨ Form 20-F      x 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 Financials Statements for the Three and Six Months Ended June 30, 2019 and 2018
99.2	Management’s Discussion and Analysis for the Three and Six Months Ended June 30, 2019
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: August 28, 2019	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

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian Dollars)

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(Expressed in Canadian dollars)

	June 30			December 31
	2019			2018
ASSETS
Current
Cash and cash equivalents	$	2,614,727		$	36,042,090
Accounts receivable (Note 5)		5,175,670			3,579,271
Biological assets (Note 6)		980,757			1,088,528
Inventory (Note 7)		21,412,731			6,772,525
Prepaid expenses		1,233,357			1,326,780
Due from related parties (Note 11)		13,895,221			14,973,749
Total current assets		45,312,463			63,782,943
Plant and equipment (Note 8)		25,922,532			16,965,989
Plant under construction		18,565,940			10,310,229
Deposits on materials and equipment		619,067			981,832
Refundable deposits		196,391			2,196,391
Intangible assets (Note 9)		90,529,605			86,612,636
Right of use assets (Note 19)		4,363,577			-
Goodwill		169,323			169,323
Long-term investment		179,390			282,509
Investment in joint venture (Note 10)		71,251,893			25,660,842
Total non-current assets		211,797,718			143,179,751
TOTAL ASSETS	$	257,110,181		$	206,962,694
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	12,208,468		$	9,634,464
Current portion of long-term debt		-			2,503,064
Deferred payment (Note 4)		10,094,520			22,226,565
Payable to joint venture (Note 10)		16,810,000			-
Due to related parties (Note 11)		10,400,227			1,806,393
Total current liabilities		49,513,215			36,170,486
Lease liability (Note 19)		4,613,973			-
Deferred income tax liability		293,886			293,886
TOTAL LIABILITIES	$	54,421,074		$	36,464,372
SHAREHOLDERS' EQUITY
Share capital (Note 12)		230,187,171			204,791,733
Warrants (Note 13)		4,360,000			4,360,000
Contributed surplus		20,496,390			14,202,536
Accumulated deficit		(56,773,926	)		(52,855,947	)
TOTAL SHAREHOLDERS' EQUITY		198,269,635			170,498,322
Non-controlling interest		4,419,472			-
TOTAL LIABILITIES AND EQUITY	$	257,110,181		$	206,962,694

Nature and continuance of operations (Note 1)

Events after the reporting period (Note 1 & 20)

On behalf of the Board of Directors:

/s/ Avtar Dhillon	/s/ Jim Heppell
Director	Director

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

1

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited)

(Expressed in Canadian dollars) 

	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30			June 30			June 30			June 30
	2019			2018			2019			2018
Revenue
Sales (Note 17)	$	5,070,107		$	284,262		$	7,679,666		$	657,480
Excise taxes		450,782			-			930,461			-
Net revenue		4,619,325			284,262			6,749,205			657,480
Cost of sales
Cost of goods sold		4,713,906			249,761			7,418,427			555,288
Production costs		579,757			548,269			1,456,990			723,915
Depreciation of Health Canada license (Note 9)		919,947			-			1,839,894			-
Gain on changes in fair value of biological assets (Note 6)		(258,921	)		(978,893	)		(977,352	)		(1,371,884	)
Gross margin		(1,335,364	)		465,125			(2,988,754	)		750,161
Expenses
General and administrative (Note 18)		3,341,550			3,344,578			7,483,030			5,956,584
Sales and marketing		1,125,692			868,943			2,050,398			1,154,840
Research and development		1,306,076			83,409			2,233,878			180,953
Depreciation (Note 8 and 9)		248,444			927,907			496,584			1,176,456
Share-based payments (Note 12)		6,421,125			2,081,661			8,443,739			4,035,708
		12,442,887			7,306,498			20,707,629			12,504,541
Loss from operations		13,778,251			6,841,373			23,696,383			11,754,380
Share of income from joint venture (Note 10)		(14,488,832	)		(682,431	)		(20,301,051	)		(380,638	)
Interest income		(164,827	)		(274,436	)		(803,137	)		(524,500	)
Other expenses		483,505			-			541,872			-
Loss on settlement of deferred payment (Note 4)		864,229			-			864,229			-
Fair value changes in financial assets		(19,595	)		(140,716	)		103,118			124,645
Deferred income tax recovery		-			(132,820	)		-			(317,497	)
NET LOSS AND COMPREHENSIVE LOSS		452,731			5,610,970			4,101,414			10,656,390
Net loss and comprehensive loss attributable to:
Emerald Health Therapeutics, Inc.		275,355			5,422,497			3,718,886			10,330,815
Non-controlling interest		177,376			188,473			382,528			325,575
		452,731			5,610,970			4,101,414			10,656,390
Net loss per common share
Basic and diluted	$	0.003		$	0.043		$	0.028		$	0.087
Weighted average number of common
shares outstanding
Basic and diluted		145,515,035			129,906,112			143,929,482			122,586,500

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

2

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(Expressed in Canadian dollars)

	Share Capital					Warrants
																		Total			Non-
	# of					# of						Contributed			Accumulated			Shareholders'			Controlling			Total
	Shares		Amount			Warrants			Amount			Surplus			Deficit			Equity			Interest			Equity
Balance, January 1, 2019		141,443,116	$	204,791,733			8,411,764		$	4,360,000		$	14,202,536		$	(52,855,947	)	$	170,498,322		$	-		$	170,498,322
Adoption of IFRS 16 (Note 3)		-		-			-			-			-			(199,093	)		(199,093	)		-			(199,093	)
Balance, January 1, 2019, as restated		141,443,116		204,791,733			8,411,764			4,360,000			14,202,536			(53,055,040	)		170,299,229			-			170,299,229
Shares issued on at-the-market offering (Note 12)		4,167,200		14,749,636			-			-			-			-			14,749,636			-			14,749,636
Acquisition of Verdelite Sciences Inc. (Note 4)		2,129,707		8,199,371			-			-			-			-			8,199,371			-			8,199,371
Shares issued on stock option exercises (Note 12)		1,702,921		3,223,157			-			-			(2,149,885	)		-			1,073,272			-			1,073,272
Acquisition of Emerald Health Naturals Inc. (Note 4)		-		-			-			-			-			-			-			4,802,000			4,802,000
Share issuance costs		-		(776,726	)		-			-			-			-			(776,726	)		-			(776,726	)
Share-based payments (Note 12)		-		-			-			-			8,443,739			-			8,443,739			-			8,443,739
Net loss and comprehensive loss		-		-			-			-			-			(3,718,886	)		(3,718,886	)		(382,528	)		(4,101,414	)
Balance, June 30, 2019		149,442,944		230,187,171			8,411,764			4,360,000			20,496,390			(56,773,926	)		198,269,635			4,419,472			202,689,107
Balance, December 31, 2017		106,787,226	$	77,912,246			9,707,677		$	461,772		$	5,285,709		$	(17,829,369	)	$	65,830,358		$	1,956,834		$	67,787,192
Shares issued on stock option exercises (Note 12)		538,523		679,414			-			-			(247,687	)		-			431,727			-			431,727
Units issued on prospectus offerings (Note 12)		10,000,000		40,740,000			10,000,000			9,060,000			-			-			49,800,000			-			49,800,000
Share issuance costs		-		(272,355	)		-			-			-			-			(272,355	)		-			(272,355	)
Acquisition of Verdelite Sciences Inc. (Note 4)		9,911,894		45,000,000			-			-			-			-			45,000,000			-			45,000,000
Increase in ownership of Avalite Sciences Inc.		-		-			-			-			-			(522,204	)		(522,204	)		522,204			-
Shares issued on warrant exercises (Note 13)		8,239,863		24,901,302			(8,239,863	)		(3,044,679	)		-			-			21,856,623			-			21,856,623
Warrants expired		-		-			(56,050	)		(17,093	)		17,093			-			-			-			-
Share-based payments (Note 12)		-		-			-			-			4,035,708			-			4,035,708			-			4,035,708
Net loss and comprehensive loss		-		-			-			-			-			(10,330,815	)		(10,330,815	)		(325,575	)		(10,656,390	)
Balance, June 30, 2018		135,477,506	$	188,960,607			11,411,764		$	6,460,000		$	9,090,823		$	(28,682,388	)	$	175,829,042		$	2,153,463		$	177,982,505

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

3

EMERALD HEALTH THERAPEUTICS, INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Expressed in Canadian dollars)

	Six months			Six months
	ended			ended
	June 30			June 30
	2019			2018
Operating activities
Net loss	$	(4,101,414	)	$	(10,656,390	)
Items not involving cash
Depreciation		2,485,561			1,176,456
Gain on changes in fair value of biological assets		(977,352	)		(1,371,884	)
Fair value changes in financial assets		103,118			124,645
Share-based payments		8,443,739			4,035,708
Share of income from joint venture		(20,301,051	)		(380,638	)
Interest expense		203,099			-
Deferred income tax recovery		-			(317,497	)
Loss on settlement of deferred payment		864,229			-
Changes in non-cash operating working capital
Accounts receivable		(1,596,399	)		(491,132	)
Due from related parties		1,078,528			(861,753	)
Prepaid expenses		93,424			(459,554	)
Inventory and biological assets		(11,921,382	)		(758,509	)
Accounts payable and accrued liabilities		(376,196	)		658,279
Due to related parties		7,685,933			(104,763	)
Net cash flows used in operating activities		(18,316,163	)		(9,407,032	)
Investing activities
Investment in joint venture (Note 10)		(8,480,000	)		(4,000,000	)
Acquisition of asset (Note 4)		(725,799	)		(22,634,061	)
Deposits on equipment		347,936			(2,000,000	)
Purchase of plant and equipment		(12,544,352	)		(5,593,281	)
Purchase of intangible assets		(912,229	)		(5,183	)
Net cash flows used in investing activities		(22,314,444	)		(34,232,525	)
Financing activities
Payment of lease liabilities		(163,969	)		-
Proceeds from financing		14,749,636			49,800,000
Share issuance costs		(776,726	)		(272,942	)
Repayment of long term debt		(2,503,064	)		(22,888	)
Repayment of deferred payment		(5,000,000	)		-
Stock option exercises		1,073,272			431,727
Interest paid		(175,905	)		-
Warrant exercises		-			21,856,623
Net cash flows provided by financing activities		7,203,244			71,792,520
(Decrease)/increase in cash and cash equivalents		(33,427,363	)		28,152,963
Cash and cash equivalents, beginning of year		36,042,090			44,523,145
Cash and cash equivalents, end of period	$	2,614,727		$	72,676,108
Supplemental Information:
Fair value of shares issued to settle portion of deferred payment (Note 4)	$	8,199,371		$	-

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

4

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

1. NATURE AND CONTINUANCE OF OPERATIONS

Emerald Health Therapeutics Inc. (the "Company"), is classified as a Tier 1 Venture Issuer on 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.”

These condensed interim consolidated financial statements (“interim 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 June 30, 2019, the Company had not yet achieved profitable operations and had accumulated losses of $56,773,926 (December 31, 2018 - $52,855,947) since its inception. As at June 30, 2019, the Company recognized that current liabilities exceed current assets by $4,200,752, which is primarily the result of the $16,810,000 liability recorded in conjunction with Pure Sunfarms' acquisition of Delta 2 (see Note 10 and 20). Subsequent to June 30, 2019, the Company has raised additional gross proceeds of $3,908,911 of equity financing through its ATM facility (see Note 12). Management continues to closely monitor its cash flows and, as necessary, will seek additional equity and debt financing to offset the working capital deficit. The continuing operations of the Company are dependent upon its ability to continue to raise adequate capital, to commence profitable operations in the future, to satisfy its commitments and to repay its liabilities arising from normal business operations as they become due. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern.

These condensed interim consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2. BASIS OF PRESENTATION

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, 2018 (“Annual Financial Statements”). 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, 2018, unless otherwise indicated. The Company assesses its accounting estimates and judgements every reporting period.

The Company’s interim results are not necessarily indicative of its results for a full year.

5

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

a) Statement of Compliance

These condensed interim consolidated financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). As a result, these unaudited condensed interim consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB have been condensed with certain disclosures from the Annual Financial Statements omitted. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2018.

The condensed interim consolidated financial statements were authorized for filing by the Board of Directors on August 28, 2019.

b) Basis of measurement

These condensed interim consolidated financial statements have been prepared on a going concern basis, at historical cost except for certain financial instruments and biological assets, which are measured at fair value.

c) 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 June 30, 2019 include the following:

	Ownership Interest			Ownership Interest
	as at June 30			as at December 31
Name of Entity	2019			2018
Emerald Health Therapeutics Canada Inc. (EHTC)		100	%		100	%
Emerald Health Naturals Inc. (Naturals)		51	%		-
Avalite Sciences Inc. (Avalite)		100	%		100	%
Pure Sunfarms Corp. (Pure Sunfarms)		50	%		50	%
Verdélite Sciences Inc. (Verdélite)		100	%		100	%
Verdélite Property Holdings Inc.		100	%		100	%

d) Functional and presentation currency

The Company and its subsidiaries’ functional currency is Canadian dollars. All dollar amounts presented are in Canadian dollars unless otherwise specified.

6

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

3. NEW ACCOUNTING PRONOUNCEMENTS

IFRS 16, Leases – replaced the guidance in IAS 17 Leases and established principles for the recognition, measurement, presentation and disclosure of leases, with the objective of ensuring that lessees and lessors provide relevant information that faithfully represents those transactions.

The Company has applied IFRS 16 with an initial application date of January 1, 2019. The simplified transition approach was applied and as a result, the Company recognized the cumulative effect of initially applying IFRS 16 as an adjustment to the accumulated deficit as at January 1, 2019. The IFRS 16 adjustment as at January 1, 2019, resulted in a debit to the Company’s accumulated deficit of $199,093.

The Company’s lease accounting policy in accordance with IFRS 16 is provided below.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The right-of-use asset is initially measured at cost and subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is subject to impairment assessment and adjusted for certain remeasurements of its associated lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company's incremental borrowing rate or rate implicit in the lease. The lease liability is subsequently measured at amortized cost using the effective interest method. The incremental borrowing rate determined for the Company for the leases in transition is within a range of 6% - 8%. The lease liability is subsequently measured at amortized cost using the effective interest method.

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in net earnings if the carrying amount of the right-of-use asset is nil.

A lease modification is accounted for as a separate lease if there is an increase in the scope of a lease and a corresponding increase in consideration, such as adding the right to use one or more underlying assets in a contract. Otherwise, a lease modification is considered a remeasurement of the lease liability, as discussed above.

Lease payments that depend on performance measures or usage of the underlying asset are considered variable lease payments, which are expensed as incurred.

7

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease term of 12 months or less) and leases for which the underlying asset is of low value. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Changes to the Company’s critical accounting estimates and judgments due to IFRS 16 are provided below.

The Company’s lease liabilities are measured at the present value of the lease payments discounted using the applicable incremental borrowing rate or rate implicit in the lease. Determining the discount rate (incremental borrowing rate) requires significant judgment and may have a significant quantitative impact on lease liability valuations. Many of the Company’s lease liabilities contain one or several lease extension clauses, and could reasonably be extended beyond the lease extensions outlined in the contract. Determining the length of the lease to be used in the present value calculation of the lease obligation requires significant judgement and may have significant impact on lease liability valuations.

	$
Operating Lease commitments at December 31, 2018		10,298,432
Undiscounted operating lease payments at January 1, 2019		10,298,432
Effect of discounting using the incremental borrowing rates at January 1, 2019		(5,569,108	)
Lease Liabilities Recognized January 1, 2019		4,729,324
Initial Recognition of ROU assets at application date		5,184,165
Accumulated Depreciation as at application date		(653,935	)
Net right-of-use assets recognized at January 1, 2019		4,530,230

4. ACQUISITIONS

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 Emerald Health Naturals, Inc. (“Naturals”). The Company will invest $5,000,000 for a 51% ownership of Naturals and EHB will grant Naturals exclusive Canadian distribution right to EHB’s product line for 49% ownership (“Distribution Right”). The Company concluded that it controls Naturals and it has been consolidated, with non-controlling interest recognized for the EHB owned portion. Naturals operates primarily in Canada and is focused on developing natural health products that may provide wellness and medical benefits by interacting with the human body’s endocannabinoid system.

8

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

The Distribution Right is recorded at its acquisition date fair value. It is an intangible asset, estimated to have an indefinite life because it is expected to generate cash flows indefinitely. As an indefinite life intangible asset, the Distribution Right is not amortized.

Concurrent with this agreement, Naturals entered into an agreement to acquire assets from GAB Innovations, Inc. (“GAB”) for cash consideration of $340,000. The Company paid $200,000 on closing and the balance is due on January 10, 2020. On the date of acquisition, management concluded that the assets acquired did not include significant processes or outputs, and therefore did not meet the definition of a business under IFRS 3 Business Combinations. As a result, the transaction was accounted for as an asset acquisition.

The total purchase price and the fair value of the net assets of GAB acquired are disclosed below:

Net assets acquired	Asset fair value		Relative fair value
	$		$
3 Natural Product Numbers		90,000		89,259
Plant and Equipment		102,824		101,976
Health Canada NHP Site License		150,000		148,765
		342,824		340,000

As part of the asset acquisition, Naturals acquired a Health Canada Natural Health Product (“NHP”) Site License. An NHP Site Licence is required for any site that manufactures, processes, packages, labels, imports, and/or stores NHPs in Canada. The acquired NHP Site License allowed EHN to start importing and storing NHPs in Q2 2019. This intangible asset was recorded at its acquisition date fair value. This asset has a finite life and will be amortized on a straight-line basis in accordance with the Company’s policy.

Verdélite Sciences Inc.

On May 2, 2018, the Company acquired 100% of the issued and outstanding shares of Verdélite and the shareholder loans payable by Verdélite, for total consideration of $90.0 million, payable 50% in cash and 50% in Common Shares (the “Purchase Price”). The Company paid $22.5 million in cash upon closing and $45.0 million was satisfied by the issuance of 9,911,894 Common Shares, of which 4,955,947 Common Shares were held in escrow until May 1, 2019 (Note 12). The remaining $22.3 million was payable to the vendors of Verdélite (the “Vendors”) on May 1, 2019.

9

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

On May 1, 2019, the Vendors elected to receive $7.5 million of the remaining $22.3 million, as shares of the Company, with the remaining $14.8 million of the Purchase Price to be paid on or before May 30, 2019. The Company treated this change to the terms of settlement for the purchase of Verdélite as an extinguishment of the original terms, and not a modification under IFRS 9, Financial Instruments. The shares issued to the Vendors were valued on the five-day volume-weighted average price of the Common Shares of the Company on the TSXV, discounted 10%, calculated as of April 30, 2019. This resulted in the issuance of 2,129,707 Common Shares to the Vendors, at a deemed share price of $3.52 per Common Share. Under IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments, when equity instruments issued to a creditor to extinguish all or part of a financial liability are recognized initially, an entity shall measure them at the fair value of the equity instruments issued. The difference between the carrying amount of the financial liability extinguished and the consideration paid is recognized in profit or loss in the quarter ended June 30, 2019. The fair value of the equity issued to the Vendors on May 1, 2019 was $3.85 per share, resulting in a loss of $864,229 being recognized by the Company in the condensed interim consolidated statements of loss and comprehensive loss.

An additional loss was recognized on the renegotiation of terms of settlement, as the Company initially recorded the liability at $22.3 million, adjusted from the $22.5 million based on working capital adjustments. The difference of $164,857 has been recognized as a loss by the Company and is included in the settlement loss of $864,229 in the condensed interim consolidated statements of loss and comprehensive loss.

On May 30, 2019, the Company renegotiated the terms of the remaining $15.0 million payable to the Vendors. $5.0 million cash was paid in June 2019, with subsequent monthly payments of $1.0 million commencing mid July through to mid November 2019, with a final payment of $5.0 million plus accrued interest due on December 16, 2019. Interest on the outstanding balance began accruing May 31, 2019 at a rate of 10% per annum. The amount outstanding as at June 30, 2019 was $10,094,520.

5. ACCOUNTS RECEIVABLE

The Company’s accounts receivable is comprised of:

	June 30		December 31
	2019		2018
	$		$
Goods and services tax refund receivable		2,380,397		2,519,789
Trade receivables		2,658,764		801,756
Other receivables		136,509		257,726
		5,175,670		3,579,271

Accounts receivable are neither impaired nor past due.

10

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

6. BIOLOGICAL ASSETS

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

	June 30			December 31
	2019			2018
	$			$
Carrying amount, beginning of year		1,088,528			114,559
Effect of unrealized changes in fair value of biological assets		977,352			2,818,442
Biological assets purchased		-			3,841
Biological assets sold		-			(133,680	)
Transferred to inventory upon harvest		(1,085,123	)		(1,714,634	)
Carrying amount, end of period		980,757			1,088,528

As at June 30, 2019, included in the carrying amount of biological assets is $28,745 (December 31, 2018 - $28,570) in seeds and $952,012 (December 31, 2018 - $1,059,958) 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 effect the fair value of the biological assets in future periods:

· plant waste – wastage of plants based on various stages of growth;

· yield per plant – represents the weighted average grams of dry cannabis expected to be harvested from a cannabis plant, based on historical yields;

· selling price, less costs to sell – based on estimated selling price per gram of dry cannabis based on historical sales and expected sales;

· percentage of costs incurred to date compared to the total costs to be incurred (to estimate the fair value of an in-process plant) – represents estimated costs to bring a gram of cannabis from propagation to harvest; and

· stage of plant growth – represents the weighted average age in of the plant out of the average growing cycle as at period end date.

As at June 30, 2019, on average, the biological assets were 40% complete as to the next expected harvest date, compared to a 39% average stage of completion as at December 31, 2018. The average number of days from the point of propagation to harvest is 106 days.

Biological assets are classified as Level 3 on the fair value hierarchy. Significant unobservable inputs used to fair value biological assets include the Company’s estimate of the yield of cannabis per plant as well as the average selling price per gram less cost to sell. A 5% increase or decrease in the estimated yield of cannabis per plant would result in an increase or decrease in the fair value of biological assets of $18,200 at June 30, 2019 (December 31, 2018 - $52,620). A 5% increase or decrease in the average selling price per gram less cost to sell would result in an increase or decrease in the fair value of the biological assets of $25,987 at June 30, 2019 (December 31, 2018 - $59,579).

11

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

7. INVENTORY

The Company’s inventory is comprised of:

	June 30		December 31
	2019		2018
	$		$
Dried cannabis		19,748,293		5,778,176
Cannabis oils		951,476		337,314
Goods for resale		73,879		1,498
Supplies and consumables		639,083		655,537
		21,412,731		6,772,525

Inventory expensed and included in cost of sales was $4,713,906 and $7,418,427, for three and six months ended June 30, 2019 (June 30, 2018 – $249,761 and $555,288). The unrealized gain due to the fair value change in biological assets included in cost of sales was $258,921 and $977,352 for three and six months ended June 30, 2019 (June 30, 2018 – gain of $978,893 and $1,371,884).

12

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

8. PLANT AND EQUIPMENT

							Production, Lab
					Leasehold		and Growing				Other
	Land		Buildings		Improvement		Equipment		Computers		Equipment		Total
	$		$		$		$		$		$		$
Costs:
Balance, December 31, 2017		-		-		274,471		992,725		57,881		36,392		1,361,469
Additions		-		6,747,648		1,407,177		1,457,537		138,641		566,928		10,317,931
Acquired Through Verdélite		476,041		5,265,894		-		237,793		73,642		257,753		6,311,123
Balance, December 31, 2018		476,041		12,013,542		1,681,648		2,688,055		270,164		861,073		17,990,523
Additions		-		5,131,453		1,236,390		2,596,168		74,320		377,138		9,415,469
Acquired Through Naturals		-		-		33,984		-		3,271		63,553		100,808
Balance, June 30 2019		476,041		17,144,995		2,952,022		5,284,223		347,755		1,301,764		27,506,800
Accumulated Depreciation:
Balance, December 31, 2017		-		-		79,609		210,653		9,002		30,870		330,134
Additions		-		153,563		75,074		336,932		67,524		61,307		694,400
Balance, December 31, 2018		-		153,563		154,683		547,585		76,526		92,177		1,024,534
Additions		-		125,731		105,783		203,737		46,173		78,310		559,734
Balance, June 30 2019		-		279,294		260,466		751,322		122,699		170,487		1,584,268
Carrying value:
June 30, 2019		476,041		16,865,701		2,691,556		4,532,901		225,056		1,131,277		25,922,532
December 31, 2018		476,041		11,859,979		1,526,965		2,140,470		193,638		768,896		16,965,989

13

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

9. INTANGIBLE ASSETS

The Company’s intangible assets continuity is as follows:

			Distribution		Health Canada		Computer
	Patents		Right		License		Software		Total
	$		$		$		$		$
Cost:
Balance, December 31, 2017		-		-		2,922,096		62,135		2,984,231
Acquired through Verdélite		-		-		86,103,549		-		86,103,549
Additions		368,531		-		-		133,032		501,563
Balance, December 31, 2018		368,531		-		89,025,645		195,167		89,589,343
Acquired through Naturals		89,259		4,802,000		148,765		1,168		5,041,192
Additions		200,323		-		-		601,281		801,604
Balance, June 30, 2019		658,113		4,802,000		89,174,410		797,616		95,432,139

			Distribution		Health Canada		Computer
	Patents		Right		License		Software		Total
	$		$		$		$		$
Accumulated amortization:
Balance, December 31, 2017		-		-		87,446		44,930		132,376
Additions		-		-		2,829,015		15,316		2,844,331
Balance, December 31, 2018		-		-		2,916,461		60,246		2,976,707
Additions		-		-		1,839,895		85,932		1,925,827
Balance, June 30, 2019		-		-		4,756,356		146,178		4,902,534

			Distribution		Health Canada		Computer
	Patents		Right		License		Software		Total
	$		$		$		$		$
Net book value:
June 30, 2019		658,113		4,802,000		84,418,054		651,438		90,529,605
December 31, 2018		368,531		-		86,109,184		134,921		86,612,636

10. INVESTMENT IN JOINT VENTURE

On March 30, 2019, Pure Sunfarms exercised its option to acquire from Village Farms International, Inc. (“Village Farms”) a second 1.1 million square foot (25 acre) greenhouse (“Delta 2”) adjacent to Pure Sunfarms’ existing 1.1 million square foot greenhouse in Delta, BC. In accordance with the terms of the Pure Sunfarms joint venture agreement, Village Farms is contributing the Delta 2 facility to the joint venture and the Company has committed to contribute an aggregate of $25.0 million in cash, of which $8.2 million was paid during the six months ended June 30, 2019. The remaining balance of $16.8 million is recognized on the condensed interim consolidated statements of financial position in Payable to Joint Venture.

14

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

Profits and losses resulting from upstream and downstream transactions between the Company and Pure Sunfarms are recognized only to the extent of unrelated investor's interests in the associates. Unrealized gains arising from transactions with the associate are eliminated. Unrealized losses resulting from transactions with the associate are also eliminated, but only to the extent that there is no evidence of impairment.

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

	$
Balance at December 31, 2018		25,660,842
Investment in Joint Venture		25,000,000
Transaction costs		290,000
Share of income		20,301,051
Balance at June 30, 2019		71,251,893

15

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

Summarized financial information for Pure Sunfarms is set out below:

	June 30		December 31
	2019		2018
	$		$
Non-current assets		108,611,519		67,263,020
Current assets (a)		100,575,197		20,414,439
Total assets		209,186,716		87,677,459
Non-current liabilities		22,320,310		2,688,273
Current liabilities		42,708,578		39,465,718
Total liabilities		65,028,888		42,153,991
(a) includes cash and cash equivalents		15,572,914		2,361,948

	Six months ended			Six months ended
	June 30			June 30
	2019			2018
	$			$
Sales		46,715,496			-
Cost of Sales (b)		10,369,461			-
Gross margin before fair value changes		36,346,035			-
Change in fair value of biological asset		(27,654,191	)		(422,012	)
Gross margin		64,000,226			422,012
Selling, general and administrative expenses		3,712,467			1,364,161
Income (loss) from operations		60,287,759			(942,149	)
Other (income) loss		354,130			(77,181	)
Income (loss) before taxes		59,933,629			(864,968	)
Provision for income taxes		11,299,269			-
Net income (loss)		48,634,360			(864,968	)
(b) includes $516,839 of amortization expense
Net Income (loss)		48,634,360			(864,968	)
Elimination of transactions with the Company		(8,644,105	)		-
Fair value adjustment		611,847			1,626,244
Adjusted net income		40,602,102			761,276
50% Share of income from joint venture		20,301,051			380,638

16

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

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

	For the six			For the twelve
	months ended			months ended
	June 30 2019			December 31 2018
	$			$
Total net assets of Pure Sunfarms		144,157,828			45,523,468
50% ownership interest held by the Company		72,078,914			22,761,734
2018 cumulative adjustments carried forward		2,669,470			-
Fair value adjustment recognized during the period		305,923			3,964,388
Elimination of transactions with the Company during the period		(4,322,053	)		(1,294,919	)
Transaction costs cumulative		519,639			229,639
Carrying amount of the investment		71,251,893			25,660,842

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

11. RELATED PARTY TRANSACTIONS

With Emerald Health Sciences Inc.

As of June 30, 2019, Emerald Health Sciences Inc. (“Sciences”) held an aggregate of 40,434,242 Common Shares, representing 27% (December 31, 2018 – 43,234,242 shares, representing 31%) of the issued and outstanding Common Shares and it also held 4,411,764 (December 31, 2018 – 4,411,764) common share purchase warrants of the Company.

Sciences charged the Company $1,050,000 and $2,100,000 during the three and six months ended June 30, 2019 (June 30, 2018 - $1,050,000 and $2,100,000) for services related to financing, business development, investor relations and acquisition activities, in accordance with the amended management agreement: $562,500 and $1,125,000 were recognized as research and development costs and $487,500 and $975,000 were recognized as general and administrative fees, respectively. Sciences charged the Company $Nil during the three and six months ended June 30, 2019 (June 30, 2018 - $Nil) for invoices paid on behalf of the Company. As of June 30, 2019, the Company owed $1,507,314 (December 31, 2018 - $502,194) to Sciences for services provided. 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 of June 30, 2019, Sciences owed the Company $31,421 (December 31, 2018 – $31,421) 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 May 2019, the Company amended a previous loan agreement with Sciences pursuant to which Sciences agreed to loan up to $6,000,000 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. As of June 30, 2019, Sciences had advanced $5,100,000 (December 31, 2018 - $Nil) in funds to the Company and charged $47,642 (June 30, 2018 - $Nil) in interest, through this agreement. The amount owing is included in Due to Related Parties on the condensed interim consolidated statements of financial position.

17

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

With the Company’s joint venture

As of June 30, 2019, Pure Sunfarms owes the Company $863,801 (December 31, 2018 - $1,942,329) for expenditures made on behalf of the joint venture. As of June 30, 2019, the Company owes to Pure Sunfarms $3,222,336 (December 31, 2018 - $1,287,082) for inventory purchased from Pure Sunfarms, that was paid subsequent to June 30, 2019. These amounts are included in the respective Due To and Due From Related Parties on the condensed interim consolidated statements of financial position, and are non-interest bearing. The Company also contributed $13,000,000 in the form of an on-demand loan as described in the Company’s Annual Financial Statements.

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. During the three and six months ended June 30, 2019, the Company paid to the Landlord $84,904 and $169,808 (June 30, 2018 - $83,235 and $166,649) in rent and $Nil and $237 (June 30, 2018 - $Nil and $Nil) for invoices paid on behalf of the Company. The Landlord was reimbursed by the Company for $20,605 and $179,146 during the three and six months ended June 30, 2019 (June 30, 2018 - $14,979 and $40,699) for development fees and services related to construction of the Company’s new facility. As of June 30, 2019, the Company owed $4,671 (December 31, 2018 - $502) to the Landlord; this amount is included in Due to Related Parties on the condensed interim consolidated statements of financial position and is non-interest bearing. As at June 30, 2019, the Company recognized a lease obligation of $3,570,989 relating to the land in Metro Vancouver. This amount is included on the statements of financial position under “Lease Liability”.

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, as described in the Company’s Annual Financial Statements. Naturals holds 3,030,303 common share purchase warrants of Avricore.

18

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

Remuneration of directors and key management of the Company

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

	For the three		For the three		For the six		For the six
	months ended		months ended		months ended		months ended
	June 30 2019		June 30 2018		June 30 2019		June 30 2018
	$		$		$		$
Wage and short-term benefits		304,805		258,930		561,382		478,350
Share-based payments		2,495,360		949,773		2,852,707		1,065,763
		2,800,165		1,208,703		3,414,089		1,544,113

Included in Due to Related Parties on the condensed interim consolidated statements of financial position at June 30, 2019 is $27,500 (December 31, 2018 - $16,614) due to related parties with respect to key management personnel and expense reimbursements and are non-interest bearing.

In the event that senior key management employment agreements are terminated by the Company, other than for just cause, such officers are entitled to a minimum severance amount equal to six months of salary.

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

12. SHARE CAPITAL

Authorized

· Unlimited number of Common Shares without par value

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

Issued

· 149,442,944 Common Shares (December 31, 2018 – 141,443,116)

· Nil preferred shares (December 31, 2018 - Nil)

19

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

During the six months ended June 30, 2019 the outstanding share capital increased by 7,999,828 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”) during Q1 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 million 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 six months ended June 30, 2019, the Company issued an aggregate of 4,167,200 Common Shares for gross proceeds of $14,749,636 with an average price of $3.54.

· Issued 2,129,707 shares with a value of $8,199,371 for the acquisition of Verdélite as described in Note 4.

· A total of 1,347,921 stock options were exercised ranging in exercise price from $0.175 to $3.07 for gross proceeds of $1,073,272. A total of 355,000 restricted share units vested and were settled. A total of 1,702,921 Common Shares were issued.

Escrowed Common Shares

The 4,955,947 shares issued as part of the purchase price of Verdélite were subject to an Escrow Agreement. Under the agreement, 50% of the shares issued to the Vendors of Verdélite were to remain in escrow until May 1, 2019. During the six months ended June 30, 2019, 4,955,947 Common Shares (December 31, 2018 – 4,955,947) were released from escrow (Note 4).

Share based payments

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.

				Weighted Average
	Number of Options			Exercise Price
				$
Balance, December 31, 2017		9,861,114			1.76
Granted		2,811,000			4.16
Forfeited		(1,367,708	)		3.62
Exercised		(1,410,195	)		0.85
Balance, December 31, 2018		9,894,211			2.31
Granted		5,748,000			4.05
Forfeited		(685,709	)		3.66
Exercised		(1,347,921	)		0.80
Balance, June 30, 2019		13,608,581			3.13

20

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

During the six-month period ended June 30, 2019, the Company granted 5,748,000 stock options to employees and consultants. The stock options granted had exercise prices between $2.83 and $4.15, have expiry dates of five years and vest over three years. The weighted average fair value of the stock options granted was $4.05. The weighted average trading share price of the options exercised during the six months ended June 30, 2019 was $3.33.

The fair values of the options granted during the six-month periods ended June 30, 2019 and 2018 were determined on the date of the grant using the Black-Scholes option pricing model with the following assumptions:

	June 30		June 30
	2019		2018
Risk free interest rate		1.39% - 1.85%		1.73-2.11
Expected life of options (years)		2.75		3.00
Expected annualized volatility		101.21%-105.68%		80	%
Expected dividend yield		Nil		Nil
Weighted average Black-Scholes value of each option	$	2.50	$	2.74

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.

21

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

Incentive stock options outstanding and exercisable at June 30, 2019 are summarized as follows:

	Outstanding						Exercisable
					Weighted				Weighted
Range of			Remaining		average				average
exercise			contractual		exercise				exercise
prices	Quantity		life (years)		price		Quantity		price
$					$				$
0.175 - 0.43		210,000		2.15		0.34		210,000		0.34
0.44 - 0.50		1,500,000		0.82		0.45		1,500,000		0.45
0.51 - 0.94		993,416		2.25		0.72		955,918		0.72
0.95 - 1.25		723,834		2.93		1.21		467,863		1.20
1.26 - 1.49		258,581		2.95		1.43		103,032		1.41
1.50 - 3.40		1,395,500		4.10		2.98		435,750		2.89
3.41 - 4.23		5,928,500		4.74		4.06		1,401,504		4.10
4.24 - 4.25		1,933,750		3.48		4.25		966,250		4.25
4.26 - 5.44		340,000		4.15		4.58		98,750		4.55
5.45 - 6.68		325,000		3.66		5.69		175,000		5.69
		13,608,581		3.67		3.13		6,314,067		2.33

The Company recorded share-based compensation expense related to the incentive stock options of $5,925,310 and $7,762,887 for the three and six months ended June 30, 2019 (June 30, 2018 – $1,592,593 and $3,062,817). The expense has been charged to the condensed interim consolidated statements of loss and comprehensive loss.

Restricted share units

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, December 31, 2017		825,000			3.73
Granted		5,000			5.67
Balance, December 31, 2018		830,000			3.74
Granted		475,000			4.15
Settled		(355,000	)		4.27
Balance, June 30, 2019		950,000			3.76

22

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

During the six months ended June 30, 2019, the Company issued 475,000 RSUs to various employees and consultants, that vest over two years, on April 2, 2020 and April 2, 2021 and settle in Common Shares. The Company recorded share-based compensation expense related to the RSUs of $495,815 and $680,852 for the three and six months ended June 30, 2019 (June 30, 2018 – $489,068 and $972,891) to the condensed interim consolidated statements of loss and comprehensive loss.

13. WARRANTS

				Weighted
	Number of			Average
	Warrants			Exercise Price
				$
Balance, December 31, 2017		9,707,677			0.80
Issued in January 2018		3,000,000			6.00
Issued in February 2018		3,000,000			7.00
Issued in May 2018		4,000,000			5.20
Exercised		(8,239,863	)		2.65
Expired		(3,056,050	)		6.91
Balance, December 31, 2018		8,411,764			2.92
Balance, June 30, 2019		8,411,764			2.92
Expire:
November 2021		4,411,764			0.85
November 2019		4,000,000			5.20
Balance, June 30, 2019		8,411,764			2.92

23

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

14. FINANCIAL INSTRUMENTS

The classification of the Company’s financial instruments, as well as their carrying amounts and fair values, are as follows:

	June 30, 2019				December 31, 2018
	Fair Value		Carrying Value		Fair Value		Carrying Value
Financial Assets	$		$		$		$
FVTPL
Long-term investment		179,390		179,390		282,509		282,509
Amortized cost
Cash and cash equivalents		2,614,727		2,614,727		36,042,090		36,042,090
Accounts receivable		5,175,670		5,175,670		3,579,271		3,579,271
Due from related parties		13,895,221		13,895,221		14,973,749		14,973,749
Refundable deposits		196,391		196,391		2,196,391		2,196,391
Financial Liabilities
Amortized cost
Accounts payable and accrued liabilities		12,208,468		12,208,468		9,634,464		9,634,464
Current portion of long-term debt		-		-		2,503,064		2,503,064
Deferred payment		10,094,520		10,094,520		22,226,565		22,226,565
Payable to joint venture		16,810,000		16,810,000		-		-
Due to related parties		10,400,227		10,400,227		1,806,393		1,806,393

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.

Fair value hierarchy – financial instruments recorded at fair value at the statement of financial position dates are classified using the fair value hierarchy, which reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – Valuation based on quoted prices unadjusted in active markets for identical assets or liabilities.

Level 2 – Valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Valuation techniques using inputs for the asset or liability that are not based on observable market data.         

There have been no transfers between fair value levels during the period.

24

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

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 June 30, 2019
Financial Assets
Long-term investments		100,000		79,390		-		179,390
As at December 31, 2018
Financial Assets
Long-term investments		166,667		115,842		-		282,509

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 June 30, 2019 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 does not have any asset backed commercial paper. The Company maintains cash deposits with Schedule A financial institutions, which from time to time may exceed 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 majority of the trade receivables held are with crown corporations of British Columbia.

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.

25

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities. As at June 30, 2019, the Company had negative working capital of $4,200,753 (December 31, 2018 – positive working capital of $27,612,457). 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.

15. CAPITAL MANAGEMENT

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.

16. SEGMENTED INFORMATION

Segment reporting is prepared on the same basis that the Company’s President, who is the Company’s Chief Operating Decision Maker, manages the business, makes resource allocation decisions and assesses performance. The Company operates in one reportable segment, being the production and sale of cannabis and in one geographical location, Canada.

	Cannabis			Other		Total
	$			$		$
For the three months ended June 30, 2019
Sales		4,975,864			94,243		5,070,107
Interest revenue		(118,960	)		283,787		164,827
Loss from operations		10,605,523			3,172,728		13,778,251
Net (income) loss and comprehensive (income) loss		(3,072,949	)		3,525,680		452,731
Share of income from joint venture		(14,488,832	)		-		(14,488,832	)
For the six months ended June 30, 2019
Sales		7,585,423			94,243		7,679,666
Interest revenue		(48,591	)		851,728		803,137
Loss from operations		14,104,906			9,591,477		23,696,383
Net (income) loss and comprehensive (income) loss		(5,403,561	)		9,504,975		4,101,414
Share of income from joint venture		(20,301,051	)		-		(20,301,051	)

26

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

	Cannabis			Other		Total
	$			$		$
For the three months ended June 30, 2018
Sales		284,262			-		284,262
Interest revenue		-			274,436		274,436
Loss from operations		1,462,406			5,378,967		6,841,373
Net loss and comprehensive loss		780,274			4,830,696		5,610,970
Share of income from joint venture		(682,431	)		-		(682,431	)
For the six months ended June 30, 2018
Sales		657,480			-		657,480
Interest revenue		-			524,500		524,500
Loss from operations		2,111,738			9,642,642		11,754,380
Net loss and comprehensive loss		1,731,400			8,924,990		10,656,390
Share of income from joint venture		(380,638	)		-		(380,638	)

17. SALES

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

	For the three		For the three		For the six		For the six
	months ended		months ended		months ended		months ended
	June 30 2019		June 30 2018		June 30 2019		June 30 2018
	$		$		$		$
Dried Cannabis		2,789,666		136,408		5,064,897		288,659
Cannabis Oils		2,182,174		141,308		2,514,701		355,180
Other		98,267		6,546		100,068		13,641
Total		5,070,107		284,262		7,679,666		657,480

During the six months ended June 30, 2019, the Company earned approximately 55% of gross revenues from three major customers, all being Crown Corporations (June 30, 2018 – $Nil).

27

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

18. GENERAL AND ADMINISTRATIVE EXPENSES

	For the three		For the three		For the six		For the six
	months ended		months ended		months ended		months ended
	June 30 2019		June 30 2018		June 30 2019		June 30 2018
	$		$		$		$
Professional, director and consulting fees		1,318,333		1,735,264		2,393,259		3,285,673
Corporate communications and media		399,722		445,273		984,550		793,042
Wages and benefits		1,231,709		652,459		2,629,210		1,034,071
Office and general		203,705		389,496		1,232,622		646,323
Travel and accommodations		188,081		122,086		243,389		197,475
Total general and administrative expenses		3,341,550		3,344,578		7,483,030		5,956,584

19. 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

	ROU - Land use Rights		ROU - Buildings		ROU - Equipment		Total
	$		$		$		$
Costs:
Balance, applied January 1, 2019		3,634,227		1,371,759		178,179		5,184,165
Additions		-		-		21,238		21,238
Balance, June 30, 2019		3,634,227		1,371,759		199,417		5,205,403
Accumulated Depreciation:
Balance, applied January 1, 2019		181,711		449,664		22,560		653,935
Amortization during period		60,570		109,488		17,833		187,891
Balance, June 30, 2019		242,281		559,152		40,393		841,826
Carrying value:
June 30, 2019		3,391,946		812,607		159,024		4,363,577
December 31, 2018		-		-		-		-

28

EMERALD HEALTH THERAPEUTICS, INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2019 and 2018

(Unaudited)

(Expressed in Canadian dollars)

b) Lease Liabilities

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

	$
Lease liabilities recognized at January 1, 2019		4,729,324
Lease liability additions during the period ended June 30, 2019		23,345
Lease payments		(314,671	)
Interest incurred		175,975
Balance, June 30, 2019		4,613,973

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

Contractual Undiscounted Cash Flows:

	$
Within 1 year	580,451
1 - <3 years	1,718,534
3 - <5 years	770,195
Over 5 years	7,066,668
Balance, June 30, 2019	10,135,848

20. EVENTS AFTER THE REPORTING PERIOD

Subsequent to June 30, 2019, the Company granted 672,500 options to purchase Common Shares with exercise prices between $1.98 and $3.47. These options vest over three years with an expiry date five years from the grant date.

On July 5, 2019, subsequent to the reporting period, the loan agreement with Sciences was amended to increase the loan agreement from $6 million to $15 million and the rate of interest charged was increased to 12%. To date, the Company has drawn a total of $10.7 million and accrued interest of $0.2 million.

On August 28, 2019, the Company announced that it had entered into a binding term sheet with a single Canadian institutional accredited investor (the “Investor”) under which the Investor has agreed, subject to certain customary conditions, to purchase 2,500 secured convertible debentures units (the “Convertible Debentures Units”) of the Company at a price of $10,000 per Convertible Debenture Unit (the “Issue Price”) for gross proceeds of $25,000,000 (the “Offering”). The Convertible Debentures Units have a maturity date of 24 months from their date of issue (the “Maturity Date”) and will bear interest (at the option of the Company, payable in cash or shares) from their date of issue at 5.0% per annum, accrued and payable semi-annually on June 30 and December 31 of each year. The final terms of the Convertible Debentures will be determined by negotiation between the Company and the Investor and will include certain covenants relating to the business of the Company.

The Convertible Debentures will be convertible, at the option of the holder, into Common Shares at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The Convertible Debentures will have a conversion price of $2.00 per Common Share (the “Conversion Price”), being a 14% premium to the closing price of the Common Shares on August 27, 2019 on the TSXV. If at any time prior to the maturity date of the Convertible Debentures, the volume weighted average trading price of the Common Shares on the TSXV is greater than $3.50 for 15 consecutive trading days, the Company may force the conversion of the principal amount of the then outstanding Convertible Debentures at the Conversion Price and any accrued and outstanding interest, provided the Company gives 30 days' notice of such conversion to the holder.

Each Warrant will be exercisable to purchase one Common Share at an exercise price of $2.25 per share, for a period of 24 months from the date of issue. If at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the TSXV is greater than $3.50 for 15 consecutive trading days, the Company may deliver a notice to the holder of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice.

29

EX-99.2

Exhibit 99.2

Emerald Health Therapeutics Inc. (EMH.TSXV) Management Discussion & Analysis For the three and six months ended June 3 0 , 2019

- 1 -

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 i ts subsidiaries (together the “Company” or “Emerald”). All statements other than statements of historical fact may be forward - looking statement s. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, object ive s, assumptions or future events or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “e stimate”, “expect”, “may”, “will”, “project”, “predict”, “forecast”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “b eli eve” and similar expressions) are not statements of historical fact and may be “forward - looking statements”. Further information regarding forwar d - looking information and statements can be found on page 30 of this MD&A. Emerald Health Therapeutics Inc. l Q 2 20 19 MD&A 2

- 2 -

Who We Are Emerald was formed by a team of people that have dedicated their working lives to advancing health science. This focus has na rro wed to finding ways to harness the complexity of the endocannabinoid system and the cannabis plant with the goal of creating better, mo re controlled outcomes for people choosing cannabis to enhance health and wellbeing. The Emerald Difference Our goals are to: Realize increasing value from one of the world’s largest growing facilities . Pioneer the sourcing of outdoor hemp for CBD production. Establish strategic partnerships with access to large - scale extraction infrastructure and proprietary technology for enhanced biological activity. Develop differentiated, consistent and reliable products through our Defined Dose TM program. Have first - mover advantage through the introduction of endocannabinoid supporting products to the natural health consumer market. 1 Enhancing Health Through Cutting Edge Cannabis Science Emerald Health Therapeutics Inc. l Q 2 20 19 MD&A 3

- 3 -

Sustainable Cannabis Supply Our current strategy is to establish secure sources of cannabis and hemp in sufficient quantity and quality to allow us to me et our product manufacturing and distribution channel requirements. To that end, we: • secured up to 40% of the production of the Pure Sunfarms Joint Venture for 2019; • commenced greenhouse and outdoor cultivation at our new organic certified Metro Vancouver facility; • have reached substantial completion of our Phase 2 expansion at our 88,000 ft 2 Verdélite indoor facility in Quebec; • have secured approximately 1,000 acres of outdoor grown hemp expected to be harvested in each of the next three years. Operational Excellence Having secured large volumes of cannabis and hemp, we focused on expanding our capacity to process the biomass. We are in the late stages of the expansion of our facilities that include both space and equipment dedicated to packaging up to 50,000 kilograms of dried flower for retail distribution and equipment to extract cannabis oil. The strategic r elationship with Factors Group could provide (subject to Health Canada licensing) the capacity to extract , encapsulate, and package CBD and other cannabinoids from up to 1 million kilograms of biomass each year. Additionally, through our relationship with leading toll processors and manufacturers , we have access to large - scale high - quality oil extraction and distribution capabilities , which have increased production volumes and reduced the time required to get our value - added products to market . Distribution We are focused on expanding the number of markets we sell our products in and have set as our objective for 2019 , the securing of supply arrangements in all provinces and territories in Canada, as well as the introduction of new products such as, edibles, vape devices and concentrates in anticipation of legalization in Canada in October 2019. We expanded our product line to include nutraceuticals during Q2 2019 and anticipate the expansion of additional product offerings to include cosmeceuticals and hemp protein products developed, produced and distributed by Emerald Health Naturals. Verdélite, Montreal Emerald Health Therapeutics Inc. l Q 2 20 19 MD&A 4 Strategy

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Emerald Health Therapeutics Inc. l Q2 2019 MD&A 5 Medical Excellence We also recognize that the medical profession plays an important role in the introduction of cannabis to patients and continu ing education of medical professionals is required. Working with professional organizations, we intend to continue to communicate with medical doctors and other healthcare professionals and to provide quality education and services to these professionals. Supporting the vision of putting medical patients first, we entered into collaborative agreements with 1 47 medical cannabis clinics nationally. Through these agreements, patients receiving Emerald cannabis products are supported by experienced physicians and healthcare practitioners who adopt an evidence - based approach to treating conditions and symptoms using cannabis. Executing on a patient - focused model, we have 920 physicians who have assisted close to 7, 2 00 patients treat their symptoms with Emerald products. Our patient base increased by over 119 % since January 2019 and we continue to increase the number of patients registering to gain access to our products . Innovation Our collection of genetic materials and established team of experts is expected to play a major role as Emerald continues to develop proprietary strains, products and reputation. Through a research program supported by a contribution from the National Research Council of Canada - IRAP grants, we characterized the cannabinoid and terpenoid content of 26 of our cannabis varieties to catalogue the strains and aid us in determining their usefulness with respect to treatment of particular indications. During the year ended December 31, 2018, Emerald filed 17 provisional US patent applications covering Emerald’s Defined Dose TM cannabis dosage forms and formulations. Based on proprietary Emerald research, the patent applications are contributing to our intelle ctu al property portfolio and our continued efforts to develop distinctive cannabis products for medical - use and improved adult - use. Innovation at Emerald is focused on developing novel products which align with our core strategy to enhance health and wellne ss through modulation of the endocannabinoid system. To create unique formulations targeted to specific need states, Emerald scientists are leveraging research collaborations with local and international experts, as well as a battery of proprietary cannabis cultivars which of fer unique cannabinoid profiles, including CBD - dominant and CBG - dominant varietals. In parallel, we are focused on strengthening our IP portfolio, fili ng for international protection for novel product ideas under development in order to maintain a competitive advantage for the new p rod ucts being launched, starting in Q4 2019. Lastly, we are gearing up for investigator - driven studies to build a body of scientific and clini cal evidence demonstrating the efficacy of our novel, proprietary products for the treatment of symptoms ranging from pain and anxiety to ins omnia. Revenue Segments – Clearly Defined Market Medical & Recreational Cannabis (Flower & Oil) : Continued distribut ion and s ales to defined end - markets through established strong brand ties and loyalty including regular consumers of medical and recreational cannabis. Natural Health Products: The Q2 2019 introduction of Emerald Health Naturals’ Endo product line featuring our PhytoCann ® Complex, a proprietary formulation consisting of non - psychoactive, plant - based bioactive compounds that support the body’s endocannabinoi d system . Anticipated Revenue Streams Edibles, Concentrates & Topicals : Expanding distribution of patented cannabis products and addressable market upon adoption of new regulations. Cosmeceuticals: Harnessing the benefits of cannabinoids without the cannabis plant and significant distribution and sales growth by offering a variety of cosmeceutical products. Hemp Derived CBD : Access ing a sustainable supply for anticipated increases in global demand for hemp derived CBD in health and wellness applications. We are working to develop GMP - grade gel capsules with the Factors Group as well as medical grade specifications and isolates through the strategic alliance with Indena S.p.A. Strategy (cont.)

- 5 -

Location Langley, BC Burnaby, BC / Kelowna, BC Victoria, BC Metro Vancouver , BC Delta, BC Saint - Eustache, QC Purpose Analytical testing, R&D and product innovation; International government approvals to import and export for R&D. Industrial scale extraction for hemp and natural products, softgel encapsulation and formulation. Breeding, genetics and R&D lab; Medical hub. High quality organic flower production greenhouse; Low cost outdoor growing. High yield, high quality flowers; Lowest production cost greenhouse. Vertically integrated facility; Expertise in craft growing; New product and innovation hub. Square Feet 4,000 TBD 10,000 533,814 1,100,000* 88,000 Cultivation Rooms - - 1 10 16* 2 1 Processing Rooms - TBD 5 6 10* 1 4 Planned annual Capacity (kg) - - - 1 8,200 * 75,000* * 5,000 Packaging/ Extraction (kg) - 1,000,000 6,000 TBD TBD 50,000 Centers • Analytical testing • R&D • New product development • Extraction • Packaging • Extracted product transformation • R&D • Packaging • Customer excellence • Extraction • Distribution • Production • Extraction • Packaging • Distribution • Production • Packaging • Distribution • Production • Analytical testing • R&D • Extraction • Packaging • Distribution Standard Cultivation Standard Processing Medical Sales Analytical Testing Research Dealer 51% owned 100% owned 100% owned 100% owned 50% owned 100% owned * Note: 10,000 kg indoor, 8,200 kg outdoor * * Note: Does not include 1.1 million ft 2 Delta - 2 facility Legend: License obtained License application in process License planned Emerald Health Therapeutics Inc. l Q2 2019 MD&A 6 Our Capabilities Key Alliances

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Reaching all Provinces & Territories in 2019 We currently ship our products to 9 provinces and territories in the recreational market: British Columbia, Alberta, Saskatch ewa n, Manitoba, Ontario, Qu é bec, Newfoundland and Labrador, Prince Edward Island and the Yukon. During Q2 2019 and subsequently, we expanded our recreational portfolio in 3 provinces with shipments of our premium, high - potency SYNC 25, a pure CBD oil. Provincial approval to supply Provincial approval in application stage Emerald Health Therapeutics Inc. l Q2 2019 MD&A 7 National Distribution 94% increase in Total Gross Revenue from Q1 2019

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Emerald Health Therapeutics Inc. l Q1 2019 MD&A 8 Adult - Use Portfolio Gaining Ground The 1 st ultra pure, high potency CBD, low THC oil derived from cannabis on the Canadian legalized recreational market. SYNC 25 is the next step in our product growth strategy to develop innovative and quality consumer products that respond to growing demand and provide higher profit margins. SYNC TM 25 CBD Cannabis Oil STRAINS LAUNCHED SINCE OCT 17, 2018 Hash Plant (Indica) Available In: 1g, 3.5g, 7g, 3x0.5g Pre - Rolled Afghani Kush (Indica) Available In: 3.5g, 7g, 3x0.5g Pre - Rolled Island Pink (Hybrid) Available In: 3.5g, 7g, 3x0.5g Pre - Rolled Shishkaberry (Indica) Available In: 3.5g, 7g, 3x0.5g Pre - Rolled Sensi Star (Indica) Available In: 3.5g, 7g, 3x0.5g Pre - Rolled NEW Island Honey (Sativa) Available In: 3x0.5g Pre - Rolled NEW White Rhino (Indica) Available In: 3.5g, 3x0.5g Pre - Rolled Time Warp A3 (Hybrid) Available In: 3.5g, 7g, 3x0.5g Pre - Rolled

- 8 -

Improving Plant Genetics • Genetic and metabolic characterization of proprietary chemovars • Development of mold/pest - resistant cultivars • Creation of true - breeding cultivars • Tissue culture propagation Creating Innovative Products for Purposeful People • Using scientific data to design innovative, proprietary products intended to achieve specific medically - focused outcomes for patients suffering from pain, insomnia and anxiety • Developing a portfolio of adult - use products seeking to address five meaningful need - states: pain, sleep, anxiety, mood, energy • Expanding both portfolios in anticipation of new legislation in October 2019 to include : Edible T opi c als Inhalation • Designer oils for vaporizing • New formats for dried flower Ingestibles • New ways of formulating cannabis oils for ingestion • Soft gel and hard shell capsules Protecting In t ellectual Property • 17 filed provisional patents Conducting Clinical Research • Observational studies in relevant disease indications with Emerald’s proprietary formulations Enhancing Extraction & Purification • High quality extracts, oils and distillates • Broad range of cannabinoids and terpenes from cannabis • CBD from hemp 9 Emerald Health Therapeutics Inc. l Q 2 2019 MD&A Driving Innovation Through Cutting - edge Cannabis Science

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Facility • 50% owned joint venture • 100+ years of experience • Automat ed large - scale farming • Leading HVAC System • Extensive climate management experience • Powered by the sun for lower production costs • High - tech light deprivation & supplementation system Grow Area D3 & D2* • 2.13 MM ft 2 growing space • 90,000 ft 2 nursery space • 32 grow rooms Cultivation • 400,000 plants grown at a time Production Capability • 2019 – 75,000 kg • 2020 – 150,000 kg • 2021 – 150,000 kg Emerald Supply Agreement • 2019 – up to 40% total production • 2020 – up to 25% total production • 2021 – up to 25% total production • 202 2 – up to 25% total production License • Standard Cultivation • Standard Processing D2 Facility Expansion • Committed CAPEX facility • B uildout expected to be completed by 2020 • Secured 48Mw of electricity from BC Hydro *When D2 fully operational 10 Emerald Health Therapeutics Inc. l Q 2 2019 MD&A

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Facility • Ne w , state of the art organic grow greenhouse • 12 acres outdoor • Leading HVAC system • Powered by the sun for lower production costs • High tech light deprivation & supplementation system • Phase 1 complete • Phase 2 expected completion end of Q4 2019 Grow Area • 103 ,000 ft 2 growing space • 10 grow rooms Cultivation • 17,500 plants grown at a time at the greenhouse, 96,000 plants outdoor Production Capability • 1 8,200 kg License • Standard Cultivation • Standard Processing (planned) 11 Emerald Health Therapeutics Inc. l Q 2 2019 MD&A

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Facility • Wholly owned subsidiary • Vertically integrated seed to sale • High precision indoor cultivation • Craft quality through highly controlled environment Grow Area • 88,000 ft 2 indoor grow facility in Quebec • 1 4 processing and packaging rooms • 2 1 independent growing room Cultivation • 9,600 plants grown at a time Production Capability • 5,000 kg Packaging Facility • High scale automated packaging • Distribution hub nationwide License • Standard Cultivation • Standard Processing • Analytical Testing ( planned ) Emerald Health Therapeutics Inc. l Q2 2019 MD&A 12

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TABLE OF CONTENTS

Overview	14
Disclosure of Outstanding Share Data	19
Summary of Quarterly Results	20
Results of Operations	20
Additional Disclosure for Venture Issuers Without Significant Revenue	25
Liquidity and Capital Resources	25
Operating, Investing and Financing Activities	26
Financial Risk Management	27
Measurement Uncertainty and Impairment Assessments	27
Transactions with Related Parties	27
Proposed Transactions	29
Critical Accounting Policies and Estimates	29
Changes in Accounting Standards not yet Effective	29
Off-Balance Sheet Arrangements	29
Risks and Uncertainties	30
Forward-Looking Statements	30

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Management's Discussion and Analysis

The following MD&A is prepared as of August 28, 2019 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 six months ended June 30, 2019 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, 2018 and 2017 which were 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

The Company was incorporated pursuant to the Business Corporations Act (British Columbia) on July 31, 2007 as Firebird Capital Partners Inc. and changed its name to Firebird Energy Inc. in December 2012. On September 4, 2014, the Company completed the acquisition of all the issued and outstanding common shares of Thunderbird Biomedical Inc. (“Thunderbird”), by way of a reverse takeover (the “Transaction”) under the rules of the TSX Venture Exchange (the “TSXV”) and concurrently changed its name to T-Bird Pharma, Inc (“T-Bird”). At that time, Thunderbird became a wholly owned subsidiary of T-Bird. In June 2015, the Company changed its name to Emerald Health Therapeutics, Inc. and Thunderbird changed its name to Emerald Health Botanicals Inc. (“Botanicals”). In February 2018, Botanicals changed its name to Emerald Health Therapeutics Canada Inc. (“EHTC”).

The Company is a publicly traded company with headquarters in Vancouver, British Columbia, Canada. Common shares of the Company (the “Common Shares”) are listed on the TSXV under the trading symbol “EMH”. The Company is classified as a Tier 1 Venture Issuer on the TSXV. The Company also trades on the OTCQX® Best Market, operated by OTC Markets Group under the ticker 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 Quebec-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 Quebec-based holding corporation that owns the Verdélite Facility (as defined below); and

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(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:

(a) 50% of the shares of Pure Sunfarms Corp. (the "Joint Venture"), a British Columbia-based licence holder under the Cannabis Act that is a 50/50 joint venture between EHTC and Village Farms, Inc.; and

(b) 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.

Development of Business in the first half of 2019

Highlights

· ATM financing of $14.7 million in gross proceeds

· Fulfilled initial shipments to 6 provinces, bringing total recreational distribution to 8 provinces and 1 territory

· Continued optimization at the Joint Venture resulted in the Joint Venture recognizing gross sales of $42.7 million

· Substantially completed the build-out of the Metro Vancouver organic greenhouse and the Saint Eustache indoor cultivation facility

· Began cultivation of both greenhouse and outdoor cannabis at Metro Vancouver facility

· Received processing license for Saint Eustache facility

On January 10, 2019, the Company closed its acquisition of 51% of EHN and EHB granted EHN the exclusive Canadian distribution rights to EHB's endocannabinoid-supporting nutritional products which consist of nutritional supplements that use non-cannabis, non-psychoactive plant-based bioactive compounds to support the body's endocannabinoid system in exchange for 49% ownership of EHN. EHB is a partially owned subsidiary of Emerald Health Sciences Inc. ("Sciences"), a control person of the Company, and is therefore a related party of the Company.

On February 5, 2019, the Company announced that it had entered into a binding licence agreement with Indena S.p.A. ("Indena"), an arm's length party, pursuant to which Indena granted the Company a perpetual exclusive licence for the use in Canada of Indena's CBD-extraction technology, and agreed to contract manufacturing services to the Company for CBD extraction. The Company has agreed to pay Indena a license fee of €450,000 (payable in two tranches of €250,000 and €200,000, respectively). The first payment is not payable until a definitive agreement has been entered into and the second payment is not payable until certain technological information has been transferred to the Company. The parties expect to enter into a definitive agreement upon completion of ongoing negotiations.

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On February 13, 2019, the Company announced that the Joint Venture had entered into a credit agreement with Bank of Montreal, as agent and lead lender, and Farm Credit Canada, as lender, in respect of a $20 million secured non-revolving term loan (the "Credit Facility"). The Joint Venture intends to use the funds available under the Credit Facility to finance the final costs of converting the Delta 3 Facility for cannabis production, the vast majority of which was completed in January 2019. The funds available under the Credit Facility may also be used by the Joint Venture for general corporate purposes. The Credit Facility, which matures on February 7, 2022, is secured by the Joint Venture's 1.1 million square foot space at the Delta 3 facility (the "Delta 3 Facility"), and contains customary financial and restrictive covenants. The Company is not a party to the Credit Facility, but has provided a limited guarantee in the amount of $10 million in connection with the Credit Facility. The Joint Venture has drawn the Credit Facility in full.

On March 13, 2019, the Company filed a final short form base shelf prospectus (the "2019 Base Shelf Prospectus") in each of the provinces of Canada. The 2019 Base Shelf Prospectus qualifies the issuance and secondary sale of up to $150,000,000 of Common Shares, preferred shares, debt securities, warrants, units or subscription receipts of the Company or a combination thereof from time to time, separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of the offering and as set out in an accompanying prospectus supplement, during the 25-month period that the 2019 Base Shelf Prospectus remains effective.

On March 27, 2019, 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 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 million 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. As at the date of this MD&A, the Company has issued an aggregate of 5,884,900 Common Shares for gross proceeds of $18,658,544 with an average price of $3.17.

On March 29, 2019, the Company announced that it had fulfilled its first purchase order of cannabis from Yukon Liquor Corporation, signed a sales agreement with Alberta Gaming, Liquor and Cannabis and became registered by the Saskatchewan Liquor and Gaming Authority to supply cannabis to the Saskatchewan market.

On April 1, 2019, the Company announced that the Joint Venture had exercised its option to acquire from Village Farms International Inc. (“Village Farms”) a second 1.1 million square foot greenhouse (“Delta 2 Facility”) adjacent to the Delta 3 Facility. In connection therewith, the Company has agreed to advance a further $25 million to the Joint Venture in tranches as and when required, of which $2.5 million was advanced on April 1, 2019. The Company also entered into an agreement (the "JV Supply Agreement") with the Joint Venture to purchase 25% of its aggregate cannabis production from the Delta 2 Facility and the Delta 3 Facility in 2020, 2021 and 2022.

On April 8, 2019, the Company announced that its Verdélite facility had received its standard processing licence from Health Canada, allowing Verdélite to extract, manufacture, synthesize, test and sell cannabis products, in addition to its right to cultivate and sell cannabis flowers.

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On April 23, 2019, the Company announced that the Joint Venture had completed planting of the final quadrants of the Delta 3 Facility and subsequently announced on May 21, 2019, that it had received a standard processing license from Health Canada, permitting it to extract and process.

On May 1, 2019, the Company announced that the vendors of Verdélite (“Vendors”) elected to receive $7.5 million of the $22.3 million they were to receive as the final payment for their shares of Verdélite in Common Shares valued on the five-day volume-weighted average price of the Common Shares TSXV, discounted 10%, calculated as of April 30, 2019. The Company announce the issuance of 2,129,707 Common Shares to the Vendors on May 27, 2019. The Company agreed to pay the remaining $14.8 million of the purchase price to the Vendors on or before May 30, 2019, however, on May 30, 2019, the Company and the Vendors renegotiated the terms of the remaining $15 million payable to the Vendors, paying $5.0 million in cash in June 2019 with subsequent monthly payments of $1.0 million commencing in July through mid-November 2019, with a final payment of $5.0 million, plus any accrued interest due on December 16, 2019.

On May 14, 2019, the Company announced it had been authorized by PEI Cannabis and Manitoba Liquor and Lotteries Corporation to supply Emerald-branded cannabis products into those provinces.

On May 17, 2019, the Company announced that it shipped 6,000 40 ml bottles of its SYNC 25 CBD oil to the British Columbia Liquor Distribution Branch.

On May 30, 2019, the Company announced that it had received its first purchase order from Société Québécoise du Cannabis to supply its cannabis products to the Quebec recreational cannabis market. Emerald fulfilled its first shipment the week of June 6.

On June 24, 2019, the Company received its initial cultivation license from Health Canada for its new organic cannabis growing facility in Metro Vancouver. The license permits cultivation in an initial 15,000 square feet of greenhouse area.

On July 2, 2019, the Company announced that EHN had introduced a cannabis-free herbal and botanical endocannabinoid-supporting health supplement product line in Canada. EHN’s Endo products, which do not contain cannabis or its derivatives, aim to support the endocannabinoid system to help maintain equilibrium in the body and are available in over 200 natural health food stores across Canada.

On July 10, 2019, the Company announced that it shipped 9,960 40 ml bottles of its SYNC 25 CBD oil to Alberta and Saskatchewan.

On July 11, 2019, the Company announced that its Joint Venture had achieved its full production run-rate of 75,000 kilograms of dried cannabis at its 1.1 million square foot Delta 3 greenhouse.

On July 12, 2019, the Company received its cultivation license from Health Canada for its 12-acre outdoor grow area at its new organic cannabis operation in Metro Vancouver.

On July 30, 2019, the Company announced the appointment of Riaz Bandali as Chief Executive Officer.

On August 28, 2019, the Company announced that it had entered into a binding term sheet with a single Canadian institutional accredited investor (the “Investor”) under which the Investor has agreed, subject to certain customary conditions, to purchase 2,500 secured convertible debentures units (the “Convertible Debentures Units”) of the Company at a price of $10,000 per Convertible Debenture Unit (the “Issue Price”) for gross proceeds of $25,000,000 (the “Offering”). The Convertible Debentures Units have a maturity date of 24 months from their date of issue (the “Maturity Date”) and will bear interest (at the option of the Company, payable in cash or shares) from their date of issue at 5.0% per annum, accrued and payable semi-annually on June 30 and December 31 of each year. The final terms of the Convertible Debentures will be determined by negotiation between the Company and the Investor and will include certain covenants relating to the business of the Company.

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The Convertible Debentures will be convertible, at the option of the holder, into Common Shares at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The Convertible Debentures will have a conversion price of $2.00 per Common Share (the “Conversion Price”), being a 14% premium to the closing price of the Common Shares on August 27, 2019 on the TSXV. If at any time prior to the maturity date of the Convertible Debentures, the volume weighted average trading price of the Common Shares on the TSXV is greater than $3.50 for 15 consecutive trading days, the Company may force the conversion of the principal amount of the then outstanding Convertible Debentures at the Conversion Price and any accrued and outstanding interest, provided the Company gives 30 days' notice of such conversion to the holder.

Each Warrant will be exercisable to purchase one Common Share at an exercise price of $2.25 per share, for a period of 24 months from the date of issue. If at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the TSXV is greater than $3.50 for 15 consecutive trading days, the Company may deliver a notice to the holder of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice.

As the Company enters the second half of 2019, it will focus its efforts on:

· Production Capacity – The Company is expanding its licensed production with plans to complete the build out of its Metro Vancouver and Saint Eustache facilities. The completion of these facilities in 2019 will result in additional indoor, greenhouse and outdoor cultivation capacity and revenue generation in 2020;

· Production Capability – The Company is diversifying its processing and manufacturing infrastructure for the medical and recreational markets with additional extraction and packaging capacity in its British Columbia and Québec locations.

· New Product Development – The Company is focusing on developing intellectual property as the second phase of recreational cannabis products become permissible in Canada. Specifically, development is focused on products that align with the Company’s core strategy of enhancing health and wellness through modulation of the Endocannabinoid System.

· Strategic Partnerships – The Company is continuing to lean into its value-added strategic partnerships with Indena, Factors Group and other outsourced extraction and processing companies with a goal of enhancing profitability, accelerating market entry, and leveraging expertise in specific fields.

· Operational Efficiency – The Company is carefully examining all aspects of its operations to rationalize functions, eliminate unnecessary redundancies and streamline operations with the objective of generating net income in 2020.

The Company believes that these actions will help to enhance and clearly differentiate its competitive position in the marketplace, while concurrently, allowing it to refine its operational model and move towards enhanced and sustained profitability in the future.

Financings

The table below summarizes the offerings conducted by the Company in 2019 and use of proceeds there from.

Offering / Proceeds Raised	Use of Proceeds – as disclosed prospectus supplement	Subsequent Use of Proceeds
Between March 29, 2019 and August 28, 2019 Treasury Offering through ATM Program ($18,658,544)	The Company currently intends to use the net proceeds from the ATM Program, if any, to fund a portion of the costs for the completion of its capital projects, for research and development, working capital and general corporate purposes.	The funds are being used to fund completion of the Metro Vancouver and Verdélite facilities, as well as the Delta 2 expansion.

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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. When the Cannabis Act came into force on October 17, 2018, the Company's licences, which were issued under the Access to Cannabis for Medical Purposes Regulations, the predecessor legislation to the Cannabis Act, were deemed to be their functionally equivalent licences under the Cannabis Act (the "Licenses"). The Company currently indirectly holds a number of Licences through its wholly owned direct and indirect subsidiaries, EHTC, Verdélite and Avalite, as well as others which are held by the Joint Venture. The Licences held by EHTC permit it to cultivate cannabis and produce and sell dried cannabis, cannabis oils, cannabis plants and cannabis seeds; the Licence held by Verdélite permits it to cultivate, extract, manufacture, synthesize, test and sell cannabis; the Licence held by Avalite permits it to process cannabis and produce cannabis oil; and the Licences held by the Joint Venture permit it to cultivate cannabis and produce and sell dried cannabis, cannabis oils, cannabis plants and cannabis seeds, all in accordance with the terms and conditions specified in the applicable Licence 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 149,442,944 were issued and outstanding as of June 30, 2019 and 151,392,244 were issued and outstanding as of August 28, 2019.

During the six months ended June 30, 2019, the Company granted an aggregate of 5,748,000 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 $2.83 to $4.15 per share. Subsequent to the period ended June 30, 2019, the Company granted an additional 672,500 stock options, with exercise prices between $1.92 and $3.47. These options vest over three years with an expiry date five years from the grant date.

There were 13,608,581 stock options and 950,000 restricted share units outstanding as of June 30, 2019. As of August 28, 2019, there were 13,874,831 stock options and 950,000 restricted share units outstanding.

There were 8,411,764 warrants outstanding as of June 30, 2019 and as of August 28, 2019.

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Summary of Quarterly Results

The financial information in the following tables summarizes selected financial 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:

	2019		2018
	June 30 ($) *	March 31 ($) *	December 31 ($)	September 30 ($)
Revenue	5,070,107	2,609,559	1,131,853	321,070
Share-based payments	6,421,125	2,022,614	1,296,891	2,165,851
Interest income	164,827	638,310	438,974	222,740
Share of income from Joint Venture	14,488,832	5,812,219	1,432,771	3,940,373
Gain on changes in the fair value of the Company’s biological assets	258,921	718,431	144,181	1,302,377
Net Loss	(452,731)	(3,648,683)	(13,900,360)	(6,426,658)
Net Loss per share (basic and diluted)	(0.003)	(0.026)	(0.098)	(0.047)

	2018		2017
	June 30 ($)	March 31 ($)	December 31 ($)	September 30 ($)
Revenue	284,262	373,218	279,362	211,316
Share-based payments	2,081,661	1,954,047	1,979,553	271,968
Interest income	274,436	250,064	43,024	60,997
Share of income (loss) from Joint Venture	682,431	(301,793)	(44,562)	(278,016)
Gain on changes in the fair value of the Company’s biological assets	978,893	392,991	44,883	64,307
Net Loss	(5,610,970)	(5,045,420)	(4,027,569)	(1,939,371)
Net Loss per share (basic and diluted)	(0.043)	(0.044)	(0.046)	(0.021)

*Quarter was prepared using IFRS 16

Included in the share of gain from the Joint Venture for the three months ended June 30, 2019, is an unrealized loss of $197,302 (June 30, 2018 – unrealized gain of $809,755) on the changes in the fair value of the Joint Venture’s biological assets.

Results of Operations

Quarter ended June 30, 2019

The net loss for the quarter ended June 30, 2019 was $452,731 (loss of $0.003 per share), compared to the net loss of $5,610,970 (loss of $0.043 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.

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Factors contributing to the net loss for the three-month period ended June 30, 2019 include the following:

Revenue

Revenue for the quarter ended June 30, 2019 was $5,070,107 compared to $284,262 for the same period in the prior year. The revenue for the three months ended June 30, 2019 demonstrated the Company’s continued growth in the market. As compared with the prior comparable period ended June 30, 2018, the Company’s revenue increased substantially as a result of the legalization of adult use recreational cannabis market in the fourth quarter of 2018. During the three months ended June 30, 2019, the Company began its first recreational shipments to Quebec, Saskatchewan and Prince Edward Island. The Company has also built a larger medical client base and a greater percentage of medical sales from oils in the current period resulting in an increase in revenue compared to the prior year. For the quarter ended June 30, 2019, revenue was comprised of approximately 55% dried product, 43% oils, and 2% other compared to approximately 48% dried product, 50% oil, and 2% other in the quarter ended June 30, 2018.

During the three months ended June 30, 2019 the Company also recognized $450,782 in excise taxes which are presented as an offset to sales in the Company’s financial statements. The excise tax attributable to medical sales was absorbed by the Company.

	Three months ended
	June 30, 2019	March 31, 2019
Average selling price of adult-use dried flower per gram	$5.41	$4.98
Kilograms sold of adult-use dried flower	471	376
Average selling price of medical dried flower per gram & gram equivalents	$7.43	$7.17
Kilograms sold of medical dried flower & kilogram equivalents	78	59
Total kilograms produced of dried flower	228	212

Cost of Sales

Cost of sales consists of four main categories: (i) Cost of good sold, which substantially consists of costs to purchase cannabis flower and trim from the Company’s Joint Venture but also includes all costs directly associated with the cultivation of the Company’s cannabis, (ii) production costs which includes costs for lab testing, extraction, formulation, final processing and packaging, (iii) amortization of the Health Canada licenses, and (iv) gains or losses on changes in the fair value of biological assets growing at the Company’s wholly owned production facilities.

Costs to purchase dried flower and trim are based on the supply agreements with the Company’s Joint Venture. Post harvest costs were capitalized to inventory up to net realizable value by individual inventory categories. Costs in excess of net realizable value are expensed directly to cost of sales. Cannabis oil production costs were also capitalized to inventory. This includes the deemed cost of dried inventory at internal transfer prices, which is assessed on a weighted average basis, that were consumed in cannabis oil production. Also included are packaging and shipping costs paid to deliver goods to final customers.

Production costs include all direct and indirect production related costs in the value-added chain; including wages, compliance, quality control and quality assurance costs, as well as related overhead such as depreciation, insurance, and lab testing. During the quarter ended June 30, 2019, the Company incurred production costs of $579,757.

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Cost of sales for the quarter ended June 30, 2019 was $5,954,689. The significant increase in cost of sales in the current period was substantially in line with the increase in revenue generated by the Company.

In the coming quarter, the Company plans to capitalize cultivation related production costs as its new Metro Vancouver facility and the second stage of the Verdélite facility come online.

The change in biological assets for the quarter ended June 30, 2019 was a gain of $258,921. The increase is substantially due to the number of plants that became mature and harvested in the Verdélite facility, as well as an improved fair value less cost to sell during the three months ended June 30, 2019.

The amortization of the Health Canada license represents the amortization of an acquired license pertaining to the Verdélite facility 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. The amortization of the license is recognized on a straight-line basis irrespective of either production or sale of cannabis from that facility.

Up to the point of harvest, the Company measures biological assets consisting of cannabis on plants at fair market value less cost to sell, which becomes the basis for the cost of finished goods inventories after harvest. Mother plants are valued based on generic strain varieties to a maximum of five plants per strain. 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 market value of cannabis plants are as follows: plant waste rate for various stages of development; yield per plant; selling price less costs to sell; percentage of total expected costs to be incurred by stage; and fair value accrued according to each stage of plant growth.

Because the adjustment of the biological assets’ fair market value is recorded as a gain or loss under the cost of goods sold, gross margin immediately reflects the gain associated with biological asset transformation during periods of expansion in the scale of cultivation. This was the case during the three months ended June 30, 2019, when the costs of sales was $5,954,689.

Other expenses

General and Administrative – During the quarter ended June 30, 2019, the Company incurred general and administrative expenses of $3,341,550 as compared to $3,344,578 for the prior comparable quarter ended June 30, 2018. Consulting and professional fees, corporate communications and general office expenses were maintained or decreased during the quarter. Wages and benefits increased during the quarter as a result of increased headcount. For the three-month period ended June 30, 2019, general and administrative costs included: salaries and benefits of $1,231,709 (2018 - $652,459); consulting and professional service fees of $1,318,333 (2018 - $1,735,264); corporate communications and media of $399,722 (2018 - $445,273); office and insurance of $203,705 (2018 – $389,496); and travel and accommodations of $188,081 (2018 - $122,086).

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Sales and marketing – In the quarter ended June 30, 2019, the Company incurred sales and marketing expenses of $1,125,692 as compared to the previous period ended June 30, 2018 of $868,943. These costs related to general marketing, patient acquisition and education expenses. The increase also related to growth in the Company’s call center, as well as additional sales and marketing staff.

Research and development – In the quarter ended June 30, 2019, the Company incurred research and development expenses of $1,306,076 versus $83,409 incurred during the prior comparable quarter ended June 30, 2018. These costs related to consulting fees and wages associated with the development of new cannabis products. The substantial increase in research and development expenditures was related to not only product development but also to the enhancement of cultivation and extraction efficiencies as well as research into strain genetics.

Share-based compensation – In the quarter ended June 30, 2019, the Company incurred share-based compensation expenses of $6,421,125 as compared to $2,081,661 for the prior comparable period ended June 30, 2018. The significant increase is related to the issuance of incentive stock options and restricted share units to employees, directors and consultants during the three-month period ended June 30, 2019. During the current quarter, the Company granted 5,280,000 stock options to directors, employees and consultants.

Share of income from Joint Venture – In the quarter ended June 30, 2019, the Company recognized $14,488,832 as its 50% share of the income from the Joint Venture as compared to $682,431 as its 50% share of the income in the quarter ended June 30, 2018. The Joint Venture commenced operations during the three months ended December 31, 2017 and has since begun producing cannabis for sale, having received its cannabis sales license from Health Canada on July 27, 2018.

Year to Date June 30, 2019

The net loss for the year to date is $4,101,414 (loss of $0.028 per share), compared to the net loss of $10,656,390 (loss of $0.087 per share) for the same time period 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 current periods include the following:

	2019	2018
	Six months ended June 30 ($)	Six months ended June 30 ($)
Revenue	7,679,666	657,480
Share-based payments	8,443,739	4,035,708
Interest revenue	803,137	524,500
Share of income from joint venture	20,301,051	380,638
Net Loss	(4,101,414)	(10,656,390)
Net Loss per share (basic and diluted)	(0.028)	(0.087)

Included in the share of gain from the Joint Venture for the year to date, is an unrealized gain of $305,924 (June 30, 2018 – unrealized gain of $809,755) on the changes in the fair market value of the Joint Venture’s biological assets.

- 23 -

Revenue

Revenue for the year to date, was $7,679,666 compared to $657,480 for the same period in the prior year. The revenue for the year to date demonstrated the Company’s continued growth in the market – substantially as a result of the legalization of adult use recreational sales of cannabis during the fourth quarter of 2018. During the first half of the year, the Company began its first recreational shipments to Ontario, the Yukon, Quebec, Manitoba, Alberta, Saskatchewan and Prince Edward Island. The Company has also built a larger medical client base, which has resulted in a significant increase in revenue compared to the prior year. For the year to date, revenue was comprised of approximately 66% dried product, 33% oils, and 1% other compared to approximately 44% dried product, 54% oils, and 2% other in the prior year to date ended June 30, 2018.

Cost of goods sold

Cost of goods sold increased in the current period compared to the same period in the prior year due to higher sales volumes and an increase in production in the current year. Total gross margin is impacted significantly by the changes in fair value of the Company’s biological assets and the production cycle of those biological assets, resulting in a negative gross margin for the six months ended June 30, 2019 of ($2,988,754), compared to the six months ended June 30, 2018 of $750,161. The gross margin was significantly impacted by the amortization of the Health Canada license and increased production costs, as well as increased volume of purchased product sold.

Other expenses

General and Administrative – During the six-month period ended June 30, 2019, the Company incurred general and administrative expenses of $7,483,030 as compared to $5,956,584 for the same period ended June 30, 2018. The year to date expenses included costs incurred to support the increased activities associated with the legal adult use market including additional staff and office space, insurance, consulting, and professional services. For the six-month period ended June 30, 2019, general and administrative costs included: salaries and benefits of $2,629,210 (2018 - $1,034,071); consulting and professional service fees of $2,393,259 (2018 - $3,285,673); corporate communications and media of $984,550 (2018 - $793,042); office and insurance of $1,232,622 (2018 – $646,323); and travel and accommodations of $243,389 (2018 - $197,475).

Sales and marketing – In the six-month period ended June 30, 2019, the Company incurred sales and marketing expenses of $2,050,398 versus $1,154,840 in the comparable 2018 prior period. These costs related to general marketing and education expenses. The increase also related to growth in the Company’s call center, as well as the appointment of additional sales and marketing staff.

Research and development – In the six-month period ended June 30, 2019, the Company incurred research and development expenses of $2,233,878, a significant increase from its expenditures of $180,953 in the 2018 prior period. Research and development costs during the first half of 2019 included increased expenditures for consulting fees and salaries related to the development of new products, supporting its intellectual property filings, enhancement of current products and cultivation efficiencies.

Share-based compensation – In the six-month period ended June 30, 2019, the Company incurred share-based compensation expenses of $8,443,739 as compared to $4,035,708 in the comparable 2018 prior period. The significant increase is substantially related to the April issuance of incentive stock options and restricted share units to employees, directors and consultants. During the six-month period, the Company granted 5,748,000 stock options to directors, employees and consultants to attract, retain and incentivize its highly valued human resources.

- 24 -

Share of income from Joint Venture – In the six-month period ended June 30, 2019, the Company recognized $20,301,051 as its 50% share of the income from the Joint Venture, compared to $380,638 as its 50% share of the income from the Joint Venture in the six-month period ended June 30, 2018. The Joint Venture commenced operations during the three months ended December 31, 2017 and has since begun producing cannabis for sale, having received its cannabis sales license from Health Canada on July 27, 2018.

Additional Disclosure for Venture Issuers Without Significant Revenue

As the Company did not have significant revenue from operations in either of its last two financial years, the following is a breakdown of the material costs incurred:

	For the three months ended June 30, 2019 ($)	For the three months ended June 30, 2018 ($)	For the six months ended June 30, 2019 ($)	For the six months ended June 30, 2018 ($)
Expensed research and development costs	1,306,076	83,409	2,223,878	180,953
General and administrative expenses	3,341,550	3,344,578	7,843,030	5,956,584
Purchase of plant and equipment	8,085,537	2,653,387	14,098,198	4,929,898

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 considers internal and external economic conditions and the risk characteristics of its underlying assets in managing its capital. To maintain or adjust its capital resources, the Company may, where necessary, pursue debt or equity financings or manage the timing of its capital expenditures. As at June 30, 2019, the Company had negative working capital of $4.2 million, substantially attributable to the decision taken during the first quarter to support the Joint Venture’s acquisition and retrofit of the Delta 2 Facility, which required a $25.0 million commitment from the Company, of which, $8.2 million was paid as at June 30, 2019.

The unaudited condensed interim consolidated financial statements have been prepared 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. The continuing operations of the Company are dependent upon its ability to obtain debt or equity financing until it achieves profitable operations. While the Company has incurred losses to date, management anticipates long-term future profitability of the business as its Joint Venture is expected to continue to generate positive cash flow and its wholly owned facilities in Metro Vancouver and Saint Eustache are expected to begin generating revenue in 2020. There can be no assurance, however, that the Company will gain adequate market acceptance for its products or be able to generate sufficient gross margins to reach profitability.

- 25 -

Readily available sources of capital for the Company include a loan facility with Sciences which was increased from $6 million to $15 million on July 5, 2019. As at June 30, 2019, the Company had drawn $5.1 million on that facility. $4.8 million was advanced to the Company under the facility subsequent to June 30, 2019 and the balance as at August 28, 2019 is $9.9 million. The Company also has the 2019 Base Shelf Prospectus and associated ATM Program available to provide capital. The Company has raised gross proceeds of $18.7 million of equity financing through the ATM Program as at August 28, 2019. Additionally, due to the positive cash flow of the Joint Venture, the Company expects to start receiving repayment of a portion of its $13 million demand shareholder loan in the fourth quarter of 2019 with full repayment by the second quarter of 2020. Management continues to closely monitor its cash flows and, as necessary, will seek additional equity and debt financing to offset the working capital deficit.

The Company has committed to certain projects which may require significant cash injections over the next 12 months. The Company committed $25.0 million to the Joint Venture in support of the Delta 2 Facility retrofit, of which $12.5 has been advanced as at August 28, 2019. The Company’s production facilities in Metro Vancouver and Saint Eustache, while nearing completion, will require approximately $2.6 million of additional spend during the remainder of 2019 prior to completion.

The Company has renegotiated the terms of the pay out of the remaining $15 million loan to the vendors of Verdélite pursuant to the Company’s purchase of Verdélite on May 30, 2019. The Company paid the vendors $5.0 million during June 2019 and has committed to subsequent monthly payments of $1.0 million commencing mid July through to mid November 2019, with a final payment of $5.0 million plus accrued interest due on December 16, 2019. Interest on the outstanding balance began accruing May 31, 2019 at a rate of 10% per annum.

The Company has also committed to contributing $5.0 million to EHN in exchange for its 51% initial ownership in EHN, of which, $0.7 million has been paid as at June 30, 2019.

Operating, Investing and Financing Activities

The chart below highlights the Company’s cash flows:

	For the six months ended June 30, 2019 ($)	For the six months ended June 30, 2018 ($)
Net cash (used in) provided by:
Operating activities	$(18,316,163)	($9,407,032)
Investing activities	$(22,314,444)	($34,232,525)
Financing activities	$7,203,244	$71,792,520
(Decrease) increase in cash	$(33,427,363)	$28,152,963

Cash used in operating activities for the six-month period ended June 30, 2019 was $18.3 million, compared to cash used of $9.4 million in the comparative period the prior year. During the six-month period ended June 30, 2019, the Company recognized an increase in general and administrative expenditures as a result of additional staff and facilities costs, an increase in inventory purchased from the Joint Venture to fulfill market demand, an increase in sales and marketing expenditures due to expanded market penetration and additional staff, and cash outflows from the payments of current liabilities as compared to the six months ended June 30, 2018. The Company incurred greater losses during the period as a result of the continued business growth as seen in its expenditures to support building staffing, infrastructure and inventory purchases. The operating activities outflow is also reflective of the reversal of a non-cash share of the Joint Venture’s income of $20.3 million as compared to $0.4 million share of income in the same period ended June 30, 2018.

- 26 -

Cash used in investing activities for the six-month period ended June 30, 2019 was $22.3 million, compared to cash used of $34.2 million in the comparative period in the prior year. During the six months ended June 30, 2019:

· $8.5 million was used to invest in the Joint Venture;

· $5.6 million was used in construction of the new production facility at the Metro Vancouver site;

· $6.6 million was used to complete the renovations on the Verdélite site and to purchase lab extraction and other equipment;

· $0.7 million was used to invest in EHN; and

· $0.9 million was used in the research and preparation of 17 patents.

Cash provided by financing activities for the six-month period ended June 30, 2019 was $7.2 million, compared to $71.8 million in the six months ended June 30, 2018. Cash generated during the six-month period ended June 30, 2019 included $14.8 million in proceeds from the ATM financing and $1.1 million from stock option exercises. Offsetting these positive sources of cash flow was a $5 million repayment of the Verdélite deferred payment, a $2.5 million expenditure to retire the mortgage acquired as a part of the Verdélite acquisition, and $0.7 million in share issuance costs in connection with the ATM Program.

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.

Measurement Uncertainty and Impairment Assessments

As of June 30, 2019, management of the Company has determined that no impairment indicators of its assets were present and no additional impairment write-downs in excess of those that had been previously recorded were required. 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 the Joint Venture as more particularly described in the Company’s annual information form dated April 30, 2019.

During the six-month period ended June 30, 2019, the Company entered into or maintained the following transactions with related parties.

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With Emerald Health Sciences Inc.

The Company entered into a management agreement with Sciences, a control person of the Company, in May 2015, which has subsequently been amended, most recently in January 2018, under which the Company pays Sciences $350,000 per month. During the three and six months ended June 30, 2019, the Company recorded $1,125,000 in research and development costs and $975,000 in general and administrative fees.

The Company’s relationship with Sciences allows it to advance the development of its business faster and with fewer resources than would otherwise be possible, and with the benefit of strategic guidance and expertise in the cannabis industry. Sciences is focused on the medicinal potential of cannabis and cannabinoids with investment goals designed to leverage the scientific rigor, federal regulatory compliance, and life-science expertise of its entire Emerald leadership group. Sciences draws upon a large network of professionals with life sciences related expertise, including corporate pharmaceutical and biotechnology management, business development, product development and marketing experience, research scientists, medical doctors, naturopathic doctors, and lawyers - many with deep subject matter expertise in cannabis and the endocannabinoid system - to leverage the Company’s ability to conduct research and development, develop intellectual property, attract talent, manage operations, conduct mergers and acquisitions, and raise capital.

With access to these services, the Company has been able to identify and select new business opportunities, successfully negotiate and develop key strategic partnerships, and efficiently secure capital for the Company.

Management periodically evaluates the terms of the management agreement for reasonableness and adjusts the fee based on that evaluation.

As at June 30, 2019, Sciences held an aggregate of 40,434,242 Common Shares, representing approximately 27% of the issued and outstanding Common Shares and it held 4,411,764 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 $6,000,000 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. As of June 30, 2019, Sciences had advanced $5,100,000 (December 31, 2018 - $Nil) in funds to the Company and charged $47,642 (June 30, 2018 - $Nil) in interest, through this agreement. On July 5, 2019, subsequent to the reporting period, the loan agreement with Sciences was amended to increase the loan amount to $15,000,000 and the rate of interest charged was increased to 12%. As at August 28, 2019, the Company had drawn $10,700,000 on the facility and had accrued $219,619 in interest.

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 is constructing its new production facility. The lease amount of $80,000 per quarter was determined by an independent valuation. The Landlord was reimbursed by the Company for $179,146 for development fees and services related to the construction of the Company’s new facility during the six months ended June 30, 2019 (2018 - $37,981).

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

As at June 30, 2019, 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.) for investment purposes. The Chief Executive Officer of Avricore is also a director of the Company.

The 1,666,667 common shares of Avricore held by the Company represent 3.7% of the issued and outstanding common shares of Avricore as 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 7.3% of the issued and outstanding common shares of Avricore, assuming no other share issuances. EHN holds 3,030,303 common share purchase warrants of Avricore.

With the Company’s joint venture

The Company also has entered into related party transactions with the Joint Venture including the entering into of the JV Supply Agreement on April 1, 2019. As at June 30, 2019, the Joint Venture owes the Company $863,801 (December 31, 2018 - $1,942,329) for expenditures made on behalf of the Joint Venture. These expenditures were made to facilitate the administration of the retrofit of the Delta 3 Facility and Health Canada license application. As of June 30, 2019, the Company owes to the Joint Venture $3,222,336 (December 31, 2018 - $1,287,082) for inventory that was paid for subsequent to June 30, 2019.

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

Included in Note 3 of the Company’s audited consolidated financial statements for the years ended December 31, 2018 and 2017 are the accounting policies and estimates that are critical to the understanding of the business operations and results of operations. Included in Note 3 of the Company’s audited consolidated financial statements for the years ended December 31, 2018 and 2017 are the accounting policies and estimates that are critical to the understanding of the business operations and results of operations. Included in Note 4 of the Company’s audited consolidated financial statements for the year ended December 31, 2018 and 2017, and in Note 3 of the Company’s unaudited condensed interim consolidated financial statements, are new accounting policies and changes to existing accounting policies adopted during the previous year and current period.

Changes in Accounting Standards not yet Effective

Refer to Note 5 of the Company’s audited consolidated financial statements for the years ended December 31, 2018 and 2017 for additional information on several new standards, amendments to standards and interpretations, which are not effective yet, and have not been applied in preparing these consolidated financial statements but may affect the Company when applied in the future.

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.

- 29 -

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 annual information form dated April 30, 2019.

Forward-Looking Statements

Certain statements contained in this MD&A constitute forward-looking statements. These statements relate to future events or future performance, business prospects or opportunities of the Company. 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: the entering into of a definitive agreement with Indena and payments thereunder; distributions of Common Shares under the ATM Program; expected date of supply of cannabis to Société Québécoise du Cannabis; PEI Cannabis and Manitoba Liquor and Lotteries Corporation the exercise by the Joint Venture of the option to lease or purchase the Delta 1 Facility from Village Farms; the retrofit of the Delta 2 Facility; the expansion of the Company's operations in Metro Vancouver, British Columbia; payment of an additional $10.0 million in cash in respect of the acquisition of Verdélite; the Company's intention to use proceeds of financings including the ATM Program 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; and the effect that each risk factor will have on the Company.

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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 Licenses issued to the Company and its subsidiaries and its ability to maintain these licenses; regulatory risks relating to the Company's compliance with the Cannabis Act; regulatory approvals for expansion of current production facility, development of new production facilities and greenhouse retrofits by the Company and the Joint Venture; the Company's ability to execute a definitive agreement with Indena; 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 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 Annual Information Form 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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emerald HEALTH THERAPEUTICS Take control^TM.

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 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 June 30, 2019.

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: August 28, 2019

/s/ Riaz Bandali

Riaz Bandali

Chief Executive 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.

EX-99.4

Exhibit 99.4

EMERALD HEALTH THERAPEUTICS, INC.

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Rob Hill, 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 June 30, 2019.

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: August 28, 2019

/s/ Rob Hill

Rob Hill

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.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	Emerald Health Therapeutics Inc.
Entity Central Index Key	0001768225
Trading Symbol	emhtf
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	6-K
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2

XML

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - CAD ($)	Jun. 30, 2019	Dec. 31, 2018
Current
Cash and cash equivalents	$ 2,614,727	$ 36,042,090
Accounts receivable (Note 5)	5,175,670	3,579,271
Biological assets (Note 6)	980,757	1,088,528
Inventory (Note 7)	21,412,731	6,772,525
Prepaid expenses	1,233,357	1,326,780
Due from related parties (Note 11)	13,895,221	14,973,749
Total current assets	45,312,463	63,782,943
Plant and equipment (Note 8)	25,922,532	16,965,989
Plant under construction	18,565,940	10,310,229
Deposits on materials and equipment	619,067	981,832
Refundable deposits	196,391	2,196,391
Intangible assets (Note 9)	90,529,605	86,612,636
Right of use assets (Note 19)	4,363,577	0
Goodwill	169,323	169,323
Long-term investment	179,390	282,509
Investment in joint venture (Note 10)	71,251,893	25,660,842
Total non-current assets	211,797,718	143,179,751
TOTAL ASSETS	257,110,181	206,962,694
Current liabilities
Accounts payable and accrued liabilities	12,208,468	9,634,464
Current portion of long-term debt	0	2,503,064
Deferred payment	10,094,520	22,226,565
Payable to joint venture (Note 10)	16,810,000	0
Due to related parties (Note 11)	10,400,227	1,806,393
Total current liabilities	49,513,215	36,170,486
Deferred income tax liability	293,886	293,886
Lease liability (Note 19)	4,613,973	0
TOTAL LIABILITIES	54,421,074	36,464,372
SHAREHOLDERS' EQUITY
Share capital (Note 12)	230,187,171	204,791,733
Warrants (Note 13)	4,360,000	4,360,000
Contributed surplus	20,496,390	14,202,536
Accumulated deficit	(56,773,926)	(52,855,947)
TOTAL SHAREHOLDERS' EQUITY	198,269,635	170,498,322
Non-controlling interest	4,419,472	0
TOTAL LIABILITIES AND EQUITY	$ 257,110,181	$ 206,962,694

XML

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS - CAD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue
Sales (Note 17)	$ 5,070,107	$ 284,262	$ 7,679,666	$ 657,480
Excise taxes	450,782	0	930,461	0
Net revenue	4,619,325	284,262	6,749,205	657,480
Cost of sales
Cost of goods sold	4,713,906	249,761	7,418,427	555,288
Production costs	579,757	548,269	1,456,990	723,915
Depreciation of Health Canada license (Note 9)	919,947	0	1,839,894	0
Gain on changes in fair value of biological assets (Note 6)	(258,921)	(978,893)	(977,352)	(1,371,884)
Gross margin	(1,335,364)	465,125	(2,988,754)	750,161
Expenses
General and administrative (Note 18)	3,341,550	3,344,578	7,483,030	5,956,584
Sales and marketing	1,125,692	868,943	2,050,398	1,154,840
Research and development	1,306,076	83,409	2,233,878	180,953
Depreciation (Note 8 and 9)	248,444	927,907	496,584	1,176,456
Share-based payments (Note 12)	6,421,125	2,081,661	8,443,739	4,035,708
Total expenses	12,442,887	7,306,498	20,707,629	12,504,541
Loss from operations	13,778,251	6,841,373	23,696,383	11,754,380
Share of income from joint venture (Note 10)	(14,488,832)	(682,431)	(20,301,051)	(380,638)
Interest income	(164,827)	(274,436)	(803,137)	(524,500)
Other expense, by function	483,505	0	541,872	0
Adjustments for increase (decrease) in deferred income	864,229	0	864,229	0
Fair value changes in financial assets	(19,595)	(140,716)	103,118	124,645
Deferred income tax recovery	0	(132,820)	0	(317,497)
NET LOSS AND COMPREHENSIVE LOSS	452,731	5,610,970	4,101,414	10,656,390
Net loss and comprehensive loss attributable to:
Emerald Health Therapeutics, Inc.	275,355	5,422,497	3,718,886	10,330,815
Non-controlling interest	177,376	188,473	382,528	325,575
Net loss	$ 452,731	$ 5,610,970	$ 4,101,414	$ 10,656,390
Net loss per common share
Basic and diluted (in dollars per share)	$ 0.003	$ 0.043	$ 0.028	$ 0.087
Weighted average number of common shares outstanding
Basic and diluted (in shares)	145,515,035	129,906,112	143,929,482	122,586,500

XML

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CAD ($)	Verdelite Sciences Inc. [Member] Share Capital	Verdelite Sciences Inc. [Member] Warrants	Verdelite Sciences Inc. [Member] Contributed Surplus	Verdelite Sciences Inc. [Member] Accumulated Deficit	Verdelite Sciences Inc. [Member] Total Shareholders' Equity	Verdelite Sciences Inc. [Member] Non-Controlling Interest	Verdelite Sciences Inc. [Member]	Emerald Health Naturals Inc. [Member] Share Capital	Emerald Health Naturals Inc. [Member] Warrants	Emerald Health Naturals Inc. [Member] Contributed Surplus	Emerald Health Naturals Inc. [Member] Accumulated Deficit	Emerald Health Naturals Inc. [Member] Total Shareholders' Equity	Emerald Health Naturals Inc. [Member] Non-Controlling Interest	Emerald Health Naturals Inc. [Member]	Share Capital Previously Reported [Member]	Share Capital	Warrants Previously Reported [Member]	Warrants	Contributed Surplus Previously Reported [Member]	Contributed Surplus	Accumulated Deficit Previously Reported [Member]	Accumulated Deficit	Total Shareholders' Equity Previously Reported [Member]	Total Shareholders' Equity	Non-Controlling Interest Previously Reported [Member]	Non-Controlling Interest	Previously Reported [Member]	Total
Balance at Dec. 31, 2017																$ 77,912,246		$ 461,772		$ 5,285,709		$ (17,829,369)		$ 65,830,358		$ 1,956,834		$ 67,787,192
Balance (shares) at Dec. 31, 2017																106,787,226		9,707,677
Acquisitions	$ 45,000,000	$ 0	$ 0	$ 0	$ 45,000,000	$ 0	$ 45,000,000
Acquisitions (in shares)	9,911,894	0
Increase in ownership of Avalite Sciences Inc.																$ 0		$ 0		0		(522,204)		(522,204)		522,204		0
Increase in ownership of Avalite Sciences Inc. (in shares)																0		0
Shares issued on stock option exercises (Note 12)																$ 679,414		$ 0		(247,687)		0		431,727		0		431,727
Shares issued on stock option exercises (Note 12) (in Shares)																538,523		0
Units issued on prospectus offerings																$ 40,740,000		$ 9,060,000		0		0		49,800,000		0		49,800,000
Units issued on prospectus offerings (shares)																10,000,000		10,000,000
Share issuance costs																$ (272,355)								(272,355)				(272,355)
Share-based payments (Note 12)																$ 0		$ 0		4,035,708		0		4,035,708		0		4,035,708
Warrants expired (shares)																0		(56,050)
Warrants expired																$ 0		$ (17,093)		17,093		0		0		0		0
Shares issued on warrant exercises (Note 18)																$ 24,901,302		$ (3,044,679)		0		0		21,856,623		0		21,856,623
Shares issued on warrant exercises (Note 18) (shares)																8,239,863		(8,239,863)
Net loss and comprehensive loss																$ 0		$ 0		0		(10,330,815)		(10,330,815)		(325,575)		(10,656,390)
Balance at Jun. 30, 2018																$ 188,960,607		$ 6,460,000		9,090,823		(28,682,388)		175,829,042		2,153,463		177,982,505
Balance (shares) at Jun. 30, 2018																135,477,506		11,411,764
Balance at Dec. 31, 2017																$ 77,912,246		$ 461,772		5,285,709		(17,829,369)		65,830,358		1,956,834		$ 67,787,192
Balance (shares) at Dec. 31, 2017																106,787,226		9,707,677
Warrants expired (shares)																												(3,056,050)
Balance at Dec. 31, 2018															$ 204,791,733	$ 204,791,733	$ 4,360,000	$ 4,360,000	$ 14,202,536	14,202,536	$ (52,855,947)	(53,055,040)	$ 170,498,322	170,299,229	$ 0	0	$ 170,498,322	$ 170,299,229
Balance (shares) at Dec. 31, 2018															141,443,116	141,443,116	8,411,764	8,411,764
Adoption of IFRS 16 (Note 3)																						(199,093)		(199,093)				(199,093)
Shares issued on at-the-market offering (Note 12) (in shares)																4,167,200		0
Shares issued on at-the-market offering (Note 12)																$ 14,749,636		$ 0		0		0		14,749,636		0		14,749,636
Acquisitions	$ 8,199,371	$ 0	$ 0	$ 0	$ 8,199,371	$ 0	$ 8,199,371	$ 0	$ 0	$ 0	$ 0	$ 0	$ 4,802,000	$ 4,802,000
Acquisitions (in shares)	2,129,707	0						0	0
Shares issued on stock option exercises (Note 12)																$ 3,223,157		$ 0		(2,149,885)		0		1,073,272		0		1,073,272
Shares issued on stock option exercises (Note 12) (in Shares)																1,702,921		0
Share issuance costs																$ (776,726)		$ 0		0		0		(776,726)		0		(776,726)
Share-based payments (Note 12)																$ 0		$ 0		8,443,739		0		8,443,739		0		8,443,739
Warrants expired (shares)																		0
Shares issued on warrant exercises (Note 18) (shares)																0		0
Net loss and comprehensive loss																$ 0		$ 0		0		(3,718,886)		(3,718,886)		(382,528)		(4,101,414)
Balance at Jun. 30, 2019																$ 230,187,171		$ 4,360,000		$ 20,496,390		$ (56,773,926)		$ 198,269,635		$ 4,419,472		$ 202,689,107
Balance (shares) at Jun. 30, 2019																149,442,944		8,411,764

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW - CAD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net loss	$ (4,101,414)	$ (10,656,390)
Items not involving cash
Depreciation	2,485,561	1,176,456
Gain on changes in fair value of biological assets	(977,352)	(1,371,884)
Fair value changes in financial assets	103,118	124,645
Share-based payments	8,443,739	4,035,708
Share of income from joint venture	(20,301,051)	(380,638)
Interest expense	203,099	0
Deferred income tax recovery	0	(317,497)
Loss on settlement of deferred payment	864,229	0
Changes in non-cash operating working capital
Accounts receivable	(1,596,399)	(491,132)
Due from related parties	1,078,528	(861,753)
Prepaid expenses	93,424	(459,554)
Inventory and biological assets	(11,921,382)	(758,509)
Accounts payable and accrued liabilities	(376,196)	658,279
Due to related parties	7,685,933	(104,763)
Net cash flows used in operating activities	(18,316,163)	(9,407,032)
Investing activities
Investment in joint venture (Note 10)	(8,480,000)	(4,000,000)
Acquisition of asset (Note 4)	(725,799)	(22,634,061)
Deposits on equipment	347,936	(2,000,000)
Purchase of plant and equipment	(12,544,352)	(5,593,281)
Purchase of intangible assets	(912,229)	(5,183)
Net cash flows used in investing activities	(22,314,444)	(34,232,525)
Financing activities
Payment of lease liabilities	(163,969)	0
Proceeds from financing	14,749,636	49,800,000
Share issuance costs	(776,726)	(272,942)
Repayment of long term debt	(2,503,064)	(22,888)
Repayment of deferred payment	(5,000,000)	0
Stock option exercises	1,073,272	431,727
Interest paid	(175,905)	0
Warrant exercises	0	21,856,623
Net cash flows generated from financing activities	7,203,244	71,792,520
(Decrease)/increase in cash and cash equivalents	(33,427,363)	28,152,963
Cash and cash equivalents, beginning of year	36,042,090	44,523,145
Cash and cash equivalents, end of year	2,614,727	72,676,108
Supplemental Information (Abstract)
Fair value of shares issued to settle portion of deferred payment (Note 4)	$ 8,199,371	$ 0

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NATURE AND CONTINUANCE OF OPERATIONS

6 Months Ended

Jun. 30, 2019

NATURE AND CONTINUANCE OF OPERATIONS

NATURE AND CONTINUANCE OF OPERATIONS

1.           NATURE AND CONTINUANCE OF OPERATIONS

Emerald Health Therapeutics Inc. (the "Company"), is classified as a Tier 1 Venture Issuer on 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.”

These condensed interim consolidated financial statements (“interim 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 June 30, 2019, the Company had not yet achieved profitable operations and had accumulated losses of  $56,773,926 (December 31, 2018 - $52,855,947)  since its inception. As at June 30, 2019, the Company recognized that current liabilities exceed current assets by $4,200,752, which is primarily the result of the $16,810,000 liability recorded in conjunction with Pure Sunfarms' acquisition of Delta 2 (see Note 10 and 20). Subsequent to June 30, 2019, the Company has raised additional gross proceeds of $3,908,911 of equity financing through its ATM facility (see Note 12). Management continues to closely monitor its cash flows and, as necessary, will seek additional equity and debt financing to offset the working capital deficit. The continuing operations of the Company are dependent upon its ability to continue to raise adequate capital, to commence profitable operations in the future, to satisfy its commitments and to repay its liabilities arising from normal business operations as they become due. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern.

These condensed interim consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

BASIS OF PRESENTATION

BASIS OF PRESENTATION

2.           BASIS OF PRESENTATION

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, 2018  (“Annual Financial Statements”). 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, 2018, unless otherwise indicated. The Company assesses its accounting estimates and judgements every reporting period.

The Company’s interim results are not necessarily indicative of its results for a full year.

a)           Statement of Compliance

These condensed interim consolidated financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). As a result, these unaudited condensed interim consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB have been condensed with certain disclosures from the Annual Financial Statements omitted. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2018.

The condensed interim consolidated financial statements were authorized for filing by the Board of Directors on August 28, 2019.

b)           Basis of measurement

These condensed interim consolidated financial statements have been prepared on a going concern basis, at historical cost except for certain financial instruments and biological assets, which are measured at fair value.

c)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 June 30, 2019 include the following:

	Ownership Interest		Ownership Interest
	as at June 30		as atDecember 31
Name of Entity	2019		2018
Emerald Health Therapeutics Canada Inc. (EHTC)	100	%	100	%
Emerald Health Naturals Inc. (Naturals)	51	%	—
Avalite Sciences Inc. (Avalite)	100	%	100	%
Pure Sunfarms Corp. (Pure Sunfarms)	50	%	50	%
Verdélite Sciences Inc. (Verdélite)	100	%	100	%
Verdélite Property Holdings Inc.	100	%	100	%

d)           Functional and presentation currency

The Company and its subsidiaries’ functional currency is Canadian dollars. All dollar amounts presented are in Canadian dollars unless otherwise specified.

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NEW ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2019

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS

3.           NEW ACCOUNTING PRONOUNCEMENTS

IFRS 16, Leases – replaced the guidance in IAS 17 Leases and established principles for the recognition, measurement, presentation and disclosure of leases, with the objective of ensuring that lessees and lessors provide relevant information that faithfully represents those transactions.

The Company has applied IFRS 16 with an initial application date of January 1, 2019. The simplified transition approach was applied and as a result, the Company recognized the cumulative effect of initially applying IFRS 16 as an adjustment to the accumulated deficit as at January 1, 2019. The IFRS 16 adjustment as at January 1, 2019, resulted in a debit to the Company’s accumulated deficit of $199,093.

The Company’s lease accounting policy in accordance with IFRS 16 is provided below.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The right-of-use asset is initially measured at cost and subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is subject to impairment assessment and adjusted for certain remeasurements of its associated lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company's incremental borrowing rate or rate implicit in the lease. The lease liability is subsequently measured at amortized cost using the effective interest method. The incremental borrowing rate determined for the Company for the leases in transition is within a range of 6% - 8%. The lease liability is subsequently measured at amortized cost using the effective interest method.

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in net earnings if the carrying amount of the right-of-use asset is nil.

A lease modification is accounted for as a separate lease if there is an increase in the scope of a lease and a corresponding increase in consideration, such as adding the right to use one or more underlying assets in a contract. Otherwise, a lease modification is considered a remeasurement of the lease liability, as discussed above. 

Lease payments that depend on performance measures or usage of the underlying asset are considered variable lease payments, which are expensed as incurred.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease term of 12 months or less) and leases for which the underlying asset is of low value. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Changes to the Company’s critical accounting estimates and judgments due to IFRS 16 are provided below.

The Company’s lease liabilities are measured at the present value of the lease payments discounted using the applicable incremental borrowing rate or rate implicit in the lease. Determining the discount rate (incremental borrowing rate) requires significant judgment and may have a significant quantitative impact on lease liability valuations. Many of the Company’s lease liabilities contain one or several lease extension clauses, and could reasonably be extended beyond the lease extensions outlined in the contract. Determining the length of the lease to be used in the present value calculation of the lease obligation requires significant judgement and may have significant impact on lease liability valuations.

	$
Operating Lease commitments at December 31, 2018	10,298,432
Undiscounted operating lease payments at January 1, 2019	10,298,432
Effect of discounting using the incremental borrowing rates at January 1, 2019	(5,569,108)
Lease Liabilities Recognized January 1, 2019	4,729,324
Initial Recognition of ROU assets at application date	5,184,165
Accumulated Depreciation as at application date	(653,935)
Net right-of-use assets recognized at January 1, 2019	4,530,230

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ACQUISITIONS

6 Months Ended

Jun. 30, 2019

ACQUISITIONS

ACQUISITIONS

4.           ACQUISITIONS

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 Emerald Health Naturals, Inc. (“Naturals”). The Company will invest $5,000,000 for a 51% ownership of Naturals and EHB will grant Naturals exclusive Canadian distribution right to EHB’s product line for 49% ownership (“Distribution Right”). The Company concluded that it controls Naturals and it has been consolidated, with non-controlling interest recognized for the EHB owned portion. Naturals operates primarily in Canada and is focused on developing natural health products that may provide wellness and medical benefits by interacting with the human body’s endocannabinoid system.

The Distribution Right is recorded at its acquisition date fair value. It is an intangible asset, estimated to have an indefinite life because it is expected to generate cash flows indefinitely. As an indefinite life intangible asset, the Distribution Right is not amortized.

Concurrent with this agreement, Naturals entered into an agreement to acquire assets from GAB Innovations, Inc. (“GAB”) for cash consideration of $340,000. The Company paid $200,000 on closing and the balance is due on January 10, 2020. On the date of acquisition, management concluded that the assets acquired did not include significant processes or outputs, and therefore did not meet the definition of a business under IFRS 3 Business Combinations. As a result, the transaction was accounted for as an asset acquisition.

The total purchase price and the fair value of the net assets of GAB acquired are disclosed below:

Net assets acquired	Asset fair value	Relative fair value
	$	$
3 Natural Product Numbers	90,000	89,259
Plant and Equipment	102,824	101,976
Health Canada NHP Site License	150,000	148,765
	342,824	340,000

As part of the asset acquisition, Naturals acquired a Health Canada Natural Health Product (“NHP”) Site License. An NHP Site Licence is required for any site that manufactures, processes, packages, labels, imports, and/or stores NHPs in Canada. The acquired NHP Site License allowed EHN to start importing and storing NHPs in Q2 2019. This intangible asset was recorded at its acquisition date fair value. This asset has a finite life and will be amortized on a straight-line basis in accordance with the Company’s policy.

Verdélite Sciences Inc.

On May 2, 2018, the Company acquired 100% of the issued and outstanding shares of Verdélite and the shareholder loans payable by Verdélite, for total consideration of $90.0 million, payable 50% in cash and 50% in Common Shares (the “Purchase Price”). The Company paid $22.5 million in cash upon closing and $45.0 million was satisfied by the issuance of 9,911,894 Common Shares, of which 4,955,947 Common Shares were held in escrow until May 1, 2019 (Note 12). The remaining $22.3 million was payable to the vendors of Verdélite (the “Vendors”) on May 1, 2019.

On May 1, 2019, the Vendors elected to receive $7.5 million of the remaining $22.3 million, as shares of the Company, with the remaining $14.8 million of the Purchase Price to be paid on or before May 30, 2019. The Company treated this change to the terms of settlement for the purchase of Verdélite as an extinguishment of the original terms, and not a modification under IFRS 9, Financial Instruments. The shares issued to the Vendors were valued on the five-day volume-weighted average price of the Common Shares of the Company on the TSXV, discounted 10%, calculated as of April 30, 2019. This resulted in the issuance of 2,129,707 Common Shares to the Vendors, at a deemed share price of $3.52 per Common Share. Under IFRIC 19,  Extinguishing Financial Liabilities with Equity Instruments, when equity instruments issued to a creditor to extinguish all or part of a financial liability are recognized initially, an entity shall measure them at the fair value of the equity instruments issued. The difference between the carrying amount of the financial liability extinguished and the consideration paid is recognized in profit or loss in the quarter ended June 30, 2019. The fair value of the equity issued to the Vendors on May 1, 2019 was $3.85 per share, resulting in a loss of $864,229 being recognized by the Company in the condensed interim consolidated statements of loss and comprehensive loss.

An additional loss was recognized on the renegotiation of terms of settlement, as the Company initially recorded the liability at $22.3 million, adjusted from the $22.5 million based on working capital adjustments. The difference of $164,857 has been recognized as a loss by the Company and is included in the settlement loss of $864,229 in the condensed interim consolidated statements of loss and comprehensive loss.

On May 30, 2019, the Company renegotiated the terms of the remaining $15.0 million payable to the Vendors. $5.0 million cash was paid in June 2019, with subsequent monthly payments of $1.0 million commencing mid July through to mid November 2019, with a final payment of $5.0 million plus accrued interest due on December 16, 2019. Interest on the outstanding balance began accruing May 31, 2019 at a rate of 10% per annum. The amount outstanding as at June 30, 2019 was $10,094,520.

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ACCOUNTS RECEIVABLE

6 Months Ended

Jun. 30, 2019

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE

5.            ACCOUNTS RECEIVABLE

The Company’s accounts receivable is comprised of:

	June 30	December 31
	2019	2018
	$	$
Goods and services tax refund receivable	2,380,397	2,519,789
Trade receivables	2,658,764	801,756
Other receivables	136,509	257,726
	5,175,670	3,579,271

Accounts receivable are neither impaired nor past due.

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BIOLOGICAL ASSETS

6 Months Ended

Jun. 30, 2019

BIOLOGICAL ASSETS

BIOLOGICAL ASSETS

6.            BIOLOGICAL ASSETS

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

	June 30	December 31
	2019	2018
	$	$
Carrying amount, beginning of year	1,088,528	114,559
Effect of unrealized changes in fair value of biological assets	977,352	2,818,442
Biological assets purchased	—	3,841
Biological assets sold	—	(133,680)
Transferred to inventory upon harvest	(1,085,123)	(1,714,634)
Carrying amount, end of period	980,757	1,088,528

As at June 30, 2019, included in the carrying amount of biological assets is $28,745 (December 31, 2018 - $28,570) in seeds and $952,012 (December 31, 2018 - $1,059,958) 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 effect the fair value of the biological assets in future periods:

· plant waste – wastage of plants based on various stages of growth;

· yield per plant – represents the weighted average grams of dry cannabis expected to be harvested from a cannabis plant, based on historical yields;

· selling price, less costs to sell – based on estimated selling price per gram of dry cannabis based on historical sales and expected sales;

· percentage of costs incurred to date compared to the total costs to be incurred (to estimate the fair value of an in-process plant) – represents estimated costs to bring a gram of cannabis from propagation to harvest; and

· stage of plant growth – represents the weighted average age in of the plant out of the average growing cycle as at period end date.

As at June 30, 2019, on average, the biological assets were 40% complete as to the next expected harvest date, compared to a 39% average stage of completion as at December 31, 2018. The average number of days from the point of propagation to harvest is 106 days.

Biological assets are classified as Level 3 on the fair value hierarchy. Significant unobservable inputs used to fair value biological assets include the Company’s estimate of the yield of cannabis per plant as well as the average selling price per gram less cost to sell. A 5% increase or decrease in the estimated yield of cannabis per plant would result in an increase or decrease in the fair value of biological assets of $18,200 at June 30, 2019 (December 31, 2018 - $52,620). A 5% increase or decrease in the average selling price per gram less cost to sell would result in an increase or decrease in the fair value of the biological assets of $25,987 at June 30, 2019 (December 31, 2018 - $59,579).

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INVENTORY

6 Months Ended

Jun. 30, 2019

INVENTORY

INVENTORY

7.           INVENTORY

The Company’s inventory is comprised of:

	June 30	December 31
	2019	2018
	$	$
Dried cannabis	19,748,293	5,778,176
Cannabis oils	951,476	337,314
Goods for resale	73,879	1,498
Supplies and consumables	639,083	655,537
	21,412,731	6,772,525

Inventory expensed and included in cost of sales was $4,713,906 and $7,418,427, for three and six months ended June 30, 2019 (June 30, 2018 – $249,761 and $555,288). The unrealized gain due to the fair value change in biological assets included in cost of sales was $258,921 and $977,352 for three and six months ended June 30, 2019 (June 30, 2018 – gain of $978,893 and $1,371,884).

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PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2019

PLANT AND EQUIPMENT

PLANT AND EQUIPMENT

8.           PLANT AND EQUIPMENT

				Production, Lab
			Leasehold	and Growing		Other
	Land	Buildings	Improvement	Equipment	Computers	Equipment	Total
	$	$	$	$	$	$	$
Costs:
Balance, December 31, 2017	—	—	274,471	992,725	57,881	36,392	1,361,469
Additions	—	6,747,648	1,407,177	1,457,537	138,641	566,928	10,317,931
Acquired Through Verdélite	476,041	5,265,894	—	237,793	73,642	257,753	6,311,123
Balance, December 31, 2018	476,041	12,013,542	1,681,648	2,688,055	270,164	861,073	17,990,523
Additions	—	5,131,453	1,236,390	2,596,168	74,320	377,138	9,415,469
Acquired Through Naturals	—	—	33,984	—	3,271	63,553	100,808
Balance, June 30 2019	476,041	17,144,995	2,952,022	5,284,223	347,755	1,301,764	27,506,800
Accumulated Depreciation:
Balance, December 31, 2017	—	—	79,609	210,653	9,002	30,870	330,134
Additions	—	153,563	75,074	336,932	67,524	61,307	694,400
Balance, December 31, 2018	—	153,563	154,683	547,585	76,526	92,177	1,024,534
Additions	—	125,731	105,783	203,737	46,173	78,310	559,734
Balance, June 30 2019	—	279,294	260,466	751,322	122,699	170,487	1,584,268
Carrying value:
June 30, 2019	476,041	16,865,701	2,691,556	4,532,901	225,056	1,131,277	25,922,532
December 31, 2018	476,041	11,859,979	1,526,965	2,140,470	193,638	768,896	16,965,989

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INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2019

INTANGIBLE ASSETS

INTANGIBLE ASSETS

9.INTANGIBLE ASSETS

The Company’s intangible assets continuity is as follows:

		Distribution	Health Canada	Computer
	Patents	Right	License	Software	Total
	$	$	$	$	$
Cost:
Balance, December 31, 2017	—	—	2,922,096	62,135	2,984,231
Acquired through Verdélite	—	—	86,103,549	—	86,103,549
Additions	368,531	—	—	133,032	501,563
Balance, December 31, 2018	368,531	—	89,025,645	195,167	89,589,343
Acquired through Naturals	89,259	4,802,000	148,765	1,168	5,041,192
Additions	200,323	—	—	601,281	801,604
Balance, June 30, 2019	658,113	4,802,000	89,174,410	797,616	95,432,139

		Distribution	Health Canada	Computer
	Patents	Right	License	Software	Total
	$	$	$	$	$
Accumulated amortization:
Balance, December 31, 2017	—	—	87,446	44,930	132,376
Additions	—	—	2,829,015	15,316	2,844,331
Balance, December 31, 2018	—	—	2,916,461	60,246	2,976,707
Additions	—	—	1,839,895	85,932	1,925,827
Balance, June 30, 2019	—	—	4,756,356	146,178	4,902,534

		Distribution	Health Canada	Computer
	Patents	Right	License	Software	Total
	$	$	$	$	$
Net book value:
June 30, 2019	658,113	4,802,000	84,418,054	651,438	90,529,605
December 31, 2018	368,531	—	86,109,184	134,921	86,612,636

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INVESTMENT IN JOINT VENTURE

6 Months Ended

Jun. 30, 2019

INVESTMENT IN JOINT VENTURE

INVESTMENT IN JOINT VENTURE

10.         INVESTMENT IN JOINT VENTURE

On March 30, 2019, Pure Sunfarms exercised its option to acquire from Village Farms International, Inc. (“Village Farms”) a second 1.1 million square foot (25 acre) greenhouse (“Delta 2”) adjacent to Pure Sunfarms’ existing 1.1 million square foot greenhouse in Delta, BC. In accordance with the terms of the Pure Sunfarms joint venture agreement, Village Farms is contributing the Delta 2 facility to the joint venture and the Company has committed to contribute an aggregate of $25.0 million in cash, of which $8.2 million was paid during the six months ended June 30, 2019. The remaining balance of $16.8 million is recognized on the condensed interim consolidated statements of financial position in Payable to Joint Venture.

Profits and losses resulting from upstream and downstream transactions between the Company and Pure Sunfarms are recognized only to the extent of unrelated investor's interests in the associates. Unrealized gains arising from transactions with the associate are eliminated. Unrealized losses resulting from transactions with the associate are also eliminated, but only to the extent that there is no evidence of impairment.

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

	$
Balance at December 31, 2018	25,660,842
Investment in Joint Venture	25,000,000
Transaction costs	290,000
Share of income	20,301,051
Balance at June 30, 2019	71,251,893

Summarized financial information for Pure Sunfarms is set out below:

	June 30	December 31
	2019	2018
	$	$
Non-current assets	108,611,519	67,263,020
Current assets (a)	100,575,197	20,414,439
Total assets	209,186,716	87,677,459
Non-current liabilities	22,320,310	2,688,273
Current liabilities	42,708,578	39,465,718
Total liabilities	65,028,888	42,153,991
(a) includes cash and cash equivalents	15,572,914	2,361,948

	Six months ended	Six months ended
	June 30	June 30
	2019	2018
	$	$
Sales	46,715,496	—
Cost of Sales (b)	10,369,461	—
Gross margin before fair value changes	36,346,035	—
Change in fair value of biological asset	(27,654,191)	(422,012)
Gross margin	64,000,226	422,012
Selling, general and administrative expenses	3,712,467	1,364,161
Income (loss) from operations	60,287,759	(942,149)
Other (income) loss	354,130	(77,181)
Income (loss) before taxes	59,933,629	(864,968)
Provision for income taxes	11,299,269	—
Net income (loss)	48,634,360	(864,968)
(b) includes $516,839 of amortization expense
Net Income (loss)	48,634,360	(864,968)
Elimination of transactions with the Company	(8,644,105)	—
Fair value adjustment	611,847	1,626,244
Adjusted net income	40,602,102	761,276
50% Share of income from joint venture	20,301,051	380,638

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

	For the six	For the twelve
	months ended	months ended
	June 30 2019	December 31 2018
	$	$
Total net assets of Pure Sunfarms	144,157,828	45,523,468
50% ownership interest held by the Company	72,078,914	22,761,734
2018 cumulative adjustments carried forward	2,669,470	—
Fair value adjustment recognized during the period	305,923	3,964,388
Elimination of transactions with the Company during the period	(4,322,053)	(1,294,919)
Transaction costs cumulative	519,639	229,639
Carrying amount of the investment	71,251,893	25,660,842

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

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2019

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

11.         RELATED PARTY TRANSACTIONS

With Emerald Health Sciences Inc.

As of June 30, 2019, Emerald Health Sciences Inc. (“Sciences”) held an aggregate of 40,434,242 Common Shares, representing 27% (December 31, 2018 – 43,234,242 shares, representing 31%) of the issued and outstanding Common Shares and it also held 4,411,764 (December 31, 2018 – 4,411,764) common share purchase warrants of the Company.

Sciences charged the Company $1,050,000 and $2,100,000 during the three and six months ended June 30, 2019 (June 30, 2018 - $1,050,000 and $2,100,000) for services related to financing, business development, investor relations and acquisition activities, in accordance with the amended management agreement: $562,500 and $1,125,000 were recognized as research and development costs and $487,500 and $975,000 were recognized as general and administrative fees, respectively. Sciences charged the Company $Nil during the three and six months ended June 30, 2019 (June 30, 2018 - $Nil) for invoices paid on behalf of the Company. As of June 30, 2019, the Company owed $1,507,314 (December 31, 2018 – $502,194) to Sciences for services provided. 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 of June 30, 2019, Sciences owed the Company $31,421 (December 31, 2018 – $31,421) 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 May 2019, the Company amended a previous loan agreement with Sciences pursuant to which Sciences agreed to loan up to $6,000,000 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. As of June 30, 2019, Sciences had advanced $5,100,000 (December 31, 2018 - $Nil) in funds to the Company and charged $47,642 (June 30, 2018 - $Nil) in interest, through this agreement. The amount owing is included in Due to Related Parties on the condensed interim consolidated statements of financial position.

With the Company’s joint venture

As of June 30, 2019, Pure Sunfarms owes the Company $863,801 (December 31, 2018 - $1,942,329) for expenditures made on behalf of the joint venture. As of June 30, 2019, the Company owes to Pure Sunfarms $3,222,336 (December 31, 2018 - $1,287,082) for inventory purchased from Pure Sunfarms, that was paid subsequent to June 30, 2019. These amounts are included in the respective Due To and Due From Related Parties on the condensed interim consolidated statements of financial position, and are non-interest bearing. The Company also contributed $13,000,000 in the form of an on-demand loan as described in the Company’s Annual Financial Statements.

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. During the three and six months ended June 30, 2019, the Company paid to the Landlord $84,904 and $169,808 (June 30, 2018 -  $83,235 and $166,649) in rent and $Nil and $237 (June 30, 2018 - $Nil and $Nil) for invoices paid on behalf of the Company. The Landlord was reimbursed by the Company for $20,605 and $179,146 during the three and six months ended June 30, 2019 (June 30, 2018 - $14,979 and $40,699) for development fees and services related to construction of the Company’s new facility. As of June 30, 2019, the Company owed $4,671 (December 31, 2018 - $502) to the Landlord; this amount is included in Due to Related Parties on the condensed interim consolidated statements of financial position and is non-interest bearing. As at June 30, 2019, the Company recognized a lease obligation of $3,570,989 relating to the land in Metro Vancouver. This amount is included on the statements of financial position under “Lease Liability”.

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, as described in the Company’s Annual Financial Statements. Naturals holds 3,030,303 common share purchase warrants of Avricore.

Remuneration of directors and key management of the Company

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

	For the three	For the three	For the six	For the six
	months ended	months ended	months ended	months ended
	June 30 2019	June 30 2018	June 30 2019	June 30 2018
	$	$	$	$
Wage and short-term benefits	304,805	258,930	561,382	478,350
Share-based payments	2,495,360	949,773	2,852,707	1,065,763
	2,800,165	1,208,703	3,414,089	1,544,113

Included in Due to Related Parties on the condensed interim consolidated statements of financial position at June 30, 2019 is $27,500 (December 31, 2018 - $16,614) due to related parties with respect to key management personnel and expense reimbursements and are non-interest bearing.

In the event that senior key management employment agreements are terminated by the Company, other than for just cause, such officers are entitled to a minimum severance amount equal to six months of salary.

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

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SHARE CAPITAL

6 Months Ended

Jun. 30, 2019

SHARE CAPITAL

SHARE CAPITAL

12.          SHARE CAPITAL

Authorized

· Unlimited number of Common Shares without par value

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

Issued

· 149,442,944 Common Shares (December 31, 2018 – 141,443,116)

· Nil preferred shares (December 31, 2018 - Nil)

During the six months ended June 30, 2019 the outstanding share capital increased by 7,999,828 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”) during Q1 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 million 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 six months ended June 30, 2019, the Company issued an aggregate of 4,167,200 Common Shares for gross proceeds of $14,749,636 with an average price of $3.54.

· Issued 2,129,707 shareswith a value of $8,199,371 for the acquisition of Verdélite as described in Note 4.

· A total of 1,347,921 stock options were exercised ranging in exercise price from $0.175 to $3.07 for gross proceeds of $1,073,272. A total of 355,000 restricted share units vested and were settled. A total of 1,702,921 Common Shares were issued.

Escrowed Common Shares

The 4,955,947 shares issued as part of the purchase price of Verdélite were subject to an Escrow Agreement. Under the agreement, 50% of the shares issued to the Vendors of Verdélite were to remain in escrow until May 1, 2019. During the six months ended June 30, 2019, 4,955,947 Common Shares (December 31, 2018 – 4,955,947) were released from escrow (Note 4).

Share based payments

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.

		Weighted Average
	Number of Options	Exercise Price
		$
Balance, December 31, 2017	9,861,114	1.76
Granted	2,811,000	4.16
Forfeited	(1,367,708)	3.62
Exercised	(1,410,195)	0.85
Balance, December 31, 2018	9,894,211	2.31
Granted	5,748,000	4.05
Forfeited	(685,709)	3.66
Exercised	(1,347,921)	0.80
Balance, June 30, 2019	13,608,581	3.13

During the six-month period ended June 30, 2019, the Company granted 5,748,000 stock options to employees and consultants. The stock options granted had exercise prices between $2.83 and $4.15, have expiry dates of five years and vest over three years. The weighted average fair value of the stock options granted was $4.05. The weighted average trading share price of the options exercised during the six months ended June 30, 2019 was $3.33.

The fair values of the options granted during the six-month periods ended June 30, 2019 and 2018 were determined on the date of the grant using the Black-Scholes option pricing model with the following assumptions:

	June 30			June 30
	2019			2018
Risk free interest rate		1.39% - 1.85	%		1.73 - 2.11
Expected life of options (years)		2.75			3.00
Expected annualized volatility		101.21%-105.68	%		80	%
Expected dividend yield		Nil			Nil
Weighted average Black-Scholes value of each option	$	2.50		$	2.74

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 June 30, 2019 are summarized as follows:

	Outstanding			Exercisable
			Weighted		Weighted
Range of		Remaining	average		average
exercise		contractual	exercise		exercise
prices	Quantity	life (years)	price	Quantity	price
$			$		$
0.175 - 0.43	210,000	2.15	0.34	210,000	0.34
0.44 - 0.50	1,500,000	0.82	0.45	1,500,000	0.45
0.51 - 0.94	993,416	2.25	0.72	955,918	0.72
0.95 - 1.25	723,834	2.93	1.21	467,863	1.20
1.26 - 1.49	258,581	2.95	1.43	103,032	1.41
1.50 - 3.40	1,395,500	4.10	2.98	435,750	2.89
3.41 - 4.23	5,928,500	4.74	4.06	1,401,504	4.10
4.24 - 4.25	1,933,750	3.48	4.25	966,250	4.25
4.26 - 5.44	340,000	4.15	4.58	98,750	4.55
5.45 - 6.68	325,000	3.66	5.69	175,000	5.69
	13,608,581	3.67	3.13	6,314,067	2.33

The Company recorded share-based compensation expense related to the incentive stock options of $5,925,310 and $7,762,887 for the three and six months ended June 30, 2019 (June 30, 2018 – $1,592,593 and $3,062,817). The expense has been charged to the condensed interim consolidated statements of loss and comprehensive loss.

Restricted share units

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, December 31, 2017	825,000	3.73
Granted	5,000	5.67
Balance, December 31, 2018	830,000	3.74
Granted	475,000	4.15
Settled	(355,000)	4.27
Balance, June 30, 2019	950,000	3.76

During the six months ended June 30, 2019, the Company issued 475,000 RSUs to various employees and consultants, that vest over two years, on April 2, 2020 and April 2, 2021 and settle in Common Shares. The Company recorded share-based compensation expense related to the RSUs of $495,815 and $680,852 for the three and six months ended June 30, 2019 (June 30, 2018 – $489,068 and $972,891) to the condensed interim consolidated statements of loss and comprehensive loss. 

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WARRANTS

6 Months Ended

Jun. 30, 2019

WARRANTS

WARRANTS

13.         WARRANTS

		Weighted
	Number of	Average
	Warrants	Exercise Price
		$
Balance, December 31, 2017	9,707,677	0.80
Issued in January 2018	3,000,000	6.00
Issued in February 2018	3,000,000	7.00
Issued in May 2018	4,000,000	5.20
Exercised	(8,239,863)	2.65
Expired	(3,056,050)	6.91
Balance, December 31, 2018	8,411,764	2.92
Balance, June 30, 2019	8,411,764	2.92
Expire:
November 2021	4,411,764	0.85
November 2019	4,000,000	5.20
Balance, June 30, 2019	8,411,764	2.92

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FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2019

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

14.         FINANCIAL INSTRUMENTS

The classification of the Company’s financial instruments, as well as their carrying amounts and fair values, are as follows:

	June 30, 2019		December 31, 2018
	Fair Value	Carrying Value	Fair Value	Carrying Value
	$	$	$	$
Financial Assets
FVTPL
Long-term investment	179,390	179,390	282,509	282,509
Amortized cost
Cash and cash equivalents	2,614,727	2,614,727	36,042,090	36,042,090
Accounts receivable	5,175,670	5,175,670	3,579,271	3,579,271
Due from related parties	13,895,221	13,895,221	14,973,749	14,973,749
Refundable deposits	196,391	196,391	2,196,391	2,196,391
Financial Liabilities
Amortized cost
Accounts payable and accrued liabilities	12,208,468	12,208,468	9,634,464	9,634,464
Current portion of long-term debt	—	—	2,503,064	2,503,064
Deferred payment	10,094,520	10,094,520	22,226,565	22,226,565
Payable to joint venture	16,810,000	16,810,000	—	—
Due to related parties	10,400,227	10,400,227	1,806,393	1,806,393

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.

Fair value hierarchy – financial instruments recorded at fair value at the statement of financial position dates are classified using the fair value hierarchy, which reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – Valuation based on quoted prices unadjusted in active markets for identical assets or liabilities.

Level 2 – Valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Valuation techniques using inputs for the asset or liability that are not based on observable market data.

There have been no transfers between fair value levels during the period.

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 June 30, 2019
Financial Assets Long-term investments	100,000	79,390	—	179,390
As at December 31, 2018
Financial Assets Long-term investments	166,667	115,842	—	282,509

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 June 30, 2019 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 does not have any asset backed commercial paper. The Company maintains cash deposits with Schedule A financial institutions, which from time to time may exceed 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 majority of the trade receivables held are with crown corporations of British Columbia.

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. As at June 30, 2019, the Company had negative working capital of $4,200,753 (December 31, 2018 – positive working capital of $27,612,457). 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.

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CAPITAL MANAGEMENT

6 Months Ended

Jun. 30, 2019

CAPITAL MANAGEMENT

CAPITAL MANAGEMENT

15.         CAPITAL MANAGEMENT

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.

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SEGMENTED INFORMATION

6 Months Ended

Jun. 30, 2019

SEGMENTED INFORMATION

SEGMENTED INFORMATION

16.         SEGMENTED INFORMATION

Segment reporting is prepared on the same basis that the Company’s President, who is the Company’s Chief Operating Decision Maker, manages the business, makes resource allocation decisions and assesses performance. The Company operates in one reportable segment, being the production and sale of cannabis and in one geographical location, Canada.

	Cannabis	Other	Total
	$	$	$
For the three months ended June 30, 2019
Sales	4,975,864	94,243	5,070,107
Interest revenue	(118,960)	283,787	164,827
Loss from operations	10,605,523	3,172,728	13,778,251
Net (income) loss and comprehensive (income) loss	(3,072,949)	3,525,680	452,731
Share of income from joint venture	(14,488,832)	—	(14,488,832)
For the six months ended June 30, 2019
Sales	7,585,423	94,243	7,679,666
Interest revenue	(48,591)	851,728	803,137
Loss from operations	14,104,906	9,591,477	23,696,383
Net (income) loss and comprehensive (income) loss	(5,403,561)	9,504,975	4,101,414
Share of income from joint venture	(20,301,051)	—	(20,301,051)

	Cannabis	Other	Total
	$	$	$
For the three months ended June 30, 2018
Sales	284,262	—	284,262
Interest revenue	—	274,436	274,436
Loss from operations	1,462,406	5,378,967	6,841,373
Net loss and comprehensive loss	780,274	4,830,696	5,610,970
Share of income from joint venture	(682,431)	—	(682,431)
For the six months ended June 30, 2018
Sales	657,480	—	657,480
Interest revenue	—	524,500	524,500
Loss from operations	2,111,738	9,642,642	11,754,380
Net loss and comprehensive loss	1,731,400	8,924,990	10,656,390
Share of income from joint venture	(380,638)	—	(380,638)

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SALES

6 Months Ended

Jun. 30, 2019

SALES

SALES

17.         SALES

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

	For the three	For the three	For the six	For the six
	months ended	months ended	months ended	months ended
	June 30 2019	June 30 2018	June 30 2019	June 30 2018
	$	$	$	$
Dried Cannabis	2,789,666	136,408	5,064,897	288,659
Cannabis Oils	2,182,174	141,308	2,514,701	355,180
Other	98,267	6,546	100,068	13,641
Total	5,070,107	284,262	7,679,666	657,480

During the six months ended June 30, 2019, the Company earned approximately 55% of gross revenues from three major customers, all being Crown Corporations (June 30, 2018 – $Nil).

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GENERAL AND ADMINISTRATIVE EXPENSES

6 Months Ended

Jun. 30, 2019

GENERAL AND ADMINISTRATIVE EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

18.         GENERAL AND ADMINISTRATIVE EXPENSES

	For the three	For the three	For the six	For the six
	months ended	months ended	months ended	months ended
	June 30 2019	June 30 2018	June 30 2019	June 30 2018
	$	$	$	$
Professional, director and consulting fees	1,318,333	1,735,264	2,393,259	3,285,673
Corporate communications and media	399,722	445,273	984,550	793,042
Wages and benefits	1,231,709	652,459	2,629,210	1,034,071
Office and general	203,705	389,496	1,232,622	646,323
Travel and accommodations	188,081	122,086	243,389	197,475
Total general and administrative expenses	3,341,550	3,344,578	7,483,030	5,956,584

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LEASES

6 Months Ended

Jun. 30, 2019

LEASES

LEASES

19.         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

	ROU - Land use	ROU -	ROU -
	Rights	Buildings	Equipment	Total
	$	$	$	$
Costs:
Balance, applied January 1, 2019	3,634,227	1,371,759	178,179	5,184,165
Additions	—	—	21,238	21,238
Balance, June 30, 2019	3,634,227	1,371,759	199,417	5,205,403
Accumulated Depreciation:
Balance, applied January 1, 2019	181,711	449,664	22,560	653,935
Amortization during period	60,570	109,488	17,833	187,891
Balance, June 30, 2019	242,281	559,152	40,393	841,826
Carrying value:
June 30, 2019	3,391,946	812,607	159,024	4,363,577
December 31, 2018	—	—	—	—

b)Lease Liabilities

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

	$
Lease liabilities recognized at January 1, 2019	4,729,324
Lease liability additions during the period ended June 30, 2019	23,345
Lease payments	(314,671)
Interest incurred	175,975
Balance, June 30, 2019	4,613,973

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

Contractual Undiscounted Cash Flows:

	$
Within 1 year	580,451
1 - <3 years	1,718,534
3 - <5 years	770,195
Over 5 years	7,066,668
Balance, June 30, 2019	10,135,848

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EVENTS AFTER THE REPORTING PERIOD

6 Months Ended

Jun. 30, 2019

EVENTS AFTER THE REPORTING PERIOD

EVENTS AFTER THE REPORTING PERIOD

20.EVENTS AFTER THE REPORTING PERIOD

Subsequent to June 30, 2019, the Company granted 617,500 options to purchase Common Shares with exercise prices between $2.39 and $3.47. These options vest over three years with an expiry date five years from the grant date.

On July 5, 2019, subsequent to the reporting period, the loan agreement with Sciences was amended to increase the loan agreement from $6 million to $15 million and the rate of interest charged was increased to 12%. To date, the Company has drawn a total of $10.7 million and accrued interest of $0.2 million.

On August 28, 2019, the Company announced that it had entered into a binding term sheet with a single Canadian institutional accredited investor (the “Investor”) under which the Investor has agreed, subject to certain customary conditions, to purchase 2,500 secured convertible debentures units (the “Convertible Debentures Units”) of the Company at a price of $10,000 per Convertible Debenture Unit (the “Issue Price”) for gross proceeds of $25,000,000 (the “Offering”). The Convertible Debentures Units have a maturity date of 24 months from their date of issue (the “Maturity Date”) and will bear interest (at the option of the Company, payable in cash or shares) from their date of issue at 5.0% per annum, accrued and payable semi-annually on June 30 and December 31 of each year. The final terms of the Convertible Debentures will be determined by negotiation between the Company and the Investor and will include certain covenants relating to the business of the Company.

The Convertible Debentures will be convertible, at the option of the holder, into Common Shares at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The Convertible Debentures will have a conversion price of $2.00 per Common Share (the “Conversion Price”), being a 14% premium to the closing price of the Common Shares on August 27, 2019 on the TSXV. If at any time prior to the maturity date of the Convertible Debentures, the volume weighted average trading price of the Common Shares on the TSXV is greater than $3.50 for 15 consecutive trading days, the Company may force the conversion of the principal amount of the then outstanding Convertible Debentures at the Conversion Price and any accrued and outstanding interest, provided the Company gives 30 days' notice of such conversion to the holder.

Each Warrant will be exercisable to purchase one Common Share at an exercise price of $2.25 per share, for a period of 24 months from the date of issue. If at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the TSXV is greater than $3.50 for 15 consecutive trading days, the Company may deliver a notice to the holder of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice.

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BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2019

BASIS OF PRESENTATION

Schedule of summary of subsidiaries

	Ownership Interest		Ownership Interest
	as at June 30		as atDecember 31
Name of Entity	2019		2018
Emerald Health Therapeutics Canada Inc. (EHTC)	100	%	100	%
Emerald Health Naturals Inc. (Naturals)	51	%	—
Avalite Sciences Inc. (Avalite)	100	%	100	%
Pure Sunfarms Corp. (Pure Sunfarms)	50	%	50	%
Verdélite Sciences Inc. (Verdélite)	100	%	100	%
Verdélite Property Holdings Inc.	100	%	100	%

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NEW ACCOUNTING PRONOUNCEMENTS (Tables)

6 Months Ended

Jun. 30, 2019

NEW ACCOUNTING PRONOUNCEMENTS

Schedule of impact on lease liability

	$
Operating Lease commitments at December 31, 2018	10,298,432
Undiscounted operating lease payments at January 1, 2019	10,298,432
Effect of discounting using the incremental borrowing rates at January 1, 2019	(5,569,108)
Lease Liabilities Recognized January 1, 2019	4,729,324
Initial Recognition of ROU assets at application date	5,184,165
Accumulated Depreciation as at application date	(653,935)
Net right-of-use assets recognized at January 1, 2019	4,530,230

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ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2019

ACQUISITIONS

Schedule of purchase price of acquisition at fair value

Net assets acquired	Asset fair value	Relative fair value
	$	$
3 Natural Product Numbers	90,000	89,259
Plant and Equipment	102,824	101,976
Health Canada NHP Site License	150,000	148,765
	342,824	340,000

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ACCOUNTS RECEIVABLE (Tables)

6 Months Ended

Jun. 30, 2019

ACCOUNTS RECEIVABLE

Schedule of accounts receivable

	June 30	December 31
	2019	2018
	$	$
Goods and services tax refund receivable	2,380,397	2,519,789
Trade receivables	2,658,764	801,756
Other receivables	136,509	257,726
	5,175,670	3,579,271

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BIOLOGICAL ASSETS (Tables)

6 Months Ended

Jun. 30, 2019

BIOLOGICAL ASSETS

Schedule of reconciliation of changes in biological assets

	June 30	December 31
	2019	2018
	$	$
Carrying amount, beginning of year	1,088,528	114,559
Effect of unrealized changes in fair value of biological assets	977,352	2,818,442
Biological assets purchased	—	3,841
Biological assets sold	—	(133,680)
Transferred to inventory upon harvest	(1,085,123)	(1,714,634)
Carrying amount, end of period	980,757	1,088,528

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INVENTORY (Tables)

6 Months Ended

Jun. 30, 2019

INVENTORY

Schedule of inventories

	June 30	December 31
	2019	2018
	$	$
Dried cannabis	19,748,293	5,778,176
Cannabis oils	951,476	337,314
Goods for resale	73,879	1,498
Supplies and consumables	639,083	655,537
	21,412,731	6,772,525

XML

PLANT AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2019

PLANT AND EQUIPMENT

Schedule of property and equipment

				Production, Lab
			Leasehold	and Growing		Other
	Land	Buildings	Improvement	Equipment	Computers	Equipment	Total
	$	$	$	$	$	$	$
Costs:
Balance, December 31, 2017	—	—	274,471	992,725	57,881	36,392	1,361,469
Additions	—	6,747,648	1,407,177	1,457,537	138,641	566,928	10,317,931
Acquired Through Verdélite	476,041	5,265,894	—	237,793	73,642	257,753	6,311,123
Balance, December 31, 2018	476,041	12,013,542	1,681,648	2,688,055	270,164	861,073	17,990,523
Additions	—	5,131,453	1,236,390	2,596,168	74,320	377,138	9,415,469
Acquired Through Naturals	—	—	33,984	—	3,271	63,553	100,808
Balance, June 30 2019	476,041	17,144,995	2,952,022	5,284,223	347,755	1,301,764	27,506,800
Accumulated Depreciation:
Balance, December 31, 2017	—	—	79,609	210,653	9,002	30,870	330,134
Additions	—	153,563	75,074	336,932	67,524	61,307	694,400
Balance, December 31, 2018	—	153,563	154,683	547,585	76,526	92,177	1,024,534
Additions	—	125,731	105,783	203,737	46,173	78,310	559,734
Balance, June 30 2019	—	279,294	260,466	751,322	122,699	170,487	1,584,268
Carrying value:
June 30, 2019	476,041	16,865,701	2,691,556	4,532,901	225,056	1,131,277	25,922,532
December 31, 2018	476,041	11,859,979	1,526,965	2,140,470	193,638	768,896	16,965,989

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INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2019

INTANGIBLE ASSETS

Schedule of intangible assets

		Distribution	Health Canada	Computer
	Patents	Right	License	Software	Total
	$	$	$	$	$
Cost:
Balance, December 31, 2017	—	—	2,922,096	62,135	2,984,231
Acquired through Verdélite	—	—	86,103,549	—	86,103,549
Additions	368,531	—	—	133,032	501,563
Balance, December 31, 2018	368,531	—	89,025,645	195,167	89,589,343
Acquired through Naturals	89,259	4,802,000	148,765	1,168	5,041,192
Additions	200,323	—	—	601,281	801,604
Balance, June 30, 2019	658,113	4,802,000	89,174,410	797,616	95,432,139

		Distribution	Health Canada	Computer
	Patents	Right	License	Software	Total
	$	$	$	$	$
Accumulated amortization:
Balance, December 31, 2017	—	—	87,446	44,930	132,376
Additions	—	—	2,829,015	15,316	2,844,331
Balance, December 31, 2018	—	—	2,916,461	60,246	2,976,707
Additions	—	—	1,839,895	85,932	1,925,827
Balance, June 30, 2019	—	—	4,756,356	146,178	4,902,534

		Distribution	Health Canada	Computer
	Patents	Right	License	Software	Total
	$	$	$	$	$
Net book value:
June 30, 2019	658,113	4,802,000	84,418,054	651,438	90,529,605
December 31, 2018	368,531	—	86,109,184	134,921	86,612,636

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INVESTMENT IN JOINT VENTURE (Tables)

6 Months Ended

Jun. 30, 2019

INVESTMENT IN JOINT VENTURE

Schedule of investment activities

	$
Balance at December 31, 2018	25,660,842
Investment in Joint Venture	25,000,000
Transaction costs	290,000
Share of income	20,301,051
Balance at June 30, 2019	71,251,893

Summarized financial information about joint venture

	June 30	December 31
	2019	2018
	$	$
Non-current assets	108,611,519	67,263,020
Current assets (a)	100,575,197	20,414,439
Total assets	209,186,716	87,677,459
Non-current liabilities	22,320,310	2,688,273
Current liabilities	42,708,578	39,465,718
Total liabilities	65,028,888	42,153,991
(a) includes cash and cash equivalents	15,572,914	2,361,948

	Six months ended	Six months ended
	June 30	June 30
	2019	2018
	$	$
Sales	46,715,496	—
Cost of Sales (b)	10,369,461	—
Gross margin before fair value changes	36,346,035	—
Change in fair value of biological asset	(27,654,191)	(422,012)
Gross margin	64,000,226	422,012
Selling, general and administrative expenses	3,712,467	1,364,161
Income (loss) from operations	60,287,759	(942,149)
Other (income) loss	354,130	(77,181)
Income (loss) before taxes	59,933,629	(864,968)
Provision for income taxes	11,299,269	—
Net income (loss)	48,634,360	(864,968)
(b) includes $516,839 of amortization expense
Net Income (loss)	48,634,360	(864,968)
Elimination of transactions with the Company	(8,644,105)	—
Fair value adjustment	611,847	1,626,244
Adjusted net income	40,602,102	761,276
50% Share of income from joint venture	20,301,051	380,638

Schedule of reconciliation of summarized financial information about joint venture

	For the six	For the twelve
	months ended	months ended
	June 30 2019	December 31 2018
	$	$
Total net assets of Pure Sunfarms	144,157,828	45,523,468
50% ownership interest held by the Company	72,078,914	22,761,734
2018 cumulative adjustments carried forward	2,669,470	—
Fair value adjustment recognized during the period	305,923	3,964,388
Elimination of transactions with the Company during the period	(4,322,053)	(1,294,919)
Transaction costs cumulative	519,639	229,639
Carrying amount of the investment	71,251,893	25,660,842

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RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2019

RELATED PARTY TRANSACTIONS

Disclosure of information about key management personnel [text block]

	For the three	For the three	For the six	For the six
	months ended	months ended	months ended	months ended
	June 30 2019	June 30 2018	June 30 2019	June 30 2018
	$	$	$	$
Wage and short-term benefits	304,805	258,930	561,382	478,350
Share-based payments	2,495,360	949,773	2,852,707	1,065,763
	2,800,165	1,208,703	3,414,089	1,544,113

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SHARE CAPITAL (Tables)

6 Months Ended

Jun. 30, 2019

SHARE CAPITAL

Schedule of share based payments

		Weighted Average
	Number of Options	Exercise Price
		$
Balance, December 31, 2017	9,861,114	1.76
Granted	2,811,000	4.16
Forfeited	(1,367,708)	3.62
Exercised	(1,410,195)	0.85
Balance, December 31, 2018	9,894,211	2.31
Granted	5,748,000	4.05
Forfeited	(685,709)	3.66
Exercised	(1,347,921)	0.80
Balance, June 30, 2019	13,608,581	3.13

Schedule of option pricing model

	June 30			June 30
	2019			2018
Risk free interest rate		1.39% - 1.85	%		1.73 - 2.11
Expected life of options (years)		2.75			3.00
Expected annualized volatility		101.21%-105.68	%		80	%
Expected dividend yield		Nil			Nil
Weighted average Black-Scholes value of each option	$	2.50		$	2.74

Schedule of incentive stock options outstanding and exercisable

	Outstanding			Exercisable
			Weighted		Weighted
Range of		Remaining	average		average
exercise		contractual	exercise		exercise
prices	Quantity	life (years)	price	Quantity	price
$			$		$
0.175 - 0.43	210,000	2.15	0.34	210,000	0.34
0.44 - 0.50	1,500,000	0.82	0.45	1,500,000	0.45
0.51 - 0.94	993,416	2.25	0.72	955,918	0.72
0.95 - 1.25	723,834	2.93	1.21	467,863	1.20
1.26 - 1.49	258,581	2.95	1.43	103,032	1.41
1.50 - 3.40	1,395,500	4.10	2.98	435,750	2.89
3.41 - 4.23	5,928,500	4.74	4.06	1,401,504	4.10
4.24 - 4.25	1,933,750	3.48	4.25	966,250	4.25
4.26 - 5.44	340,000	4.15	4.58	98,750	4.55
5.45 - 6.68	325,000	3.66	5.69	175,000	5.69
	13,608,581	3.67	3.13	6,314,067	2.33

Schedule of Restricted share units (RSUs)

		Weighted
		average
		fair value per
	Number of RSUs	unit at issue
		$
Balance, December 31, 2017	825,000	3.73
Granted	5,000	5.67
Balance, December 31, 2018	830,000	3.74
Granted	475,000	4.15
Settled	(355,000)	4.27
Balance, June 30, 2019	950,000	3.76

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WARRANTS (Tables)

6 Months Ended

Jun. 30, 2019

WARRANTS

Schedule of warrants

		Weighted
	Number of	Average
	Warrants	Exercise Price
		$
Balance, December 31, 2017	9,707,677	0.80
Issued in January 2018	3,000,000	6.00
Issued in February 2018	3,000,000	7.00
Issued in May 2018	4,000,000	5.20
Exercised	(8,239,863)	2.65
Expired	(3,056,050)	6.91
Balance, December 31, 2018	8,411,764	2.92
Balance, June 30, 2019	8,411,764	2.92
Expire:
November 2021	4,411,764	0.85
November 2019	4,000,000	5.20
Balance, June 30, 2019	8,411,764	2.92

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FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2019

FINANCIAL INSTRUMENTS

Schedule of fair value measurement of assets and liabilities

	June 30, 2019		December 31, 2018
	Fair Value	Carrying Value	Fair Value	Carrying Value
	$	$	$	$
Financial Assets
FVTPL
Long-term investment	179,390	179,390	282,509	282,509
Amortized cost
Cash and cash equivalents	2,614,727	2,614,727	36,042,090	36,042,090
Accounts receivable	5,175,670	5,175,670	3,579,271	3,579,271
Due from related parties	13,895,221	13,895,221	14,973,749	14,973,749
Refundable deposits	196,391	196,391	2,196,391	2,196,391
Financial Liabilities
Amortized cost
Accounts payable and accrued liabilities	12,208,468	12,208,468	9,634,464	9,634,464
Current portion of long-term debt	—	—	2,503,064	2,503,064
Deferred payment	10,094,520	10,094,520	22,226,565	22,226,565
Payable to joint venture	16,810,000	16,810,000	—	—
Due to related parties	10,400,227	10,400,227	1,806,393	1,806,393

Schedule of financial instruments

	Fair Value Measurement
	Level 1	Level 2	Level 3	Total
	$	$	$	$
As at June 30, 2019
Financial Assets Long-term investments	100,000	79,390	—	179,390
As at December 31, 2018
Financial Assets Long-term investments	166,667	115,842	—	282,509

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SEGMENTED INFORMATION (Tables)

6 Months Ended

Jun. 30, 2019

SEGMENTED INFORMATION

Schedule of segmented information

	Cannabis	Other	Total
	$	$	$
For the three months ended June 30, 2019
Sales	4,975,864	94,243	5,070,107
Interest revenue	(118,960)	283,787	164,827
Loss from operations	10,605,523	3,172,728	13,778,251
Net (income) loss and comprehensive (income) loss	(3,072,949)	3,525,680	452,731
Share of income from joint venture	(14,488,832)	—	(14,488,832)
For the six months ended June 30, 2019
Sales	7,585,423	94,243	7,679,666
Interest revenue	(48,591)	851,728	803,137
Loss from operations	14,104,906	9,591,477	23,696,383
Net (income) loss and comprehensive (income) loss	(5,403,561)	9,504,975	4,101,414
Share of income from joint venture	(20,301,051)	—	(20,301,051)

	Cannabis	Other	Total
	$	$	$
For the three months ended June 30, 2018
Sales	284,262	—	284,262
Interest revenue	—	274,436	274,436
Loss from operations	1,462,406	5,378,967	6,841,373
Net loss and comprehensive loss	780,274	4,830,696	5,610,970
Share of income from joint venture	(682,431)	—	(682,431)
For the six months ended June 30, 2018
Sales	657,480	—	657,480
Interest revenue	—	524,500	524,500
Loss from operations	2,111,738	9,642,642	11,754,380
Net loss and comprehensive loss	1,731,400	8,924,990	10,656,390
Share of income from joint venture	(380,638)	—	(380,638)

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SALES (Tables)

6 Months Ended

Jun. 30, 2019

SALES

Schedule of sales by product line

	For the three	For the three	For the six	For the six
	months ended	months ended	months ended	months ended
	June 30 2019	June 30 2018	June 30 2019	June 30 2018
	$	$	$	$
Dried Cannabis	2,789,666	136,408	5,064,897	288,659
Cannabis Oils	2,182,174	141,308	2,514,701	355,180
Other	98,267	6,546	100,068	13,641
Total	5,070,107	284,262	7,679,666	657,480

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GENERAL AND ADMINISTRATIVE EXPENSES (Tables)

6 Months Ended

Jun. 30, 2019

GENERAL AND ADMINISTRATIVE EXPENSES

Schedule of general and administrative expenses

	For the three	For the three	For the six	For the six
	months ended	months ended	months ended	months ended
	June 30 2019	June 30 2018	June 30 2019	June 30 2018
	$	$	$	$
Professional, director and consulting fees	1,318,333	1,735,264	2,393,259	3,285,673
Corporate communications and media	399,722	445,273	984,550	793,042
Wages and benefits	1,231,709	652,459	2,629,210	1,034,071
Office and general	203,705	389,496	1,232,622	646,323
Travel and accommodations	188,081	122,086	243,389	197,475
Total general and administrative expenses	3,341,550	3,344,578	7,483,030	5,956,584

XML

LEASES (Tables)

6 Months Ended

Jun. 30, 2019

LEASES

Schedule of associated lease liabilities

	ROU - Land use	ROU -	ROU -
	Rights	Buildings	Equipment	Total
	$	$	$	$
Costs:
Balance, applied January 1, 2019	3,634,227	1,371,759	178,179	5,184,165
Additions	—	—	21,238	21,238
Balance, June 30, 2019	3,634,227	1,371,759	199,417	5,205,403
Accumulated Depreciation:
Balance, applied January 1, 2019	181,711	449,664	22,560	653,935
Amortization during period	60,570	109,488	17,833	187,891
Balance, June 30, 2019	242,281	559,152	40,393	841,826
Carrying value:
June 30, 2019	3,391,946	812,607	159,024	4,363,577
December 31, 2018	—	—	—	—

Schedule of lease liabilities

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

	$
Lease liabilities recognized at January 1, 2019	4,729,324
Lease liability additions during the period ended June 30, 2019	23,345
Lease payments	(314,671)
Interest incurred	175,975
Balance, June 30, 2019	4,613,973

Schedule of maturity analysis of operating lease payments

Contractual Undiscounted Cash Flows:

	$
Within 1 year	580,451
1 - <3 years	1,718,534
3 - <5 years	770,195
Over 5 years	7,066,668
Balance, June 30, 2019	10,135,848

XML

NATURE AND CONTINUANCE OF OPERATIONS (Details) - CAD ($)	6 Months Ended
	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Disclosure of subsidiaries [line items]
Accumulated deficit	$ (56,773,926)	$ 199,093	$ (52,855,947)
Gross proceeds of Borrowing	3,908,911
Increase (decrease) in working capital	4,200,752
Delta 2 [Member]
Disclosure of subsidiaries [line items]
Liabilities incurred	$ 16,810,000

XML

BASIS OF PRESENTATION (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Emerald Health Therapeutics Canada Inc. ("EHTC")
Disclosure of subsidiaries [line items]
Ownership Interest	100.00%	100.00%
Emerald Health Naturals Inc [Member]
Disclosure of subsidiaries [line items]
Ownership Interest	51.00%	0.00%
Avalite Sciences Inc. ("Avalite")
Disclosure of subsidiaries [line items]
Ownership Interest	100.00%	100.00%
Pure Sunfarms Corp. ("Pure Sunfarms")
Disclosure of subsidiaries [line items]
Ownership Interest	50.00%	50.00%
Verdelite Sciences Inc
Disclosure of subsidiaries [line items]
Ownership Interest	100.00%	100.00%
Verdelite Property Holdings Inc.
Disclosure of subsidiaries [line items]
Ownership Interest	100.00%	100.00%

XML

NEW ACCOUNTING PRONOUNCEMENTS (Details) - CAD ($)	Jun. 30, 2019	Jan. 01, 2019
NEW ACCOUNTING PRONOUNCEMENTS
Operating Lease commitments at December 31, 2018	$ 10,298,432
Undiscounted operating lease payments at January 1, 2019	10,298,432
Effect of discounting using the incremental borrowing rates at January 1, 2019	(5,569,108)
Lease Liabilities Recognized January 1, 2019		$ 4,729,324
Initial Recognition of ROU assets at application date	5,184,165
Accumulated Depreciation as at application date	(653,935)
Net right-of-use assets recognized at January 1, 2019	$ 4,530,230

XML

NEW ACCOUNTING PRONOUNCEMENTS - Additional Information (Details) - CAD ($)	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Retained earnings	$ (56,773,926)	$ 199,093	$ (52,855,947)
Bottom of range
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Weighted average lessee's incremental borrowing rate applied to lease liabilities recognized at date of initial application of IFRS 16	6.00%
Top of range
Disclosure of expected impact of initial application of new standards or interpretations [line items]
Weighted average lessee's incremental borrowing rate applied to lease liabilities recognized at date of initial application of IFRS 16	8.00%

XML

ACQUISITIONS (Details)	Jun. 30, 2019 CAD ($)
Asset Fair Value [Member]
Disclosure Of Acquisitions [Line Items]
3 Natural Product Numbers	$ 90,000
Plant and Equipment	102,824
Health Canada NHP Site License	150,000
Total	342,824
Relative Fair Value [Member]
Disclosure Of Acquisitions [Line Items]
3 Natural Product Numbers	89,259
Plant and Equipment	101,976
Health Canada NHP Site License	148,765
Total	$ 340,000

XML

ACQUISITIONS - Additonal Information (Details)						12 Months Ended
	May 30, 2019 CAD ($)	May 01, 2019 CAD ($) $ / shares	Jan. 10, 2019 CAD ($)	Jan. 10, 2019 USD ($)	May 02, 2018 CAD ($) shares	Dec. 31, 2018 CAD ($)	Jun. 30, 2019 CAD ($)	May 31, 2019	Jan. 10, 2019 CAD ($)	May 15, 2018 CAD ($)
Gab Innovations Inc [Member]
Disclosure of detailed information about business combination [line items]
Cash									$ 340,000
Cash Consideration Transferred			$ 200,000
Verdelite Sciences Inc. [Member]
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired					100.00%
Cash	$ 5,000,000									$ 22,500,000
Percentage of acquisitions adjustment payable in cash					50.00%
Percentage of acquisitions adjustment payable in common shares					50.00%
Number of share issued in acquisition		2,129,707
Amount of remaining total consideration transferred		$ 7,500,000				$ 45,000,000
Number of share held in escrow | shares					4,955,947
Total consideration					$ 90,000,000
Amount of remaining cash is payable in acquisition	15,000,000				$ 22,300,000
Discount on weighted average share price		10.00%
Deemed share price | $ / shares		$ 3.52
Fair value (per share) | $ / shares		$ 3.85
Loss on remeasurement of fair value of equity issued		$ (864,229)
Initially recorded liability		22,300,000
Remaining Cash Payable Amount		14,800,000
Working capital adjustments		22,500,000
Loss recognized on renegotiation		$ (164,857)
Monthly payments commencing mid July through to mid November 2019	1,000,000
Final payable plus accrued interest	$ 5,000,000
Rate of interest								10.00%
Borrowings							$ 10,094,520
Emerald Health Naturals Inc. [Member]
Disclosure of detailed information about business combination [line items]
Percentage Of Ownership For Product Line				49.00%
Emerald Health Bioceuticals, Inc. ("EHB")
Disclosure of detailed information about business combination [line items]
Percentage of voting equity interests acquired				51.00%					51.00%
Equity interests of acquirer				$ 5,000,000

XML

ACCOUNTS RECEIVABLE (Details) - CAD ($)	Jun. 30, 2019	Dec. 31, 2018
ACCOUNTS RECEIVABLE
Goods and services tax refund receivable	$ 2,380,397	$ 2,519,789
Trade receivables	2,658,764	801,756
Other receivables	136,509	257,726
Total accounts receivable	$ 5,175,670	$ 3,579,271

XML

BIOLOGICAL ASSETS (Details) - CAD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
BIOLOGICAL ASSETS
Carrying amount, beginning of year	$ 1,088,528	$ 114,559
Effect of unrealized changes in fair value of biological assets	977,352	2,818,442
Biological assets purchased	0	3,841
Biological assets sold	0	(133,680)
Transferred to inventory upon harvest	(1,085,123)	(1,714,634)
Carrying amount, end of period	$ 980,757	$ 1,088,528

XML

BIOLOGICAL ASSETS - Additional Information (Details) - CAD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of detailed information about biological assets [line items]
Biological assets	$ 980,757	$ 1,088,528	$ 114,559
Percentage of biological assets complete as to next expected harvest date	40.00%
Percentage of biological assets average stage of completion		39.00%
Sensitivity analysis, Impact of 5% increase (decrease) in estimated yield of cannabis per plant, Increase (decrease) in fair value of biological assets	$ 18,200	$ 52,620
Sensitivity analysis, Impact of 5% increase (decrease) in average selling price per gram less cost to sell, Increase (decrease) in fair value of biological assets	25,987	59,579
Cannabis seeds
Disclosure of detailed information about biological assets [line items]
Biological assets	28,745	28,570
Cannabis plants
Disclosure of detailed information about biological assets [line items]
Biological assets	$ 952,012	$ 1,059,958

XML

INVENTORY (Details) - CAD ($)	Jun. 30, 2019	Dec. 31, 2018
INVENTORY
Dried cannabis	$ 19,748,293	$ 5,778,176
Cannabis oils	951,476	337,314
Goods for resale	73,879	1,498
Supplies and consumables	639,083	655,537
Total current inventories	$ 21,412,731	$ 6,772,525

XML

INVENTORY - Additional Information (Details) - CAD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
INVENTORY
Inventory expensed and included in cost of sales	$ 4,713,906	$ 249,761	$ 7,418,427	$ 555,288
Fair value change in biological assets	$ 258,921	$ 978,893	$ 977,352	$ 1,371,884

XML

PLANT AND EQUIPMENT (Details) - CAD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Disclosure of detailed information about property, plant and equipment [line items]
Balance	$ 16,965,989
Balance	25,922,532	$ 16,965,989
Costs
Disclosure of detailed information about property, plant and equipment [line items]
Balance	17,990,523	1,361,469
Additions	9,415,469	10,317,931
Acquired Through Avalite	100,808	6,311,123
Balance	27,506,800	17,990,523
Accumulated Depreciation
Disclosure of detailed information about property, plant and equipment [line items]
Balance	1,024,534	330,134
Additions	559,734	694,400
Balance	1,584,268	1,024,534
Land
Disclosure of detailed information about property, plant and equipment [line items]
Balance	476,041
Balance	476,041	476,041
Land | Costs
Disclosure of detailed information about property, plant and equipment [line items]
Balance	476,041	0
Additions	0	0
Acquired Through Avalite	0	476,041
Balance	476,041	476,041
Land | Accumulated Depreciation
Disclosure of detailed information about property, plant and equipment [line items]
Balance	0	0
Additions	0	0
Balance	0	0
Buildings
Disclosure of detailed information about property, plant and equipment [line items]
Balance	11,859,979
Balance	16,865,701	11,859,979
Buildings | Costs
Disclosure of detailed information about property, plant and equipment [line items]
Balance	12,013,542	0
Additions	5,131,453	6,747,648
Acquired Through Avalite	0	5,265,894
Balance	17,144,995	12,013,542
Buildings | Accumulated Depreciation
Disclosure of detailed information about property, plant and equipment [line items]
Balance	153,563	0
Additions	125,731	153,563
Balance	279,294	153,563
Leasehold Improvement
Disclosure of detailed information about property, plant and equipment [line items]
Balance	1,526,965
Balance	2,691,556	1,526,965
Leasehold Improvement | Costs
Disclosure of detailed information about property, plant and equipment [line items]
Balance	1,681,648	274,471
Additions	1,236,390	1,407,177
Acquired Through Avalite	33,984	0
Balance	2,952,022	1,681,648
Leasehold Improvement | Accumulated Depreciation
Disclosure of detailed information about property, plant and equipment [line items]
Balance	154,683	79,609
Additions	105,783	75,074
Balance	260,466	154,683
Production, Lab and Growing Equipment
Disclosure of detailed information about property, plant and equipment [line items]
Balance	2,140,470
Balance	4,532,901	2,140,470
Production, Lab and Growing Equipment | Costs
Disclosure of detailed information about property, plant and equipment [line items]
Balance	2,688,055	992,725
Additions	2,596,168	1,457,537
Acquired Through Avalite	0	237,793
Balance	5,284,223	2,688,055
Production, Lab and Growing Equipment | Accumulated Depreciation
Disclosure of detailed information about property, plant and equipment [line items]
Balance	547,585	210,653
Additions	203,737	336,932
Balance	751,322	547,585
Computers
Disclosure of detailed information about property, plant and equipment [line items]
Balance	193,638
Balance	225,056	193,638
Computers | Costs
Disclosure of detailed information about property, plant and equipment [line items]
Balance	270,164	57,881
Additions	74,320	138,641
Acquired Through Avalite	3,271	73,642
Balance	347,755	270,164
Computers | Accumulated Depreciation
Disclosure of detailed information about property, plant and equipment [line items]
Balance	76,526	9,002
Additions	46,173	67,524
Balance	122,699	76,526
Other Equipment
Disclosure of detailed information about property, plant and equipment [line items]
Balance	768,896
Balance	1,131,277	768,896
Other Equipment | Costs
Disclosure of detailed information about property, plant and equipment [line items]
Balance	861,073	36,392
Additions	377,138	566,928
Acquired Through Avalite	63,553	257,753
Balance	1,301,764	861,073
Other Equipment | Accumulated Depreciation
Disclosure of detailed information about property, plant and equipment [line items]
Balance	92,177	30,870
Additions	78,310	61,307
Balance	$ 170,487	$ 92,177

XML

INTANGIBLE ASSETS (Details)	6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 CAD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2018 CAD ($)
Disclosure of detailed information about intangible assets [line items]
Balance		$ 86,612,636
Balance		90,529,605		$ 86,612,636
Costs
Disclosure of detailed information about intangible assets [line items]
Balance		89,589,343		2,984,231
Acquired Through Avalite and Verdelite in 2017 and 2018 respectively		5,041,192		86,103,549
Additions		801,604		501,563
Balance		95,432,139		89,589,343
Accumulated Depreciation
Disclosure of detailed information about intangible assets [line items]
Balance		2,976,707		132,376
Additions		1,925,827		2,844,331
Balance		4,902,534		2,976,707
Patents
Disclosure of detailed information about intangible assets [line items]
Balance		368,531
Balance		658,113		368,531
Patents | Costs
Disclosure of detailed information about intangible assets [line items]
Balance		368,531		0
Acquired Through Avalite and Verdelite in 2017 and 2018 respectively		89,259		0
Additions		200,323		368,531
Balance		658,113		368,531
Patents | Accumulated Depreciation
Disclosure of detailed information about intangible assets [line items]
Balance				0
Additions		0		0
Balance		0
Distribution Right [Member]
Disclosure of detailed information about intangible assets [line items]
Balance		0
Balance		4,802,000		0
Distribution Right [Member] | Costs
Disclosure of detailed information about intangible assets [line items]
Balance		0		0
Acquired Through Avalite and Verdelite in 2017 and 2018 respectively		4,802,000		0
Additions		0		0
Balance		4,802,000		0
Distribution Right [Member] | Accumulated Depreciation
Disclosure of detailed information about intangible assets [line items]
Balance				0
Additions		0		0
Balance		0
Health Canada License
Disclosure of detailed information about intangible assets [line items]
Balance		86,109,184
Balance		84,418,054		86,109,184
Health Canada License | Costs
Disclosure of detailed information about intangible assets [line items]
Balance		89,025,645		2,922,096
Acquired Through Avalite and Verdelite in 2017 and 2018 respectively		148,765		86,103,549
Additions		0		0
Balance		89,174,410		89,025,645
Health Canada License | Accumulated Depreciation
Disclosure of detailed information about intangible assets [line items]
Balance	$ 2,916,461		$ 87,446
Additions	1,839,895		2,829,015
Balance	$ 4,756,356		$ 2,916,461
Computer Software
Disclosure of detailed information about intangible assets [line items]
Balance		134,921
Balance		651,438		134,921
Computer Software | Costs
Disclosure of detailed information about intangible assets [line items]
Balance		195,167		62,135
Acquired Through Avalite and Verdelite in 2017 and 2018 respectively		1,168		0
Additions		601,281		133,032
Balance		797,616		195,167
Computer Software | Accumulated Depreciation
Disclosure of detailed information about intangible assets [line items]
Balance		60,246		44,930
Additions		85,932		15,316
Balance		$ 146,178		$ 60,246

XML

INVESTMENT IN JOINT VENTURE (Details) - CAD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disclosure of joint ventures [line items]
Beginning Balance			$ 25,660,842
Share of income	$ 14,488,832	$ 682,431	20,301,051	$ 380,638
Ending Balance	71,251,893		71,251,893
Pure Sunfarms
Disclosure of joint ventures [line items]
Beginning Balance			25,660,842
Investment in Joint Venture			25,000,000
Transaction costs			290,000
Share of income			20,301,051	$ 380,638
Ending Balance	$ 71,251,893		$ 71,251,893

XML

INVESTMENT IN JOINT VENTURE - Summarized Financial Information (Details) - CAD ($)	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Disclosure of joint ventures [line items]
Non-current assets	$ 211,797,718		$ 211,797,718			$ 143,179,751
Current assets	45,312,463		45,312,463			63,782,943
Total assets	257,110,181		257,110,181			206,962,694
Current liabilities	49,513,215		49,513,215			36,170,486
Total liabilities	54,421,074		54,421,074			36,464,372
Cash and cash equivalents	2,614,727	$ 72,676,108	2,614,727	$ 72,676,108	$ 72,676,108	36,042,090	$ 44,523,145
Sales	5,070,107	284,262	7,679,666	657,480	$ 657,480
Cost of sales	4,713,906	249,761	7,418,427	555,288
Change in fair value of biological asset	(258,921)	(978,893)	(977,352)	(1,371,884)
Gross margin	(1,335,364)	465,125	(2,988,754)	750,161
Income (loss) from operations	(13,778,251)	(6,841,373)	(23,696,383)	(11,754,380)
Net income (loss)	(452,731)	(5,610,970)	(4,101,414)	(10,656,390)
Net loss	(452,731)	(5,610,970)	(4,101,414)	(10,656,390)
50% Share of income (loss) from joint venture	14,488,832	682,431	20,301,051	380,638
Revenue (loss)	4,619,325	$ 284,262	6,749,205	657,480
Pure Sunfarms
Disclosure of joint ventures [line items]
Non-current assets	108,611,519		108,611,519			67,263,020
Current assets	100,575,197		100,575,197			20,414,439
Total assets	209,186,716		209,186,716			87,677,459
Non-current liabilities	22,320,310		22,320,310			2,688,273
Current liabilities	42,708,578		42,708,578			39,465,718
Total liabilities	65,028,888		65,028,888			42,153,991
Cash and cash equivalents	$ 15,572,914		15,572,914			$ 2,361,948
Sales			46,715,496
Cost of sales			10,369,461
Gross margin before fair value changes			36,346,035
Change in fair value of biological asset			(27,654,191)	(422,012)
Gross margin			64,000,226	422,012
Selling, general and administrative expense			3,712,467	1,364,161
Income (loss) from operations			60,287,759	(942,149)
Other income (loss)			354,130	(77,181)
Income (loss) before taxes			59,933,629	(864,968)
Provision for income taxes			11,299,269
Net income (loss)			48,634,360	(864,968)
Net loss			48,634,360	(864,968)
Elimination of transactions with the company			(8,644,105)
Fair value adjustment			611,847	1,626,244
Adjusted net income			40,602,102	761,276
50% Share of income (loss) from joint venture			$ 20,301,051	$ 380,638

XML

INVESTMENT IN JOINT VENTURE - Reconciliation of Summarized Financial Information (Details 2) - CAD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Disclosure of joint ventures [line items]
Carrying amount of the investment	$ 71,251,893	$ 25,660,842
Pure Sunfarms
Disclosure of joint ventures [line items]
Total net assets of Pure Sunfarms	144,157,828	45,523,468
50% ownership interest held by the Company	72,078,914	22,761,734
2018 cumulative adjustments carried forward	2,669,470	0
Fair value adjustment recognized during the period	305,923	3,964,388
Elimination of transactions with the Company	(4,322,053)	(1,294,919)
Transaction costs cumulative	519,639	229,639
Carrying amount of the investment	$ 71,251,893	$ 25,660,842

XML

INVESTMENT IN JOINT VENTURE - Reconciliation of Summarized Financial Information (Parenthetical) (Details)	12 Months Ended
	Dec. 31, 2018
Pure Sunfarms
Disclosure of joint ventures [line items]
Proportion of ownership interest in joint venture	50.00%

XML

INVESTMENT IN JOINT VENTURE - Additional Information (Details) ft² in Millions	6 Months Ended
	Jun. 30, 2019 CAD ($)	Mar. 30, 2019 ft²
Village Farms International In [Member]
Disclosure of joint ventures [line items]
Area Of Property For Cannabis Operation | ft²		1.1
Pure Sunfarms
Disclosure of joint ventures [line items]
Cash contributed in joint venture	$ 8,200,000
Investments In Joint Ventures Accounted For Using Equity Method During Period	$ 25,000,000
Pure Sunfarms | Village Farms International In [Member]
Disclosure of joint ventures [line items]
Area Of Property | ft²		1.1
Annualized Full Production Run rate	16,800,000

XML

RELATED PARTY TRANSACTIONS (Details) - CAD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
RELATED PARTY TRANSACTIONS
Wage and short-term benefits	$ 304,805	$ 258,930	$ 561,382	$ 478,350
Share-based payments (Note 17)	2,495,360	949,773	2,852,707	1,065,763
Remuneration of directors and key management	$ 2,800,165	$ 1,208,703	$ 3,414,089	$ 1,544,113

XML

RELATED PARTY TRANSACTIONS - Emerald Health Sciences and Joint venture (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019 CAD ($) shares	Jun. 30, 2018 CAD ($)	Jun. 30, 2019 CAD ($) shares	Jun. 30, 2018 CAD ($)	Dec. 31, 2018 CAD ($) shares	May 31, 2019 CAD ($)	Dec. 31, 2017 CAD ($) shares
Disclosure of transactions between related parties [line items]
Percentage of share held under related party transactions					31.00%
Research and development expense	$ 1,306,076	$ 83,409	$ 2,233,878	$ 180,953
General and administrative expense	3,341,550	3,344,578	7,483,030	5,956,584
Proceeds from loan			14,749,636	49,800,000
Emerald Health Sciences Inc. ("Sciences")
Disclosure of transactions between related parties [line items]
Related party transactions services fees	1,050,000	1,050,000	2,100,000	2,100,000
Related party transactions as invoices paid on behalf of company	0	$ 0	0	0
Amount payable to related party	1,507,314		1,507,314		$ 502,194
Amount receivable from related party	$ 31,421		$ 31,421		$ 31,421
Number of common shares issued and outstanding | shares	40,434,242		40,434,242		43,234,242		487,500
Number of common share purchase warrants held	4,411,764		4,411,764		4,411,764		8,489,451
Percentage of share held under related party transactions	27.00%		27.00%
Research and development expense			$ 562,500	1,125,000
General and administrative expense			487,500	42
Emerald Health Sciences Inc. ("Sciences") | Amended Loan Agreement with Emerald Health Sciences Inc [Member]
Disclosure of transactions between related parties [line items]
Borrowings, interest rate						10.00%
Proceeds from loan			5,100,000		$ 0
Interest expense			47,642	$ 0
Emerald Health Sciences Inc. ("Sciences") | Top of range | Amended Loan Agreement with Emerald Health Sciences Inc [Member]
Disclosure of transactions between related parties [line items]
Ifrs Line of Credit Facility, Maximum Borrowing Capacity						$ 6,000,000
Pure Sunfarms
Disclosure of transactions between related parties [line items]
Amount payable to related party	$ 3,222,336		3,222,336		1,287,082
Amount receivable from related party	863,801		863,801		$ 1,942,329
Amount payable for inventory in subsequent to December 31, 2018							$ 166,649
Receivables due from joint ventures	$ 13,000,000		$ 13,000,000

XML

RELATED PARTY TRANSACTIONS - Additional Information (Details) - CAD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2019
Disclosure of transactions between related parties [line items]
Key management personnel compensation	$ 2,800,165	$ 1,208,703	$ 3,414,089	$ 1,544,113
Lease liabilities	4,613,973		4,613,973		$ 0		$ 4,729,324
Land
Disclosure of transactions between related parties [line items]
Lease liabilities	$ 3,570,989		$ 3,570,989
Emerald Health Naturals ("EHN")
Disclosure of transactions between related parties [line items]
Number Of Share Issued To Purchase Of Warrants			3,030,303
Avricore Health Inc. (""Avricore"", formerly VANC Pharmaceuticals Inc.)
Disclosure of transactions between related parties [line items]
Key management personnel compensation			$ 27,500		16,614
Avricore Health Inc. (""Avricore"", formerly VANC Pharmaceuticals Inc.) | Subscription Agreement [Member]
Disclosure of transactions between related parties [line items]
Number of shares issued	1,666,667		1,666,667
Number Of Share Issued To Purchase Of Warrants			1,666,667
Dr. Avtar Dhillon, the Executive Chairman
Disclosure of transactions between related parties [line items]
Rent charge	$ 84,904	83,235	$ 169,808	166,649		$ 86,471
Services received, related party transactions	20,605	14,979	179,146	40,699
Settlement of liabilities by entity on behalf of related party, related party transactions	0	$ 0	237	$ 0
Amounts payable, related party transactions	$ 4,671		$ 4,671		$ 502
Key management personnel compensation						$ 44,775

XML

SHARE CAPITAL (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 CAD ($) Option	Dec. 31, 2018 CAD ($) Option
Number of Options
Balance at beginning of period | Option	9,894,211	9,861,114
Granted | Option	5,748,000	2,811,000
Forfeited | Option	(685,709)	(1,367,708)
Exercised | Option	(1,347,921)	(1,410,195)
Balance at end of period | Option	13,608,581	9,894,211
Weighted Average Exercise Price
Balance at beginning of period | $	$ 2.31	$ 1.76
Granted | $	4.05	4.16
Forfeited | $	3.66	3.62
Exercised | $	0.80	0.85
Balance at end of period | $	$ 3.130	$ 2.31

XML

SHARE CAPITAL - Black-Scholes Option Pricing Model (Details)	6 Months Ended		12 Months Ended
	Jun. 30, 2019 CAD ($)	Jun. 30, 2018 CAD ($)	Dec. 31, 2017 CAD ($)
Disclosure of terms and conditions of share-based payment arrangement [line items]
Expected life of options (years)	2.75		3.00
Expected annualized volatility		80.00%
Weighted average Black-Scholes value of each option	$ 2.50	$ 2.74
Bottom of range
Disclosure of terms and conditions of share-based payment arrangement [line items]
Risk free interest rate	1.39%	1.73%
Expected life of options (years)			3.00
Expected annualized volatility	101.21%
Top of range
Disclosure of terms and conditions of share-based payment arrangement [line items]
Risk free interest rate	1.85%	2.11%

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SHARE CAPITAL - Incentive Stock Options Outstanding and Exercisable (Details)	Jun. 30, 2019 CAD ($) Option	Dec. 31, 2018 CAD ($) Option	Dec. 31, 2017 CAD ($) Option
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	13,608,581	9,894,211	9,861,114
Outstanding Remaining contractual life (years)	3.67
Outstanding Weighted average exercise price	$ 3.130	$ 2.31	$ 1.76
Exercisable Quantity | Option	6,314,067
Exercisable Weighted average exercise price	$ 2.33
0.175 - 0.43
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	210,000
Outstanding Remaining contractual life (years)	2.15
Outstanding Weighted average exercise price	$ 0.34
Exercisable Quantity | Option	210,000
Exercisable Weighted average exercise price	$ 0.34
0.44 - 0.50
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	1,500,000
Outstanding Remaining contractual life (years)	0.82
Outstanding Weighted average exercise price	$ 0.45
Exercisable Quantity | Option	1,500,000
Exercisable Weighted average exercise price	$ 0.45
0.51 - 0.94
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	993,416
Outstanding Remaining contractual life (years)	2.25
Outstanding Weighted average exercise price	$ 0.72
Exercisable Quantity | Option	955,918
Exercisable Weighted average exercise price	$ 0.72
0.95 - 1.25
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	723,834
Outstanding Remaining contractual life (years)	2.93
Outstanding Weighted average exercise price	$ 1.21
Exercisable Quantity | Option	467,863
Exercisable Weighted average exercise price	$ 1.20
1.26 - 1.49
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	258,581
Outstanding Remaining contractual life (years)	2.95
Outstanding Weighted average exercise price	$ 1.43
Exercisable Quantity | Option	103,032
Exercisable Weighted average exercise price	$ 1.41
1.50 - 3.40
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	1,395,500
Outstanding Remaining contractual life (years)	4.10
Outstanding Weighted average exercise price	$ 2.98
Exercisable Quantity | Option	435,750
Exercisable Weighted average exercise price	$ 2.89
3.41 - 4.23
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	5,928,500
Outstanding Remaining contractual life (years)	4.74
Outstanding Weighted average exercise price	$ 4.06
Exercisable Quantity | Option	1,401,504
Exercisable Weighted average exercise price	$ 4.10
4.24 - 4.25
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	1,933,750
Outstanding Remaining contractual life (years)	3.48
Outstanding Weighted average exercise price	$ 4.25
Exercisable Quantity | Option	966,250
Exercisable Weighted average exercise price	$ 4.25
4.26 - 5.44
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	340,000
Outstanding Remaining contractual life (years)	4.15
Outstanding Weighted average exercise price	$ 4.58
Exercisable Quantity | Option	98,750
Exercisable Weighted average exercise price	$ 4.55
5.45 - 6.68
Disclosure of terms and conditions of share-based payment arrangement [line items]
Outstanding Quantity | Option	325,000
Outstanding Remaining contractual life (years)	3.66
Outstanding Weighted average exercise price	$ 5.69
Exercisable Quantity | Option	175,000
Exercisable Weighted average exercise price	$ 5.69

XML

SHARE CAPITAL - Restricted Share Units (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 CAD ($) item	Dec. 31, 2018 CAD ($) item
Number of RSUs
Balance at beginning of period	830,000	825,000
Granted | item	475,000	5,000
Settled | item	(355,000)
Balance at end of period	950,000	830,000
Weighted average fair value per unit at issue
Balance at beginning of period	$ 3.74	$ 3.73
Granted	4.15	5.67
Settled	4.27
Balance at end of period	$ 3.76	$ 3.74

XML

SHARE CAPITAL - Additional Information 1 (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 CAD ($) Option $ / shares shares	Dec. 31, 2018 CAD ($) Option shares	Jun. 30, 2018 shares	May 02, 2018 CAD ($)	Dec. 31, 2017 shares
Disclosure of classes of share capital [line items]
Number of stock options exercised | Option	1,347,921	1,410,195
stock options exercise price	$ 0.80	$ 0.85
Gross proceeds from stock options exercised	1,073,272
Bottom of range
Disclosure of classes of share capital [line items]
stock options exercise price	0.175
Top of range
Disclosure of classes of share capital [line items]
stock options exercise price	$ 3.07
Avalite Sciences Inc. ("Avalite")
Disclosure of classes of share capital [line items]
Number of share issued in acquisition				9,911,894
Warrants
Disclosure of classes of share capital [line items]
Number of shares issued | shares	8,411,764	8,411,764	11,411,764		9,707,677
Warrant Three
Disclosure of classes of share capital [line items]
Number of warrant exercised | shares	2,129,707
Gross proceeds from warrant exercised	$ 8,199,371
Prospectus offering
Disclosure of classes of share capital [line items]
Unit issued price per unit | $ / shares	$ 39.00
Gross proceeds from unit issued	$ 4,167,200
Warrant exercise price | $ / shares	$ 14,749,636.00
stock options exercise price	$ 3.54
Common shares
Disclosure of classes of share capital [line items]
Number of shares issued | shares	149,442,944	141,443,116
Number of shares increased | shares	7,999,828
Preference shares
Disclosure of classes of share capital [line items]
Number of shares issued | shares

XML

SHARE CAPITAL - Additional Information 2 (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019 CAD ($)	Jun. 30, 2018 CAD ($)	Jun. 30, 2019 CAD ($) Option item shares	Jun. 30, 2018 CAD ($)	Dec. 31, 2018 CAD ($) Option item shares	Dec. 31, 2017 CAD ($)
Disclosure of classes of share capital [line items]
Number of share options granted | Option			5,748,000		2,811,000
Weighted average fair value of the stock options granted			$ 4.05		$ 4.16
Expected life of share option granted			2.75			3.00
Exercise price of share options granted			$ 2.50	$ 2.74
Number of restricted share units granted | item			475,000		5,000
Share-based compensation expense	$ 6,421,125	$ 2,081,661	$ 8,443,739	4,035,708
Incentive stock options
Disclosure of classes of share capital [line items]
Share-based compensation expense	5,925,310	1,592,593	$ 2,716,400	3,062,817
RSUs
Disclosure of classes of share capital [line items]
Number of other equity instruments exercised or vested in share-based payment arrangement			355,000
Share-based compensation expense	$ 495,815	$ 489,068	$ 680,852	$ 972,891
Bottom of range
Disclosure of classes of share capital [line items]
Expected life of share option granted						3.00
Employees and consultants
Disclosure of classes of share capital [line items]
Number of share options granted			5,748,000
Expected life of share option granted			3
Weighted average trading share price of the options exercised			$ 3.33
Employees and consultants | Bottom of range
Disclosure of classes of share capital [line items]
Exercise price of share options granted			2.83
Employees and consultants | Top of range
Disclosure of classes of share capital [line items]
Exercise price of share options granted			$ 4.15
Employee | RSUs
Disclosure of classes of share capital [line items]
Number of restricted share units granted | item			475,000
Verdelite Sciences Inc [Member]
Disclosure of classes of share capital [line items]
Percentage of share held in escrow			50.00%
Number of share held in escrow | shares			4,955,947		4,955,947

XML

WARRANTS (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Number of warrants
Balance at	8,411,764	9,707,677
Exercised		(8,239,863)
Expired		(3,056,050)
Balance at	8,411,764	8,411,764
Weighted Average Exercise Price
Balance at	$ 2.92	$ 0.80
Exercised		2.65
Expired		6.91
Balance at	$ 2.92	$ 2.92
Issued in January 2018
Number of warrants
Issued		3,000,000
Weighted Average Exercise Price
Issued		$ 6.00
Issued in February 2018
Number of warrants
Issued		3,000,000
Weighted Average Exercise Price
Issued		$ 7.00
Issued in May 2018
Number of warrants
Issued		4,000,000
Weighted Average Exercise Price
Issued		$ 5.20
Expire November 2021
Number of warrants
Expired	4,411,764
Weighted Average Exercise Price
Expired	$ 0.85
Expire November 2019
Number of warrants
Expired	4,000,000
Weighted Average Exercise Price
Expired	$ 5.20

XML

FINANCIAL INSTRUMENTS (Details) - CAD ($)	Jun. 30, 2019	Dec. 31, 2018
Disclosure of detailed information about financial instruments [line items]
Financial Liabilities Carrying Value	$ 4,360,000	$ 4,360,000
Amortized cost | Accounts payable and accrued liabilities
Disclosure of detailed information about financial instruments [line items]
Financial Liabilities Fair Value	12,208,468	9,634,464
Financial Liabilities Carrying Value	12,208,468	9,634,464
Amortized cost | Current portion of long-term debt
Disclosure of detailed information about financial instruments [line items]
Financial Liabilities Fair Value	0	2,503,064
Financial Liabilities Carrying Value	0	2,503,064
Amortized cost | Deferred payment
Disclosure of detailed information about financial instruments [line items]
Financial Liabilities Fair Value	10,094,520	22,226,565
Financial Liabilities Carrying Value	10,094,520	22,226,565
Amortized cost | Payable to joint venture
Disclosure of detailed information about financial instruments [line items]
Financial Liabilities Fair Value	16,810,000	0
Financial Liabilities Carrying Value	16,810,000	0
Amortized cost | Due to related parties
Disclosure of detailed information about financial instruments [line items]
Financial Liabilities Fair Value	10,400,227	1,806,393
Financial Liabilities Carrying Value	10,400,227	1,806,393
Long-term investment
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	179,390	282,509
FVTPL | Long-term investment
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	179,390	282,509
Financial Assets Carrying Value	179,390	282,509
Amortized cost | Cash and cash equivalents
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	2,614,727	36,042,090
Financial Assets Carrying Value	2,614,727	36,042,090
Amortized cost | Accounts receivable
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	5,175,670	3,579,271
Financial Assets Carrying Value	5,175,670	3,579,271
Amortized cost | Due from related parties
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	13,895,221	14,973,749
Financial Assets Carrying Value	13,895,221	14,973,749
Amortized cost | Refundable deposits
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	196,391	2,196,391
Financial Assets Carrying Value	$ 196,391	$ 2,196,391

XML

FINANCIAL INSTRUMENTS - Fair Value (Details) - Long-term investment - CAD ($)	Jun. 30, 2019	Dec. 31, 2018
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	$ 179,390	$ 282,509
Level 1
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	100,000	166,667
Level 2
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	79,390	115,842
Level 3
Disclosure of detailed information about financial instruments [line items]
Financial Assets Fair Value	$ 0	$ 0

XML

FINANCIAL INSTRUMENTS - Additional Information (Details) - CAD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
FINANCIAL INSTRUMENTS
Working Capital	$ (4,200,753)	$ 27,612,457

XML

SEGMENTED INFORMATION (Details) - CAD ($)	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018
Disclosure Of Reportable Segments [Line Items]
Sales	$ 5,070,107	$ 284,262	$ 7,679,666	$ 657,480	$ 657,480
Interest revenue	164,827	274,436	803,137	524,500
Loss from operations	13,778,251	6,841,373	23,696,383	11,754,380
Net loss	452,731	5,610,970	4,101,414	10,656,390
Share of income from joint venture	(14,488,832)	(682,431)	(20,301,051)	(380,638)
Operating
Disclosure Of Reportable Segments [Line Items]
Sales	4,975,864	284,262	7,585,423	657,480
Interest revenue	(118,960)	0	(48,591)	0
Loss from operations	10,605,523	1,462,406	14,104,906	2,111,738
Net loss	(3,072,949)	780,274	(5,403,561)	1,731,400
Share of income from joint venture	(14,488,832)	(682,431)	(20,301,051)	(380,638)
Other
Disclosure Of Reportable Segments [Line Items]
Sales	94,243	0	94,243	0
Interest revenue	283,787	274,436	851,728	524,500
Loss from operations	3,172,728	5,378,967	9,591,477	9,642,642
Net loss	3,525,680	4,830,696	9,504,975	8,924,990
Share of income from joint venture	$ 0	$ 0	$ 0	$ 0

XML

SEGMENTED INFORMATION - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019 segment
SEGMENTED INFORMATION
Number of reportable segments	2

XML

SALES (Details) - CAD ($)	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018
Disclosure Of Sales By Product Line [Line Items]
Total	$ 5,070,107	$ 284,262	$ 7,679,666	$ 657,480	$ 657,480
Dried Cannabis
Disclosure Of Sales By Product Line [Line Items]
Total	2,789,666	136,408	5,064,897		288,659
Cannabis Oils
Disclosure Of Sales By Product Line [Line Items]
Total	2,182,174	141,308	2,514,701		355,180
Other
Disclosure Of Sales By Product Line [Line Items]
Total	$ 98,267	$ 6,546	$ 100,068		$ 13,641

XML

SALES - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
SALES
Percentage of gross revenue earned from 2 major customers	55.00%

XML

GENERAL AND ADMINISTRATIVE EXPENSES (Details) - CAD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
GENERAL AND ADMINISTRATIVE EXPENSES
Professional, director and consulting fees	$ 1,318,333	$ 1,735,264	$ 2,393,259	$ 3,285,673
Corporate communications and media	399,722	445,273	984,550	793,042
Wages and benefits	1,231,709	652,459	2,629,210	1,034,071
Office and general	203,705	389,496	1,232,622	646,323
Travel and accommodations	188,081	122,086	243,389	197,475
Total general and administrative expenses	$ 3,341,550	$ 3,344,578	$ 7,483,030	$ 5,956,584

XML

LEASES (Details)	6 Months Ended
	Jun. 30, 2019 CAD ($)
Disclosure Of Leases [Line Items]
Balance	$ 0
Balance	4,363,577
Costs
Disclosure Of Leases [Line Items]
Balance	5,184,165
Additions	21,238
Balance	5,205,403
Accumulated Depreciation
Disclosure Of Leases [Line Items]
Balance	653,935
Amortization During period	187,891
Balance	841,826
Land use Rights
Disclosure Of Leases [Line Items]
Balance	0
Balance	3,391,946
Land use Rights | Costs
Disclosure Of Leases [Line Items]
Balance	3,634,227
Additions	0
Balance	3,634,227
Land use Rights | Accumulated Depreciation
Disclosure Of Leases [Line Items]
Balance	181,711
Amortization During period	60,570
Balance	242,281
Buildings
Disclosure Of Leases [Line Items]
Balance	0
Balance	812,607
Buildings | Costs
Disclosure Of Leases [Line Items]
Balance	1,371,759
Additions	0
Balance	1,371,759
Buildings | Accumulated Depreciation
Disclosure Of Leases [Line Items]
Balance	449,664
Amortization During period	109,488
Balance	559,152
Equipment
Disclosure Of Leases [Line Items]
Balance	0
Balance	159,024
Equipment | Costs
Disclosure Of Leases [Line Items]
Balance	178,179
Additions	21,238
Balance	199,417
Equipment | Accumulated Depreciation
Disclosure Of Leases [Line Items]
Balance	22,560
Amortization During period	17,833
Balance	$ 40,393

XML

LEASES - Lease Liabilities (Details)	6 Months Ended
	Jun. 30, 2019 CAD ($)
LEASES
Lease Liabilities Recognized at January 1, 2019	$ 0
Lease liability additions during the period ended June 30, 2019	23,345
Lease Payments	(314,671)
Interest Incurred	175,975
Balance, June 30, 2019	$ 4,613,973

XML

LEASES - Contractual Undiscounted Cash Flows (Details)	Jun. 30, 2019 CAD ($)
Disclosure Of Leases [Line Items]
Gross lease liabilities	$ 10,135,848
Less than one year
Disclosure Of Leases [Line Items]
Gross lease liabilities	580,451
Later than one year and not later than three years
Disclosure Of Leases [Line Items]
Gross lease liabilities	1,718,534
Later than three years and not later than five years
Disclosure Of Leases [Line Items]
Gross lease liabilities	770,195
More than Five Years
Disclosure Of Leases [Line Items]
Gross lease liabilities	$ 7,066,668

XML

EVENTS AFTER THE REPORTING PERIOD (Details)					6 Months Ended	12 Months Ended
	Aug. 28, 2019 CAD ($) shares	Aug. 27, 2019 CAD ($) $ / shares	Jul. 05, 2019 CAD ($)	Jul. 01, 2019 CAD ($)	Jun. 30, 2019 CAD ($) Option	Dec. 31, 2018 CAD ($) Option
Disclosure of non-adjusting events after reporting period [line items]
Number of shares granted | Option					5,748,000	2,811,000
Exercise price, option granted					$ 4.05	$ 4.16
Subsequent Event [Member]
Disclosure of non-adjusting events after reporting period [line items]
Increase in rate of interest percentage			12
Amount withdrawn from loan agreement			$ 10,700,000
Accrued interest			200,000
Number of Convertible Debenture Unit | shares	2,500
Convertible Debenture value	$ 10,000
Gross proceeds	$ 25,000,000
Convertible Debenture Maturity Term	24 months
Convertible Debenture Interest Rate	5.00%
Convertible Debentures conversion price | $ / shares		$ 2.00
Convertible Debentures Premium percentage		14.00%
Convertible Debentures, weighted average trading price		$ 3.50
Warrant Exercise Price | $ / shares		$ 2.25
Warrants weighted average trading price		$ 3.50
Minimum [Member]
Disclosure of non-adjusting events after reporting period [line items]
Increase in loan agreement			6,000,000
Maximum [Member]
Disclosure of non-adjusting events after reporting period [line items]
Increase in loan agreement			$ 15,000,000
Event after reporting period
Disclosure of non-adjusting events after reporting period [line items]
Number of shares granted				617,500
Option vesting period				3 years
Options expiry period				5 years
Event after reporting period | Minimum [Member]
Disclosure of non-adjusting events after reporting period [line items]
Exercise price, option granted				$ 2.39
Event after reporting period | Maximum [Member]
Disclosure of non-adjusting events after reporting period [line items]
Exercise price, option granted				$ 3.47