22nd Century Group Issues Annual Letter to Shareholders

22nd Century Group, Inc. (NYSE American: XXII), a plant biotechnology company that is focused on tobacco harm reduction, Very Low Nicotine Content tobacco, and hemp/cannabis research, announced today that the Company has issued its annual letter to shareholders as part of 22nd Century Group’s 2018 Annual Report. The 2018 letter to shareholders is reprinted below.

In addition, all shareholders of record as of the close of business on March 15, 2019 are invited to attend 22nd Century’s annual shareholder meeting on Friday, May 3, 2019, at 10:30AM at the The Larkin Center of Commerce, 701 Seneca Street, Buffalo, New York 14210. 22nd Century’s President and Chief Executive Officer, Henry Sicignano III, will provide a business update.

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Dear Fellow Shareholders:

For 22nd Century Group, 2018 was a year of investment. The Company invested considerable resources, time, and capital to accomplish the most important project in our history: submission of our Premarket Tobacco Product (PMT) application and our Modified Risk Tobacco Product (MRTP) application for the Company’s proprietary Very Low Nicotine Content (VLNC) cigarettes to the U.S. Food and Drug Administration (FDA). At a cost exceeding $10 million, our PMT and MRTP applications actually represent many years of work.

The culmination of our efforts was the December 2018 submission of more than 200,000 pages of data – including research from more than 150 independent studies – to the FDA’s Center for Tobacco Products. With these PMT and MRTP applications, 22nd Century is seeking the FDA’s authorization to commercialize the Company’s proprietary VLNC cigarettes under the proposed brand name "VLN™” and to advertise to consumers that VLN™ cigarettes contain 95% less nicotine as compared to the 100 leading cigarette brands in the United States.

According to FDA Commissioner, Dr. Scott Gottlieb, "Cigarettes are the only legal consumer product that, when used as intended, will kill half of all long-term users.”

22nd Century’s proprietary VLNC cigarettes have been designed to put an end to this madness.

Following our PMT and MRTP submissions, 22nd Century regulatory specialists and scientists have been in virtually constant communication with FDA regulators charged with reviewing the Company’s PMT and MRTP applications. Already, we have had more than 20 conversations with the FDA on matters relating to our PMT and MRTP applications. The review process by the FDA for our applications is well underway and we look forward to the approval and launch of what may very well prove to be the world’s first Modified Risk Tobacco Product.

Concurrently, the FDA is pursuing its plan to limit nicotine in ALL cigarettes sold in the United States to minimally or non-addictive levels. Early in 2018, the FDA issued an Advanced Notice of Proposed Rulemaking (ANPRM) as the Agency explained the substantial science behind its plan to dramatically lower the nicotine in all U.S. cigarettes. Going forward, the FDA will soon (expected in 2019) issue a Notice of Proposed Rulemaking (NPRM). In the NPRM, the FDA will spell out the proposed product specifications and the details for how the Agency will implement its new nicotine reduction rule. Following the issuance of the NPRM and a public comment period, the FDA should thereafter move forward with a final rule and a time schedule for the national implementation. We believe the FDA is moving at a steady, deliberate pace in this initiative in order to assist the more than 30 million American smokers who are addicted to conventional cigarettes and the 2,000 youth – under the age of 18 – across the United States who smoke their first addictive cigarettes each day.

While our PMT and MRTP efforts are independent of the FDA’s planned mandate to limit the nicotine in all cigarettes sold in the United States to minimally or non-addictive levels, we view the two initiatives as complimentary and reinforcing. 22nd Century’s VLNC tobacco is the foundation of our MRTP candidate and, at the same time, our VLNC tobacco makes possible the FDA’s planned nicotine reduction rule. It is precisely because of this connection that we continue to believe that the FDA and public health will benefit from the approval of 22nd Century’s MRTP application. In this way, the FDA will have a commercial VLNC cigarette on the market to prove the feasibility of the FDA’s nicotine reduction plan and to generate real-world consumer data in support of the FDA’s proposed new rule.

All of that said, and as important as our tobacco initiatives are for the Company and for our shareholders, our strategic initiatives in hemp and cannabis – together with significant recent legislative changes – have combined to give our biotechnology efforts a massive boost in the emerging hemp/cannabis industry. By the end of 2018, more than half of U.S. states had approved the sale and use of medical cannabis, with another 10 states allowing adult, recreational consumption. Even more importantly, in an effort led by U.S. Senate Majority Leader Mitch McConnell, the U.S. federal government enacted the 2018 Farm Bill in December, including an important provision to legalize "hemp,” which is defined as the cannabis plant containing not more than 0.3% THC. The enactment of this new federal law has accelerated hemp/cannabis biotechnology developments and spurred a slew of multi-million-dollar investments in hemp/cannabis production and extraction. 22nd Century is well positioned to take advantage of the opportunities represented by these changes in the federal law.

22nd Century’s mission is to develop proprietary hemp/cannabis plant lines for important new medicines and robust agricultural crops in order to improve the health and lives of people around the world.

Our Company’s genesis in hemp/cannabis research is already well established. In 2014, a wholly-owned subsidiary of 22nd Century entered into a worldwide license agreement with Anandia Laboratories in Canada through which our Company was granted an exclusive sublicense in the United States and a co-exclusive sublicense in the remainder of the world, excluding Canada, to patents and patent applications relating to the hemp/cannabis plant that are required for the production of cannabinoids, the major active ingredients in the hemp/cannabis plant. In 2018, when Aurora Cannabis purchased Anandia Labs, we were able to monetize our 2014 investment – realizing a return on our investment of more than 800% (and, of course, this return does not even include the value of the warrant we received to purchase 973,971 shares of Aurora Cannabis common stock; 22nd Century continues to hold this warrant). Keep in mind too, the valuable licenses that we received from Anandia in 2014 that allow 22nd Century to manipulate the production of cannabinoids in the hemp/cannabis plant. These licenses survive the Aurora Cannabis acquisition of Anandia. What’s more, our subsequent investments in research with Anandia have already generated important new cannabis strains – including one with zero-THC.

Besides our Anandia collaboration, 22nd Century is entering the third year of a research agreement with the University of Virginia to optimize our Company’s proprietary hemp plants for growth in the historical U.S. "tobacco belt states.” In addition, we already possess a valuable New York State hemp research license for 22nd Century’s own laboratory in New York. The foundation of any biotechnology effort is the acquisition of genetic material. To this end, we have already developed or acquired exclusive rights to a very significant number of unique and proprietary varieties of hemp and cannabis plants, each with valuable agronomic traits and/or exceptional cannabinoid profiles. Further, we are continually adding to our genetic library. Using genome sequences from the hemp/cannabis varieties to which we have developed and/ or acquired exclusive rights, we are in the process of identifying genes responsible for regulating cannabinoid biosynthesis, drought tolerance, disease resistance, increased flower production, increased cannabinoid production, and overall plant growth and yields.

Going forward, and as our PMT and MRTP applications progress through the FDA review process, 22nd Century will substantially increase its investment in the development of hemp/cannabis intellectual property. While our Company’s molecular biotechnology laboratory is an important component in achieving our mission of creating new varieties of hemp/cannabis, our strategy also includes expanding our network of accomplished hemp and cannabis researchers, partner companies, and universities. To this end, 22nd Century is forming a vertically-integrated hemp and cannabis nexus that combines research, production, and extraction.

As a part of our strategic alliance plans, we are working on projects to:

1. Create a sophisticated database from the molecular analysis of approximately 100 hemp/cannabis plant lines for use in accelerating the Company’s development and licensing of uniquely characterized lines;

2. Enhance genetic variation to empower 22nd Century’s production of new GMO and non-GMO hemp/cannabis plant lines;

3. Create a high-resolution map of the cannabis genome to aid identification of genes for distinctive traits;

4. Compare genomic sequences of multiple cannabis species and identify shared genetic markers, allowing 22nd Century to produce improved commercial hemp/cannabis plant lines much more rapidly than by conventional breeding approaches; and

5. Initiate rapid-cycle generation of hemp/cannabis plant lines with distinctive cannabinoid and terpene profiles.

At 22nd Century’s own molecular biology lab, our scientists are making progress in our effort to reproduce cannabinoid biosynthesis… independent of the hemp/cannabis plant. In this way, we plan to develop plants that yield single, high-value cannabinoids instead of the cocktail of cannabinoids produced by conventional hemp/cannabis plants. Plants that produce high levels of single, rare cannabinoids would be a boon for our own extraction activities and for third-party extractors.

Although we do not necessarily intend to enter the complex regulatory arena of marketing hemp/cannabis-based consumer goods, we do plan to become a source of highly-coveted hemp/cannabis genetics, plant varieties, and high-value extracted cannabinoids. 22nd Century is at the leading edge of hemp/cannabis genomics, pushing the boundaries of what is possible with the hemp/cannabis plant.

In a similar way, 22nd Century is adding to the prodigious tobacco technology already possessed by the Company. Much to the chagrin of "Big Tobacco” companies, 22nd Century’s proprietary VLN™ tobacco – with at least 95% less nicotine than conventional tobacco crops – has already been grown at commercial scale. Further, in an effort to address the needs of international markets, in 2019 the Company will introduce to the world new non-GMO varieties of drastically reduced nicotine tobacco. With these proprietary tobaccos and with the Company’s unrivaled technology, 22nd Century promises to help smokers substantially reduce their exposure to nicotine.

In short, we are the holders of extraordinary technology. Once regulatory approvals are secured, we will have the opportunity to disrupt the entire $80 billion U.S. tobacco industry with exclusive products that could play a critical role in saving millions of lives. In hemp/cannabis, we have plans to produce proprietary plants with extraordinary levels of some of the most sought-after cannabinoids.

On behalf of the Board of Directors and the 22nd Century Group management team, we thank you for being part of our family of shareholders. We look forward to meeting many of you at our annual shareholder meeting in May and to sharing exciting Company developments with everyone in the weeks and months to come.

Best regards,

Henry Sicignano III
President & Chief Executive Officer

About 22nd Century Group, Inc.

22nd Century is a plant biotechnology company focused on technology which allows it to increase or decrease the level of nicotine in tobacco plants and the level of cannabinoids in hemp/cannabis plants through genetic engineering and plant breeding. The Company’s primary mission in tobacco is to reduce the harm caused by smoking. The Company’s primary mission in hemp/cannabis is to develop proprietary hemp/cannabis strains for important new medicines and agricultural crops. Visit www.xxiicentury.com and www.botanicalgenetics.com for more information.

Cautionary Note Regarding Forward-Looking Statements: This press release contains forward-looking information, including all statements that are not statements of historical fact regarding the intent, belief or current expectations of 22nd Century Group, Inc., its directors or its officers with respect to the contents of this press release, including but not limited to our future revenue expectations. The words "may,” "would,” "will,” "expect,” "estimate,” "anticipate,” "believe,” "intend” and similar expressions and variations thereof are intended to identify forward-looking statements. We cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these forward-looking statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances, or to reflect the occurrence of unanticipated events. You should carefully review and consider the various disclosures made by us in our annual report on Form 10-K for the fiscal year ended December 31, 2018, filed on March 6, 2019, including the section entitled "Risk Factors,” and our other reports filed with the U.S. Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

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