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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