6-K - CURLF - Equibles

UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

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

For the month of May, 2021.

Commission File Number: 333-249081

CURALEAF HOLDINGS,INC.

(Exact Name of Registrant as Specified in Charter)

666 BurrardStreet, Suite 1700, Vancouver, British Columbia V6C 2X8

Canada

(Address of principal executive offices)

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 ¨ Form 40-F x

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): ____

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

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): ____

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 to this Form 6-K of Curaleaf Holdings, Inc. (the “Company”) are hereby incorporated by reference as exhibits to the Registration Statement on Form F-10 (File No. 333-249081) of the Company, as amended or supplemented.

SIGNATURE

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.

CURALEAF HOLDINGS, INC.
(Registrant)
Date: May 11, 2021	By:	/s/ Joe Bayern
---	---	---
	Name:	Joe Bayern
	Title:	Chief Executive Officer

EXHIBIT INDEX

99.1	Interim Financial Statements – March 31, 2021
99.2	MD&A – March 31, 2021
99.3	Certification of Interim Filings
99.4	Certification of Interim Filings
99.5	News Release dated May 10, 2021

Exhibit 99.1

CURALEAF HOLDINGS, INC.

Unaudited Condensed Interim Consolidated Financial Statements

As of and for the Three Months Ended

March 31, 2021 and 2020

(Expressed in Thousands United States DollarsUnless Otherwise Stated)

	Page(s)
Condensed Interim Consolidated Financial Statements
Condensed Interim Consolidated Statements of Financial Position (Unaudited)	1
Condensed Interim Consolidated Statements of Profits or Losses (Unaudited)	2
Condensed Interim Consolidated Statements of Changes in Equity (Unaudited)	3
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)	4
Notes to Condensed Interim Consolidated Financial Statements	5-34

Curaleaf Holdings, Inc.

Condensed Interim Consolidated Statements of Financial Position

Unaudited

(in thousands)

			March 31,			December 31,
	Note		2021			2020
Assets				Unaudited			Audited
Current assets:
Cash and cash equivalents			$	314,591		$	73,542
Accounts receivable, net		3		33,750			28,830
Inventories, net		5		237,254			197,991
Biological assets		6, 20		46,452			46,210
Assets held for sale		7		60,922			58,504
Prepaid expenses and other current assets				22,785			10,140
Current portion of notes receivable		8		3,723			2,645
Total current assets				719,477			417,862
Deferred tax asset				5,528			5,528
Notes receivable		8		2,004			2,000
Property, plant and equipment, net		9		259,109			242,855
Right-of-use assets, net		18		265,078			267,168
Intangible assets, net		10		781,111			797,401
Goodwill		10		469,837			470,144
Investments		4		16,264			16,264
Prepaid acquisition consideration		4		132,234			132,234
Other assets				30,726			35,135
Total assets			$	2,681,368		$	2,386,591
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable			$	38,651		$	47,043
Accrued expenses				54,368			57,475
Income tax payable				110,147			79,649
Current portion of lease liability		18		16,382			15,710
Current portion of notes payable		11		4,193			6,500
Liabilities held for sale		7		12,775			7,181
Other current liabilities		20		1,454			6,568
Total current liabilities				237,970			220,126
Deferred tax liability				222,566			226,465
Notes payable		11		335,320			285,001
Lease liability		18		270,948			270,495
Non-controlling interest redemption liability		20		2,694			2,694
Contingent consideration liability		4, 20		1,898			1,898
Other long term liability				3,864			3,698
Total liabilities				1,075,260			1,010,377
Shareholders’ equity:
Share capital				2,021,980			1,754,412
Treasury shares				(5,208	)		(5,208	)
Reserves				(198,207	)		(177,744	)
Accumulated deficit				(211,856	)		(194,645	)
Total Curaleaf Holdings, Inc. shareholders' equity		12		1,606,709			1,376,815
Redeemable non-controlling interest contingency		20		(2,694	)		(2,694	)
Non-controlling interest				2,093			2,093
Total shareholders’ equity				1,606,108			1,376,214
Total liabilities and shareholders’ equity			$	2,681,368		$	2,386,591

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Curaleaf Holdings, Inc.

Condensed Interim Consolidated Statements of Profits or Losses

Unaudited

(in thousands, except for share and per share amounts)

			Three months ended
			March 31,
	Note		2021			2020
Revenues:
Retail and wholesale revenues			$	259,883		$	77,055
Management fee income				437			19,441
Total revenues				260,320			96,496
Cost of goods sold				131,853			44,013
Gross profit before impact of biological assets				128,467			52,483
Realized fair value amounts included in inventory sold				(68,914	)		(21,191	)
Unrealized fair value gain on growth of biological assets		6		81,261			36,747
Gross profit				140,814			68,039
Operating expenses:
Selling, general and administrative		14		80,090			45,857
Share-based compensation		13		4,907			4,501
Depreciation and amortization		9, 10, 18		22,112			12,688
Total operating expenses				107,109			63,046
Income from operations				33,705			4,993
Other income (expense):
Interest income				88			2,846
Interest expense		11		(12,151	)		(10,492	)
Interest expense related to lease liabilities		18		(8,560	)		(2,158	)
Other income		11, 15		415			2,608
Total other expense				(20,208	)		(7,196	)
Income (loss) before provision for income taxes				13,497			(2,203	)
Income tax expense				(30,708	)		(13,249	)
Net loss				(17,211	)		(15,452	)
Less: Net loss attributable to non-controlling interest				—			(363	)
Net loss attributable to Curaleaf Holdings, Inc.			$	(17,211	)	$	(15,089	)
Loss per share attributable to Curaleaf Holdings, Inc. – basic and diluted		16	$	(0.03	)	$	(0.03	)
Weighted average common shares outstanding – basic and diluted		16		682,041,420			507,700,498

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Curaleaf Holdings, Inc.

Condensed Interim Consolidated Statements of Changes in Equity

Unaudited

(in thousands, except for share amounts)

	Share<br> Capital <br> (Note 12)						Treasury			Share-Based			Other									Total<br><br> Curaleaf<br> Holdings,<br><br> Inc.			Redeemable<br><br> Non - <br> Controlling<br><br> Interest			Non-Controlling			Redeemable<br><br> Non-Controlling			Total
	#<br> of Shares						Shares			Reserves			Reserves			Total			Accumulated			Shareholders'			Contingency			Interest			Interest			Shareholders’
	SVS		MVS		Amount		(Note 12)			(Note 13)			(Note 4)			Reserves			Deficit			Equity			(Note 4)			(Note 4)			(Note 4)			Equity
Balances as of December 31, 2019		366,114,366		103,970,705	$	693,699	$	(5,208	)	$	20,517		$	(167,336	)	$	(146,819	)	$	(132,910	)	$	408,762		$	(2,694	)	$	2,156		$	(4,778	)	$	403,446
Issuance of shares		50,100,504		—		262,727		—			—			—			—			—			262,727			—			—			—			262,727
Minority buyouts		3,788,920		—		25,752		—			—			(16,490	)		(16,490	)		—			9,262			—			—			1,710			10,972
Exercise of stock options		3,543,496		—		1,344		—			(622	)		—			(622	)		—			722			—			—			—			722
Share-based compensation		—		—		—		—			4,501			—			4,501			—			4,501			—			—			—			4,501
Net loss		—		—		—		—			—			—			—			(15,089	)		(15,089	)		—			(356	)		(7	)		(15,452	)
Balances as of March 31, 2020		423,547,286		103,970,705	$	983,522	$	(5,208	)	$	24,396		$	(183,826	)	$	(159,430	)	$	(147,999	)	$	670,885		$	(2,694	)	$	1,800		$	(3,075	)	$	666,916
Balances as of December 31, 2020		569,831,140		93,970,705	$	1,754,412	$	(5,208	)	$	34,530		$	(212,274	)	$	(177,744	)	$	(194,645	)	$	1,376,815		$	(2,694	)	$	2,093		$	—		$	1,376,214
Issuance of shares in connection<br> with acquisitions		18,975,000		—		261,597		—			—			(21,028	)		(21,028	)		—			240,569			—			—			—			240,569
Exercise and forfeiture of stock<br> options		3,633,007		—		5,971		—			(4,342	)		—			(4,342	)		—			1,629			—			—			—			1,629
Share-based compensation		—		—		—		—			4,907			—			4,907			—			4,907			—			—			—			4,907
Net loss		—		—		—		—			—			—			—			(17,211	)		(17,211	)		—			—			—			(17,211	)
Balances as of March 31, 2021		592,439,147		93,970,705	$	2,021,980	$	(5,208	)	$	35,095		$	(233,302	)	$	(198,207	)	$	(211,856	)	$	1,606,709		$	(2,694	)	$	2,093		$	—		$	1,606,108

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Curaleaf Holdings, Inc.

Condensed Interim Consolidated Statements of Cash Flows

Unaudited

(in thousands)

			Three months ended
			March 31,
	Note		2021			2020
Cash flows from operating activities:
Net loss			$	(17,211	)	$	(15,452	)
Adjustments to reconcile loss to net cash provided (used) in operating activities:
Depreciation and amortization				30,154			14,906
Share-based compensation				4,907			4,501
Non-cash interest expense				9,655			229
Unrealized gain on changes in fair value of biological assets				(81,261	)		(36,747	)
Realized fair value amounts included in inventory sold		15		68,914			21,191
(Gain)/loss on sale of property, plant and equipment				13			(418	)
Deferred taxes				(3,435	)		1,935
Changes in operating assets and liabilities
Accounts receivable				(3,881	)		2,877
Biological assets				12,439			7,691
Inventories				(41,095	)		(18,724	)
Prepaid expenses and other current assets				(15,862	)		715
Other assets				5,990			291
Accounts payable				(296	)		(1,301	)
Income taxes payable				33,077			13,249
Accrued expenses				(8,091	)		3,422
Net cash used in operating activities				(5,983	)		(1,635	)
Cash flows from investing activities:
Purchases of property, plant and equipment, net				(31,425	)		(22,687	)
Payments made on completion on acquisitions		11		—			(7,500	)
Amounts advanced for notes receivable				(4	)		(14,599	)
Net cash used in investing activities				(31,429	)		(44,786	)
Cash flows from financing activities:
Cash received from financing agreement		11		49,930			185,723
Proceeds from sale leaseback				2,419			—
Debt issuance costs				(681	)		—
Minority buyouts				—			(2,508	)
Lease liability payments		18		(13,071	)		(3,470	)
Principal payments on notes payable				(2,332	)		—
Exercise of stock options				1,627			721
Issuance of common shares, net of issuance costs				240,569			—
Net cash provided by financing activities				278,461			180,466
Net change in cash				241,049			134,045
Cash at beginning of period				73,542			42,310
Cash at end of period				314,591			176,355
Supplemental disclosure of cash flow information:
Cash paid for interest				332			8,342
Cash paid for income tax				(171	)		—
Supplemental disclosure of non-cash investing and financing activities:
Recognition of right of use assets and lease liabilities				5,636			—
Issuance of shares in connection with minority buyouts				—			13,480
Issuance of shares in connection with acquisitions				—			260,480
Contingent consideration incurred in connection with acquisitions				—			49,804
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 1 – Operations of the company

Curaleaf Holdings, Inc. (the “Company”, “Curaleaf”, or the “Group”), formerly known as Lead Ventures, Inc. (“LVI”), was incorporated under the laws of British Columbia, Canada on November 13, 2014. Curaleaf operates as a life science company developing full scale cannabis operations, with core competencies in cultivation, manufacturing, dispensing, and medical cannabis research.

On October 25, 2018, the Company completed a reverse takeover transaction, and completed a related private placement which closed one day prior on October 24, 2018 (collectively, the “Business Combination”). Following the transactions, the Company’s subordinate voting shares (“SVS”) were listed on the Canadian Securities Exchange (“CSE”) under the symbol “CURA” and on the OTCQX under the symbol “CURLF”.

The head office and principal address of the Company is 301 Edgewater Place #405, Wakefield, MA 01880. The Company’s registered and records office address is located at Suite 1700-666 Burrard Street, Vancouver, British Columbia, Canada.

For the purposes of these unaudited condensed interim consolidated financial statements (“the Interim Financial Statements”), the terms “Company” and “Curaleaf” mean Curaleaf Holdings, Inc. and, unless the context otherwise requires, includes its subsidiaries. Any references to the cultivation, processing, manufacturing, extraction, retail operations, dispensing or distribution of cannabis, logistics, or similar terms specifically relate only to the Company’s state-licensed subsidiary entities. Operations of the licensed subsidiary entities are dependent on each entity’s license type, and the applicable state law and associated regulations.

Note 2 – Basis of presentation

The Interim Financial Statements have been prepared in compliance with International Accounting Standard 34 - Interim Financial Reporting. The Company followed the same accounting policies and methods of application as those disclosed in the annual audited consolidated financial statements as at and for the years ended December 31, 2020 and 2019 (“the Annual Financial Statements”). These Interim Financial Statements should be read in conjunction with the Annual Financial Statements, which were prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board.

These Interim Financial Statements were approved by the Board of Directors of the Company and authorized for issue by the Board of Directors on May 7, 2021.

Functional currency

The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These Interim Financial Statements are presented in thousands U.S. dollars unless otherwise stated.

Basis of consolidation

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity and is exposed to the variable returns from its activities. The financial statements of subsidiaries are included in the Interim Financial Statements from the date control commences until the date control ceases.

Non-controlling interests (“NCI”) are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Company’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

When the Company loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in the statement of profits or losses. Any interest retained in the former subsidiary is measured at fair value when control is lost.

These Interim Financial Statements include the accounts of the Company and its direct subsidiaries, indirect subsidiaries that are not wholly owned, and other entities consolidated on a basis other than of ownership:

		March 31,			December 31,
	State of	2021			2020
Business name ^(1)^	operations	ownership %			ownership %
CLF AZ, Inc.	AZ		100	%		100	%
CLF NY, Inc.	NY		100	%		100	%
Curaleaf CA, Inc.	CA		100	%		100	%
Curaleaf KY, Inc.	KY		100	%		100	%
Curaleaf Massachusetts, Inc.	MA		100	%		100	%
Curaleaf MD, LLC	MD		100	%		100	%
Curaleaf OGT, Inc.	OH		100	%		100	%
Curaleaf PA, LLC	PA		100	%		100	%
Curaleaf, Inc.	MA		100	%		100	%
Focused Investment Partners, LLC	MA		100	%		100	%
CLF Maine, Inc.	ME		100	%		100	%
PalliaTech CT, Inc.	CT		100	%		100	%
CLF Oregon, LLC (formerly PalliaTech OR, LLC)	OR		100	%		100	%
PalliaTech Florida, Inc.	FL		100	%		100	%
Curaleaf Florida, LLC	FL		100	%		100	%
CLF MD Processing, LLC	MD		100	%		100	%
PT Nevada, Inc.	NV		100	%		100	%
CLF Sapphire Holdings, Inc.	OR		100	%		100	%
Curaleaf NJ II, Inc.	NJ		100	%		100	%
Focused Employer, Inc.	MA		100	%		100	%
GR Companies, Inc.	IL		100	%		100	%
HMS Health LLC	MD		—			—
HMS Processing LLC	MD		—			—
HMS Sales LLC	MD		—			—
MI Health LLC	MD		—			—
Town Center Wellness, LLC	MD		—			—
Grassroots OpCo AR, LLC	AR		—			—
WCCC, LLC	IL		—			—
Compass Dispensary Holdings, LLC	IL		—			—
Greenhouse Group, LLC	IL		—			—
GR Vending MI, LLC	MI		—			—
GR Companies OK, LLC	OK		—			—
Remedy Compassion Center, Inc	ME		—			—
Primary Organic Therapy, Inc. (d/b/a Maine Organic Therapy)	ME		—			—
^(1)^ This table specifically excludes EMMAC Life Sciences Limited ("EMMAC"), a subsidiary of the Company, as EMMAC was acquired after March 31, 2021 (the date of the interim financial statements of the Company). See the "Recent Acquisitions" section of this MD&A for other examples of entities that have been excluded from the financial statements.
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All intercompany balances and transactions were eliminated on consolidation.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Significant accounting judgments, estimates and assumptions

The preparation of the Company’s Interim Financial Statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Except as described below, the significant judgments, estimates, and assumptions made by management in preparing the Interim Financial Statements for the three months ended March 31, 2021 and 2020 were the same as those that applied to the Annual Financial Statements.

Biological assets

Biological assets are dependent upon estimates of future economic benefits as a result of past events to determine the fair value through an exercise of significant judgment by the Company. In estimating the fair value of an asset or a liability, the Company uses observable market data to the extent it is available. The Company uses the average selling price per gram in the market in which the biological assets are produced to determine fair value. The Company reevaluates market prices on a quarterly basis in order to ensure biological assets are measured at the most relevant fair value.

Business combinations

In a business combination, all identifiable assets, liabilities, and contingent liabilities acquired are recorded at their fair values. The Company accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Company. In determining whether a particular set of activities and assets is a business, the Company assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

One of the most significant estimates relates to the determination of the fair value of these assets and liabilities of the acquiree. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in the statement of profits or losses immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in the unaudited interim condensed consolidated statement of profits or losses. Contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 9 – Financial Instruments with the corresponding gain or loss being recognized in the unaudited interim condensed consolidated statement of profits or losses. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. Certain fair values may be estimated at the acquisition date pending confirmation or completion of the valuation process. Where provisional values are used in accounting for a business combination, they may be adjusted retrospectively in subsequent periods, not to exceed one year from the acquisition date.

The Company utilizes the guidance prescribed by Amendments to IFRS 3 – Definition of a Business (the “IFRS 3 Amendment”). The IFRS 3 Amendment changes the definition of a business and allows entities to use a concentration test to determine if transactions should be accounted for as a business combination or an asset acquisition. Under the optional concentration test, where substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business and the transaction would be accounted for as an asset acquisition. Management performs a concentration test where appropriate and if the concentration of assets is 85% or above, the transaction is generally accounted for as an asset acquisition.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Share-based payment arrangements

The Company uses the Black-Scholes valuation model to determine the fair value of options granted to employees and directors under share-based payment arrangements, where appropriate. In instances where stock options have performance or market conditions, the Company utilizes the Monte Carlo valuation model to simulate the various outcomes that affect the value of the option. In estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility of the Company’s future share price, risk free rates, future dividend yields, and estimated forfeitures at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results.

Assets held for sale

The Company classifies assets held for sale in accordance with IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations. When the Company makes the decision to sell an asset or to stop some part of its business, the Company assesses if such assets should be classified as an asset held for sale. To classify as an asset held for sale, the asset or disposal group must meet all of the following conditions: i) the asset is available for immediate sale in its present condition, ii) management is committed to a plan to sell, iii) an active program to locate a buyer and complete the plan has been initiated, iv) the asset is being actively marketed for sale at a sales price that is reasonable in relation to its fair value, v) the sale is highly probable within one year from the date of classification, and vi) actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed or withdrawn. An asset held for sale is measured at the lower of its carrying amount or fair value less cost to sell (“FVLCTS”) unless the asset held for sale meets the exceptions as denoted by IFRS 5. FVLCTS is the amount obtainable from the sale of the asset in an arm’s length transaction, less the costs of disposal. Once classified as held for sale, any depreciation and amortization cease to be recorded (see Note 7).

Goodwill

Goodwill represents the excess of the purchase price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets acquired. Goodwill is allocated to the cash generating unit (“CGU” or “CGUs”) which are expected to benefit from the synergies of the combination. In determining its CGUs, the Company has completed an internal analysis to identify the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Given the nature of the Company’s business, management generally identifies CGUs based on both regions and acquired business entities. The Company has determined that the goodwill recognized in connection with all acquisitions to date belong to the cannabis operations segment.

Goodwill is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired in accordance with IAS 36. Impairment is determined by assessing if the carrying value of a CGU, including the allocated goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs to sell and the value in use. The Company performs the analysis on a CGU level using a discounted cash flow method. Impairment losses recognized in respect of a CGU are first allocated to the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the CGU. Any goodwill impairment loss is recognized in the consolidated statement of profits or losses in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

COVID-19 Estimation Uncertainty

The novel coronavirus commonly referred to as “COVID-19” was identified in December 2019 in Wuhan, China. On January 30, 2020, the World Health Organization declared the outbreak a global health emergency, and on March 11, 2020, the spread of COVID-19 was declared a pandemic by the World Health Organization. On March 13, 2020, the spread of COVID-19 was declared a national emergency by former President Donald Trump. The outbreak has spread throughout the globe, causing companies and various international jurisdictions to impose restrictions such as quarantines, business closures, and travel restrictions.

The duration of the business disruptions and related financial impact cannot reasonably be estimated at this time. In addition, it is possible that estimates in the Company’s financial statements will change in the near term as a result of COVID-19, and the effect of any such changes could be material, which could result in, among other things, impairment of long-lived assets, intangibles assets, and goodwill. The Company is closely monitoring the impact of the pandemic on all aspects of its business. See the heading "Risk Factors – Risks Related to the COVID-19 Pandemic" of the Company's annual information form for the year ended December 31, 2020 for more information.

New, amended, and future IFRS pronouncements

The Company has implemented all applicable IFRS standards recently issued by the IASB. Pronouncements that are not applicable or where it has been determined do not have a significant impact to the Company have been excluded herein.

The following is a brief summary of the new standards issued but not yet effective:

Amendments to IAS 1: Classification of Liabilitiesas Current or Non-Current

In January 2020, the IASB issued Classificationof Liabilities as Current or Non-Current (“Amendments to IAS 1”). The Amendments to IAS 1 aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The Amendments to IAS 1 include clarifying the classification requirements for debt a company might settle by converting it into equity. The Amendments to IAS 1 are effective for annual reporting periods beginning on or after January 1, 2023 (extended from January 1, 2022), with earlier application permitted.

Amendments to IAS 37: Onerous Contracts –Cost of Fulfilling a Contract

In May 2020, the IASB issued Onerous Contracts – Cost of Fulfilling a Contract amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendment is effective for annual reporting periods beginning on or after January 1, 2022.

Note 3 – Accounts receivable

Accounts receivable consist of the following:

	March 31,			December 31,
	2021			2020
Trade accounts receivable, net	$	33,051		$	30,919
Other receivables		1,773			2,447
Transferred to assets held for sale		(1,074	)		(4,536	)
Total trade and other receivables	$	33,750		$	28,830

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

As of March 31, 2021 and December 31, 2020, the Company recognized a $308 and $494 provision for expected credit losses, respectively.

Note 4 – Acquisitions

No acquisitions closed during the three months ended March 31, 2021. A summary of acquisitions completed during the year ended December 31, 2020 is provided below:

	2020<br> Acquisitions
Purchase price<br> allocation	Cura<br> (2)			Remedy<br> (2)			Arrow<br> (1)			MEOT<br> (2)			Curaleaf<br> NJ (2)			Blue<br> Kudu (1)			Grassroots<br> (2)			ATG<br> (2)
Assets acquired:
Cash	$	12,755		$	172		$	711		$	395		$	3,667		$	276		$	28,696		$	7,253
Accounts receivable,<br> net		11,027			15			—			129			1,995			350			5,475			—
Prepaid expenses<br> and other current assets		2,232			3			—			15			405			—			5,835			787
Inventory		22,074			227			508			1,418			4,962			123			12,101			3,455
Biological<br> assets		—			79						705			2,340			—			4,571			379
Property,<br> plant and equipment, net		7,465			319			1,854			1,081			6,187			56			37,128			4,397
Right-of-use<br> assets		9,009			108			2,058			1,812			41,518			812			103,055			1,555
Other assets		832			—			—			1,034			46			—			91			—
Intangible<br> assets :																				—
Licenses		135,060			—			38,435			—			57,580			3,345			300,140			24,690
Trade name		28,340			160			—			170			8,260			—			12,130			120
Service agreements		59,030			1,430			—			5,830			—			—			3,080			—
Non-compete<br> agreements		4,950			—			—			—			—			—			19,290			—
Prepaid Acquisition<br> Cost		—			—			—			—			—			—			132,234			—
Goodwill		113,290			909			—			561			22,863			—			256,471			19,072
Deferred tax liabilities		(58,971	)		(480	)					(1,680	)		(20,525	)		—			(102,329	)		(9,397	)
Liabilities<br> assumed		(22,652	)		(573	)		(5,885	)		(3,426	)		(46,065	)		(1,469	)		(158,786	)		(9,811	)
Consideration<br> transferred	$	324,441		$	2,369		$	37,681		$	8,044		$	83,233		$	3,493		$	659,182		$	42,500
(1)	Acquisition accounted for as an asset acquisition with the application of the IFRS 3 Amendment.
---	---
(2)	Acquisition accounted for as a business combination under IFRS 3.
---	---

Certain fair values may be estimated at the acquisition date pending confirmation or completion of the valuation process. Where provisional values are used in accounting for a business combination, they may be adjusted retrospectively in subsequent periods, not to exceed one year from the acquisition date.

Goodwill arising from acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the businesses. These synergies include the elimination of redundant facilities and functions and the use of the Company’s existing commercial infrastructure to expand sales.

2021 and 2020 acquisitions

There were no acquisitions completed during the three months ended March 31, 2021. For more detail regarding completed 2020 acquisitions, please see the 2020 Audited Annual Financial Statements, filed on March 11, 2021.

GR Companies, Inc., a Delaware company("Grassroots")

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

In July 2019, the Company entered into an Agreement and Plan of Merger to acquire Grassroots (“Grassroots Acquisition”). In June 2020, Curaleaf entered into an Amended and Restated Agreement and Plan of Merger (the "Grassroots Merger Agreement") which amended and restated the original definitive agreement and amended certain terms of the Grassroots Acquisition. The Company acquired Grassroots to continue its path forward in playing a leading role in the growth of the U.S. cannabis market.

Closing of the Grassroots Acquisition occurred in July 2020. At closing, the Company issued (i) 103,455,816 SVS to the benefit of the former holders of common stock of Grassroots which had a fair value of approximately $564,541, and (ii) 12,851,005 SVS to be held in escrow in accordance with the terms of the Grassroots Merger Agreement which had a fair value of approximately $71,389. In addition, the Company paid an amount of $51,187 in connection with the closing of the Grassroots Transaction, which included reimbursements of permitted capital expenditures and acquisitions that occurred between signing and closing, transaction related expenses, and replenishment of working capital. In addition, the parties resolved that certain Grassroots assets in Illinois, Ohio, and a dispensary in Maryland, are designated for sale to comply with local limitations on license ownership. Due to the limitations on license ownership, the Company recognized $132,234 for prepayment of acquisition consideration. Curaleaf also agreed to issue 2,119,864 SVS to partially offset the dilution to the holders of common stock of Grassroots caused by the conversion of certain debentures of Grassroots into equity of Grassroots immediately prior to the closing of the Grassroots Transaction. The transaction price remains subject to closing adjustments and the parties are still in the process of finalizing the computation of those post-closing adjustments, which are expected to finalize by the third quarter of 2021. The Company incurred transaction costs of approximately $7,623. Subsequent to Q1 2021, the Company completed the reorganization of the Maryland and Illinois entities and the sale of the Ohio assets; see further detail in Note 7 – Assets and liabilities held for sale.

Pending acquisitions

The following acquisition had been signed, but was not completed prior to March 31, 2021, as the transaction is pending regulatory approval. In accordance with IFRS 10 – Consolidated Financial Statements, the Company has concluded that they do control the operations of the acquiree, and have therefore consolidated the results of the entity in the Interim Financial Statements:.

Ohio Grown Therapies, LLC, an Ohio limitedliability company (“OGT”)

In May 2019, the Company entered into an agreement granting it an option to acquire OGT for $20,000. The Company paid $5,000 cash in May 2019 and $7,500 in cash in July 2020. The remaining consideration will be paid upon completion of certain milestones, culminating with regulatory approval of the transfer of the final licenses and OGT facility to Curaleaf. The closing of this transaction is currently pending regulatory approval.

The following acquisition had been signed, but was not completed prior to March 31, 2021, as the transaction is pending regulatory approval. The Company has concluded that they do not control the operations of the acquiree in accordance with IFRS 10 - Consolidated Financial Statements, and accordingly have not consolidated the results of the entity in the Interim Financial Statements of the Company.

Maryland Compassionate Care and Wellness, LLC(“MCCW”)

Through its acquisition of Grassroots, the Company acquired an option to purchase Maryland Compassionate Care and Wellness, LLC (“MCCW”) from its sole owner, KDW Maryland Holding Corporation (“KDW”), subject to regulatory approval, which was received on May 1, 2021. MCCW is the holder of cultivation, processing, and dispensary licenses in Maryland. The exercise price for the option is the cancellation of a secured promissory note issued by KDW to the Company in the principal amount of $32,000. MCCW is the sole owner of each of GR Vending MD Management, LLC and GR Vending MD, LLC. Mr. Kahn, a member of the Company’s board of directors, is a minority stockholder, the sole director and an officer of KDW; see further detail in Note 19 – Related party transactions.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

The following acquisition was completed subsequent to March 31, 2021. Due to the timing of the transaction closing, sufficient information was not available to complete Purchase Price and Pro Forma accounting at the timing of filing. Accordingly, the results of the following entity are not included in the Interim Financial Statements of the Company.

EMMAC Life Sciences Limited, a corporationexisting under the laws of England and Wales (“EMMAC”)

In March 2021, the Company entered into a Share Purchase Agreement (“EMMAC Purchase Agreement”) to acquire EMMAC (“EMMAC Acquisition”), an independent cannabis company with operations spanning, amongst others, the United Kingdom, Germany, Italy, Spain and Portugal. A newly-formed Curaleaf Subsidiary, Curaleaf International Limited, closed the EMMAC Acquisition on April 7, 2021. See Note 21 – Subsequent Events for more information. The Company incurred transaction costs to date, with more expected, of approximately $919.

Note 5 – Inventories

Inventories consist of the following:

	March 31,			December 31,
	2021			2020
Raw materials
Harvested cannabis	$	13,044		$	5,036
Harvested trim		9,757			8,450
Total raw materials		22,801			13,486
Work-in-process
Processing		72,743			67,955
Finished goods
Consumables		13,212			10,403
Flower		13,177			14,231
Extracts		42,988			31,269
Total finished goods		69,377			55,903
Fair value adjustment to inventory related to biological assets		76,267			63,828
Transferred to assets held for sale		(3,934	)		(3,181	)
	$	237,254		$	197,991

During the three months ended March 31, 2021, the Company recognized cost of goods sold of $200,767 of which $131,853 was included in costs before the impact of biological assets adjustments in the amount of $68,914, a non-cash expense relating to the realized change in fair value of inventory sold. During the three months ended March 31, 2020, the Company recognized cost of goods sold of $65,204, of which $44,013 was included in costs before the impact of biological assets adjustments in the amount of $21,191 non-cash expense relating to the realized change in fair value of inventory sold.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 6 – Biological assets

The following table is a reconciliation of the carrying amount of the biological assets:

Balance at December 31, 2020	$	46,210
Unrealized fair value gain on growth of biological assets		81,261
Increase in biological assets due to capitalized costs		28,263
Transferred to inventories upon harvest		(109,616	)
Transferred to assets held for sale		334
Balance at March 31, 2021	$	46,452
Balance at December 31, 2019	$	19,197
Unrealized fair value gain on growth of biological assets		36,747
Increase in biological assets due to capitalized costs		16,231
Transferred to inventories upon harvest		(45,113	)
Balance at March 31, 2020	$	27,062

Biological assets consist of actively growing cannabis plants to be harvested as agricultural produce.

The average grow cycle of plants up to the point of harvest is approximately twelve weeks. Plants in production are plants that are in the flowering stage and are valued at fair value less cost to complete and cost to sell, where fair value represents the Company’s selling price per gram of dried cannabis. As of March 31, 2021, and December 31, 2020, it was expected that the Company’s biological assets would yield 18,188,832 and 16,905,180 grams of cannabis when harvested, respectively. See Note 20 for the inputs and sensitivity analysis for the fair value of the biological assets.

Note 7 – Assets and liabilities held for sale

Assets and liabilities held for sale consist of the following:

Assets held for sale	HMS Assets			Elevate, Takoma		GR Entities		Total
Balance at January 1, 2021	$	30,397			2,274		25,833	$	58,504
Transferred in/(out)		(1,221	)		115		3,524		2,418
Total assets held for sale at March 31, 2021	$	29,176			2,389		29,357	$	60,922
Liabilities associated with assets held for sale	HMS Assets		Elevate, Takoma			GR Entities		Total
---	---	---	---	---	---	---	---	---	---
Balance at January 1, 2021	$	3,145		797			3,239	$	7,181
Transferred in/(out)		2,775		(5	)		2,824		5,594
Total liabilities associated with assets held for sale at March 31, 2021	$	5,920		792			6,063	$	12,775

In November 2020, the Company announced the signing of a definitive agreement to sell its rights to the assets of HMS Health, LLC and the cultivation and processing assets of HMS Processing, LLC (collectively, the “HMS Assets”) in Maryland to TerrAscend for total consideration of $27,500. The HMS Assets sale includes the divestiture of operations of a 22,000 square foot co-located cultivation and processing facility in Frederick, MD. The transaction closed May 4, 2021 after receipt of regulatory approval by the Maryland Medical Cannabis Commission. After working capital adjustments, the total consideration of $24,899 included $22,399 payable in cash upon closing as well as a $2,500 interest bearing Note due and payable to the Company in April 2022.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

In November 2020, the Company signed a definitive agreement to sell 100% of Town Center Wellness, LLC, a licensed dispensary business in Takoma Park, Maryland, to PharmaCann LLC for total consideration of $2,000, all payable in cash upon closing. The transaction closed May 1, 2021 after receipt of regulatory approval by the Maryland Medical Cannabis Commission. These sales enable the Company to finalize the acquisition of the Maryland dispensary, cultivation and processing assets previously owned by Grassroots, which were previously restricted by the legal limits on license ownership in the state of Maryland.

The Company has certain rights to the proceeds from the sale of the OhiGrow, LLC and Ohio Green Grow, LLC (collectively “Ohio Assets”), which have Ohio cultivation and processing licenses, respectively, and were previously affiliated with Grassroots. In April 2021, the owners of the Ohio Assets and the Company signed definitive agreements with Jushi OH, LLC pursuant to which the owners agreed to sell the Ohio Assets to Jushi OH and the Company agreed to assign certain debt of the Ohio Assets to Jushi OH. Upon closing of the transaction, which is subject to regulatory approval by the Ohio Department of Commerce, the Company will receive $5,000 in proceeds from the transaction.

The Company also has certain rights to the proceeds from the sale of three Illinois medical dispensary licenses and six adult use dispensary licenses owned by former affiliates of Grassroots (the “Illinois Assets”). Currently, three medical dispensaries and two adult use dispensaries operate under these licenses. On April 1, 2021, the owners of these licenses signed definitive agreements to sell the Illinois Assets to Parallel (formerly Surterra Wellness, Inc.). The transaction is subject to regulatory approval. Under the terms of the transaction, the purchase price for the Illinois Assets consists of a $100,000 base price to be paid $60,000 in cash and $40,000 in Parallel stock, plus earnouts of up to an additional $55,000 payable through 2023. Pursuant to the Grassroots Merger Agreement, the proceeds net of expenses and taxes from the sale of the Illinois Assets shall be shared by the Company with the former owners of Grassroots as follows: (i) the first $25,000 of net proceeds shall be retained by the Company; (ii) the next $25,000 of net proceeds shall be remitted to the former Grassroots owners; and (iii) the Company shall keep 50% of the net proceeds above $50,000, and the other 50% shall be remitted to the Grassroots owners. The Company has received from Parallel a $10,000 deposit, which is refundable under limited circumstances and will be applied to the base purchase price for the Illinois Assets at closing. Additionally, the Company has been marketing certain rights and interests in certain real estate assets associated with the Grassroots Acquisition.

Note 8 – Notes receivable

Notes receivable consist of the following:

	March 31,		December 31,
	2021		2020
Notes receivable RJB Enterprises, LLC.	$	2,727	$	1,645
Notes receivable Curaleaf Maryland, Inc.		3,000		3,000
Total notes receivable	$	5,727	$	4,645

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 9 – Property, plant and equipment

Property, plant and equipment and related accumulated depreciation consist of the following:

	March 31,			December 31,
	2021			2020
Land	$	5,273		$	6,871
Building and improvements		150,269			139,044
Furniture and fixtures		70,451			70,486
Information technology		2,902			3,025
Construction in progress		84,993			73,728
Transferred to assets held for sale		(12,925	)		(6,326	)
Total property, plant and equipment		300,963			286,828
Less: Accumulated depreciation		(41,854	)		(43,973	)
Property, plant and equipment, net	$	259,109		$	242,855

Assets included in construction in progress represent projects related to both cultivation and dispensary facilities not yet completed or otherwise not ready for use.

Depreciation expense for the three months ended March 31, 2021 and 2020 totaled $6,139 and $3,955, respectively, of which $4,168 and $2,218, respectively, is included in cost of goods sold.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 10 – Goodwill and intangible assets

Identifiable intangible assets consist of the following:

	2020		2021
	Balance		Transferred					Balance
	at		to assets		Year-to-date			at
	December 31,		held for sale		amortization			March 31,
Licenses	$	662,492	$	6	$	(12,791	)	$	649,707
Trade names		47,820		—		(1,104	)		46,716
Service agreements		63,595		—		(1,628	)		61,967
Non-compete agreements		23,494		—		(773	)		22,721
Total intangible assets, net	$	797,401	$	6	$	(16,296	)	$	781,111

Amortization of intangible assets was $16,296 and $7,153 for the three months ended March 31, 2021 and 2020, respectively.

The Company determined that goodwill associated with all acquisitions is associated with the cannabis operations segment. There was no goodwill associated with the non-cannabis operations segment as of March 31, 2021 or December 31, 2020. The changes in the carrying amount of goodwill for the cannabis operations segment were as follows:

	Total
Balance at December 31, 2020	$	470,144
Purchase price adjustments		(513	)
Change in assets held for sale (Note 7)		206
Balance at March 31, 2021	$	469,837

There were no indications of goodwill impairment for any CGUs for the three months ended March 31, 2021 or 2020.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 11 – Notes payable

Notes payable consist of the following:

	March 31,			December 31,
	2021			2020
Term Loan Facility
Principal amount	$	300,000		$	300,000
Unamortized debt discount		(24,655	)		(25,126	)
Net carrying amount	$	275,345		$	274,874
Promissory Note – 2024
Principal amount	$	10,000		$	10,000
Interest accrued/Unamortized debt discount		29			(300	)
Net carrying amount	$	10,029		$	9,700
Credit Facility – 2024
Principle Amount	$	50,000		$	—
Unamortized Debt Discount		(456	)		—
Net carrying amount	$	49,544		$	—
Seller note payable	$	4,193		$	6,500
Other notes payable		402			427
Total other notes payable	$	4,595		$	6,927
Current portion of notes payable	$	4,193		$	6,500
Long term notes payable		335,320			285,001
Total notes payable	$	339,513		$	291,501

Term Loan Facility

In January 2020, the Company closed on a senior secured term loan facility (“Term Loan Facility”) from a syndicate of lenders totaling $300,000. The notes bear interest at a rate of 13.0% per annum, payable quarterly in arrears with maturity in December 2023 and contain certain principal prepayment premiums.

The Company satisfied its obligations in full under the Financing Agreement – 2021 in connection with, and out of the proceeds of the Term Loan Facility.

The Term Loan Facility may be pre-paid but is subject to a prepayment premium dependent on the loan year. Any prepayment made between January 10, 2022 and January 9, 2023, will incur a prepayment premium of 6.50%. Any prepayment made between January 10, 2023 and October 14, 2023, will incur a prepayment premium of 3.25%. Any prepayment made on or after October 15, 2023, will not incur a prepayment premium.

Beginning with the fiscal quarter ending December 31, 2020, the Term Loan Facility is subject to a mandatory amortization payment and a yield maintenance premium. The mandatory amortization payment is paid ratably to each lender based on the aggregate principal amount of all initial term loans times an applicable rate that is based on the leverage ratio.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

For the three months ended March 31, 2021, the applicable percentage ranges from 0% to 3.00% depending on the leverage ratio. For all quarters in 2021, the applicable percentage ranges from 0% to 6.00% depending on the leverage ratio. For all quarters in 2022, the applicable percentage ranges from 0% to 8.00% depending on the leverage ratio. For all quarters in 2023 through September 30, 2023, the applicable percentage ranges from 0% to 9.00% depending on the leverage ratio.

The yield maintenance premium is paid based on all amounts repaid. The premium is determined by the amount of interest that would have otherwise been payable on the prepayment less the aggregate amount of interest that would have been earned if the prepayment were to be reinvested from the date of prepayment until January 10, 2022 at the yield maintenance premium rate. The yield maintenance premium rate is the rate per annum equal to the rate in effect 3 days before the repayment date for U.S. Treasury instruments that have a maximum term of 3 months or less times 0.50%.

The Company recognized interest expense under the Term Loan Facility of $11,360 and $9,979 for the three months ended March 31, 2021 and 2020, respectively, including interest expense related to the amortization of the debt discount of $443 and $1,637, respectively.

PromissoryNote – 2024

In October 2020, the Company entered into a Promissory Note with a principal sum of $10,000 with Baldwin Holdings, LLC (“Promissory Note – 2024”) to replace the contingent liability incurred in connection with the Curaleaf, MA acquisition (Note 20) which was deemed completed in March 2020. The issue price of the Promissory Note – 2024 is equal to 97.00% of the principal amount of the Promissory Note – 2024 and the remaining $300 is treated as Original Issue Discount (“OID”).

The Promissory Note – 2024 carries a fixed interest rate per quarter equal to 3.25%. Interest is payable in arrears on the last day of each fiscal quarter, commencing December 31, 2020. The Maturity Date of the Promissory Note – 2024 is June 10, 2024.

The Promissory Note – 2024 contain other terms substantially similar to the Financing Agreement – 2023, except that the Promissory Note – 2024 is secured by separate collateral consisting solely of the equity of, and guarantees given by, the Company’s subsidiaries Curaleaf Hartford, Inc. and Curaleaf Stamford, Inc., which operate medical cannabis dispensaries in Hartford and Stamford, CT, respectively.

The Company recognized interest expense under the Promissory Note – 2024 of $325 for the three months ended March 31, 2021. There was no interest expense recognized for the three months ended March 31, 2020.

Credit Facility – 2024

In January 2021, the Company entered into a $50,000 secured credit facility (the “Credit Agreement”), which matures on January 10, 2024, with a syndicate of lenders. The net proceeds from borrowings under the Credit Agreement are expected to be used to fund capital expenditures to support future growth initiatives, potential acquisitions, and for general corporate purposes. Borrowings under the Credit Agreement bear interest on any outstanding principal of 10.25% per annum. The facility was fully drawn at closing. The Credit Agreement serves as an expansion of the Company’s existing Financing Agreement, described under "General Development of the Business – Three Year History – 2019 – Senior Secured Term Loan Facility" in the Company’s 2020 Annual Information Form filed with SEDAR on April 28, 2021. Except as described below, the terms of the Credit Agreement are substantially similar to the terms of the Financing Agreement and the two facilities are secured by the same collateral.

The Credit Agreement may be pre-paid but is subject to a prepayment premium dependent on the loan year. Any prepayment made between January 8, 2022 and January 7, 2023, will incur a prepayment premium of 5.125%. Any prepayment made between January 8, 2023 and January 7, 2024, will incur a prepayment premium of 2.50%.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

The Credit Agreement is subject to a yield maintenance premium. The yield maintenance premium is paid based on amounts repaid. The premium is determined by the amount of interest that would have otherwise been payable on the prepayment less the aggregate amount of interest that would have been earned if the prepayment were to be reinvested from the date of prepayment until January 8, 2022 at the yield maintenance premium rate. The yield maintenance premium rate is the rate per annum equal to the rate in effect 3 days before the repayment date for U.S. Treasury instruments that have a maximum term of 3 months or less times 0.50%.

Seller note

The Company issued certain notes payable in conjunction with the Emerald acquisition in the amount of $8,000, the Glendale acquisition in the amount of $7,500, and the Phyto acquisition in the amount of $1,500. The Company paid $5,000 and the accrued interest related to the Emerald acquisition in January 2020 and the remaining $3,000 and accrued interest was paid in May 2020. The Company paid $2,500 and the accrued interest related to the Glendale acquisition in February 2020. The Company paid $2,100 and the accrued interest related to the Glendale acquisition in January 2021.

Future maturities

As of March 31, 2021, future principal payments due under Notes payable were as follows:

Period	Amount
2021 (remaining nine months)	$	4,193
2022		—
2023		300,000
2024		60,000
2025		—
2026 and thereafter		402
	$	364,595

Information about the Company’s exposure to interest rate risks and liquidity risks is included in Note 20.

Note 12 – Shareholders’ equity

The authorized and issued share capital of the Company is as follows:

Authorized

As of March 31, 2021, the authorized share capital consists of an unlimited number of multiple voting shares (“MVS”) without par value and an unlimited number of subordinate voting shares (“SVS”) without par value.

Issued

Holders of the MVS are entitled to 15 votes per share and are entitled to notice of and to attend any meeting of the shareholders, except a meeting of which only holders of another particular class or series of shares will have the right to vote. As of March 31, 2021 and December 31, 2020, the MVS represented approximately 12.0% and 14.2%, respectively, of the total issued and outstanding shares and 67.3% and 71.2%, respectively, of the voting power attached to such outstanding shares. The MVS are convertible into SVS on a one-for-one basis at any time at the option of the holder or upon termination of the MVS structure. The MVS structure will terminate automatically on October 25, 2021. It will also terminate automatically upon the occurrence of the following events: (i) transfer or disposition of the MVS by the Company’s Executive Chairman, Boris Jordan, to one or more third parties which are not certain permitted holders as described in the Company’s Articles, and (ii) Mr. Jordan or his permitted holders no longer beneficially owning, directly or indirectly and in the aggregate, at least 50% of the issued and outstanding SVS and MVS. In 2019, Mr. Jordan voluntarily converted 18,200,000 MVS into SVS. In April and May 2020, Mr. Jordan voluntarily converted 10,000,000 MVS into SVS. As of March 31, 2021, the Company had 93,970,705 MVS issued and outstanding that were held indirectly by Boris Jordan.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

On January 12, 2021, the Company closed on its previously announced overnight marketed offering of 18,975,000 SVS at a price of C$16.70 per share in an underwritten public offering, for total gross proceeds of C$316,883, before deducting the underwriters’ fees and estimated offering expense. The Company intends to use the net proceeds of $240,569 from the overnight marketed offering for working capital and general corporate purposes.

Holders of the SVS are entitled to one vote per share. As of March 31, 2021, the Company had 592,439,147 SVS issued and outstanding.

The Company had reserved 78,038,056 SVS and 66,380,185 SVS, as of March 31, 2021 and December 31, 2020, respectively, for the issuance of stock options and other share-based awards under the Company’s 2018 Long Term Incentive Plan (see Note 13). Other reserves in equity are due to the private placement offering described above as well as the minority buyout disclosed in Note 20.

Treasury shares

There were no shares repurchased for the three months ended March 31, 2021 and 2020.

Note 13 – Share-based payment arrangements

Stock option programs

The 2011 and 2015 Equity Incentive Plans provide for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, stock appreciation rights, and other share-based awards. In connection with the Business Combination, all unexercised stock options of Curaleaf, Inc. issued and outstanding under the 2011 and 2015 Equity Incentive Plans were converted to the option to receive an equivalent substitute option under the 2018 Long Term Incentive Plan (the “LTIP”). The LTIP provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units, performance awards, dividend equivalents, and other share-based awards. The number of SVS reserved for issuance under the LTIP is calculated as 10% of the aggregate number of SVS and MVS outstanding on an “as-converted” basis.

Stock option valuation

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes valuation model, where appropriate. In instances where stock options have performance or market conditions, the Company utilizes the Monte Carlo valuation model to simulate the various outcomes that affect the value of the option.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

The weighted average inputs used in the measurement of the grant date fair values of the equity-settled share-based payment plans were as follows:

	March 31,
	2021			2020
Fair value at grant date	$	10.34		$	2.86
Share price at grant date	$	14.52		$	3.87
Exercise price	$	15.49		$	5.59
Expected volatility		76.5	%		90.4	%
Expected life		6.1	years		6.1	years
Expected dividends		—	%		—	%
Risk-free interest rate (based on government bonds)		1.02	%		0.52	%

The expected volatility is estimated based on the Company’s historical volatility. Management believes this is the best estimate of the expected volatility over the expected life of its stock options. The expected life in years represents the period of time that options granted are expected to be outstanding. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

During the three months ended March 31, 2021 and 2020, the Company recorded share-based compensation in the amount of $4,907 and $4,501, respectively.

Reconciliation of outstanding stock options

The number and weighted-average exercise prices of share options under the LTIP were as follows:

				Weighted					Weighted
	Number of			average		Number of			average
	options			exercise price		options			exercise price
	2021			2021		2020			2020
Outstanding at January 1		25,936,658		$	4.21		26,919,515		$	1.59
Forfeited during the three month period		(10,678	)		7.35		(493,765	)		1.10
Expired during the three month period		(42,712	)		7.35
Exercised during the three month period		(3,696,904	)		0.53		(3,543,496	)		0.31
Granted during the three month period		2,688,307			15.49		604,414			8.35
Rollover grants in connection with acquisition		—			—		4,820,663			9.98
Outstanding at March 31		24,874,671		$	5.97		28,307,331		$	1.59
Options exercisable at March 31		15,415,169		$	4.44		20,215,681		$	0.24

Restricted stock units (“RSUs”)

The number of RSUs awarded under the 2018 LTIP Plan were as follows:

	Number of RSUs
	2021			2020
Outstanding at January 1		2,452,338			2,170,064
Forfeited during the three month period		—			(166,624	)
Released during the three month period		(455,069	)		—
Granted during the three month period		253,147			942,122
Outstanding at March 31		2,250,416			2,945,562
RSUs vested at March 31		—			250,847

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 14 – Selling, general and administrative expense

Selling, general and administrative expenses consist of the following:

	Three months ended
	March 31,
	2021		2020
Selling, general and administrative expenses:
Salaries and benefits	$	41,067	$	18,769
Sales and marketing		10,489		3,608
Rent and occupancy		6,905		823
Travel		781		1,663
Professional fees		6,693		14,086
Office supplies and services		7,337		2,785
Other		6,818		4,123
Total selling, general and administrative expense	$	80,090	$	45,857

Note 15 – Other income

Other income consists of the following:

	Three months ended
	March 31,
	2021		2020
Gain (loss) on disposal of assets	$	13	$	(20	)
Gain on non-substantial debt modification		—		2,269
Gain on foreign currency exchange		—		109
Other income		402		250
Total other income, net	$	415	$	2,608

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 16 – Earnings per share

Basic and diluted loss per share attributable to Curaleaf Holdings, Inc. was calculated as follows:

	Three months ended
	March 31,
	2021			2020
Numerator:
Net loss	$	(17,211	)	$	(15,452	)
Less: Net income (loss) attributable to redeemable non-controlling interest		—			(363	)
Net loss attributable to Curaleaf Holdings, Inc. — basic and diluted	$	(17,211	)	$	(15,089	)
Denominator:
Weighted average common shares outstanding — basic and diluted		682,041,420			507,700,498
Loss per share — basic and diluted	$	(0.03	)	$	(0.03	)

The Company’s potentially dilutive securities, which include options to purchase shares, have been excluded from the computation of diluted net loss per share as the effect would reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to shareholders is the same. The Company excluded the following potential shares, presented based on amounts outstanding at each period end, from the computation of diluted loss per share attributable to Curaleaf Holdings, Inc. for the periods indicated because including them would have had an anti-dilutive effect:

	Three months ended
	March 31,
	2021		2020
Options to purchase SVS		24,874,671		28,307,331

Note 17 – Segment reporting

The Company operates in two segments: the production and sale of cannabis via retail and wholesale channels (“Cannabis Operations”); and providing professional services including cultivation, processing, retail know-how and back office administration, intellectual property licensing, real estate leasing services, and lending facilities to medical and adult-use cannabis licensees under management service agreements (“Non-Cannabis Operations”).

	Cannabis		Non-Cannabis			Total
For the three months ended March 31, 2021:
Revenues	$	259,883	$	437		$	260,320
Gross profit		140,377		437			140,814
Income (loss) from operations		50,006		(16,301	)		33,705
Net income (loss)	$	9,810	$	(27,021	)	$	(17,211	)

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

	Cannabis		Non-Cannabis			Total
For the three months ended March 31, 2020:
Revenues	$	77,055	$	19,441		$	96,496
Gross profit		48,598		19,441			68,039
Income (loss) from operations		10,547		(5,554	)		4,993
Net income (loss)	$	7,664	$	(23,116	)	$	(15,452	)
	Cannabis		Non-Cannabis		Held for sale		Total
---	---	---	---	---	---	---	---	---
As of March 31, 2021:
Total assets	$	2,201,647	$	418,799	$	60,922	$	2,681,368
Total liabilities	$	726,985	$	335,500	$	12,775	$	1,075,260
	Cannabis		Non-Cannabis		Held for sale		Total
---	---	---	---	---	---	---	---	---
As of December 31, 2020:
Total assets	$	2,114,424	$	213,663	$	58,504	$	2,386,591
Total liabilities	$	672,796	$	330,400	$	7,181	$	1,010,377

Note 18 – Commitments and contingencies

Leases

The Company leases its facilities under operating leases that require the payment of real estate taxes and other operating costs in addition to normal rent.

At March 31, 2021, approximate future minimum payments due under non-cancellable operating leases were as follows:

Period	Scheduled payments
2021 (remaining nine months)	$	38,015
2022		49,419
2023		47,804
2024		46,248
2025 and thereafter		388,568
Total undiscounted lease liability		570,054
Impact of discount		(279,994	)
Lease liability at March 31, 2021		290,060
Less current portion of lease liability		(16,382	)
Less long-term lease liabilities transferred to liabilities associated with assets held for sale		(2,730	)
Long-term portion of lease liability	$	270,948

Real estate leases typically extend for a period of 1–10 years. Some leases for office space include extension options exercisable up to one year before the end of the cancellable lease term. Typically, options to renew leases are for an additional period of 5 years after the end of the initial contract term and are at the option of the Company as the lessee. Lease payments are in substance fixed, and certain real estate leases include annual escalation clauses with reference to an index or contractual rate.

The Company leases machinery and equipment but does not purchase or guarantee the value of leased assets. The Company considers these assets to be of low value or short-term in nature and therefore no right-of use assets and lease liabilities are recognized for these leases. Expenses recognized relating to short-term leases and leases of low value during the three months ended March 31, 2021 and 2020 were immaterial.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

The Company leases space for its offices, cultivation centers, and retail dispensaries. Key movements relating to the right-of-use lease asset balances are presented below:

Carrying amount, January 1, 2021	$	267,168
Additions to leased assets		5,571
Depreciation charges		(7,717	)
Transferred to assets held for sale		56
Carrying amount, March 31, 2021	$	265,078

The total interest expense on lease liabilities for the three months ended March 31, 2021 and 2020 was $8,560 and $2,158, respectively.

The total depreciation expense on right-of-use assets for the three months ended March 31, 2021 and 2020 was $7,717 and $3,700, respectively, of which $3,875 and $0, respectively, was included in cost of goods sold.

The total cash outflow for lease liability payments for the three months ended March 31, 2021 and 2020 was $13,071 and $3,470, respectively.

Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and senior management team that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnification agreements. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its Interim Financial Statements.

Legal

The Company is involved in claims or lawsuits that arise in the ordinary course of business. Accruals for claims or lawsuits are provided to the extent that losses are deemed both probable and estimable. Although the ultimate outcome of these claims or lawsuits cannot be ascertained, on the basis of present information and advice received from counsel, it is management’s opinion that the disposition or ultimate determination of such claims or lawsuits will not have a material adverse effect on the Company.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Among other legal disputes, the Company is currently involved in the following proceedings:

Connecticut Arbitration. Pursuant to the Second Amended and Restated Operating Agreement of Doubling Road Holdings, LLC, the holders (the “Holders”) of a majority of the Series A-2 Units of Doubling Road Holdings had the right to require that PalliaTech CT, LLC or any Affiliate purchase all of the Series A-2 Units in exchange for shares of PalliaTech, Inc. (now Curaleaf, Inc.), the parent of PalliaTech CT, pursuant to a defined “Buy-Out Exchange Ratio.” On October 25, 2018, the Holders, the Company, and others entered into a Stipulation of Settlement in order to resolve a dispute with respect to the applicable Buy-Out Exchange Ratio for the Put Right. The Stipulation of Settlement provided, among other things, that PalliaTech CT purchased the Holders’ interests in exchange for (1) a payment of $40,142; (2) 4,755,548 SVS of Curaleaf Holdings, Inc.; and (3) the potential for additional equity in Curaleaf Holdings, Inc. depending on the results of a “Settlement Second Appraisal.” Pursuant to the Settlement Second Appraisal, dated December 12, 2019, and the terms of the Stipulation of Settlement, the Holders received 2,016,859 additional SVS. On January 23, 2020, the Holders filed claims in arbitration including for fraudulent inducement and breach of contract, relating primarily to a lock-up agreement that the Holders signed in connection with the Stipulation of Settlement. A schedule for the arbitration has not yet been established.

Florida Arbitration / Litigation. On December 10, 2018, Jayson Weisz and SRC Medical Partners, LLC initiated an arbitration against PalliaTech Florida LLC. On March 19, 2019, Weisz and SRC derivatively on behalf of PalliaTech Florida LLC filed a complaint against Defendants Curaleaf Florida LLC, PalliaTech Florida, Inc., Joseph Lusardi, and Boris Jordan in the Complex Business Litigation Section in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida. Plaintiffs’ derivative Complaint seeks the judicial dissolution of Curaleaf Florida LLC and asserts various causes of action against Defendants, including for breach of contract, civil conspiracy, breach of fiduciary duty, fraudulent transfer, and a declaratory judgment appointing Robins to the Board of Managers. On January 10, 2020, Weisz, JRF Group, and the Curaleaf entities entered into a Stipulation of Settlement pursuant to which all claims of Weisz and JRF Group against the Company and its affiliates were released without compensation and the Company purchased JRF Group’s interest in PalliaTech Florida LLC for consideration of 1,772,062 SVS and $2,500 in cash. During February 2020, SRC, PalliaTech Florida LLC, PalliaTech Florida, Inc., and Lusardi participated in a final arbitration hearing. In June 2020, the arbitrator issued a final order regarding SRC’s claims in the dispute. While no damages were awarded, the Company was ordered to buyout SRC’s interest in PT Florida. Based on the order, the parties agreed that the Company would acquire SRC’s interest in PT Florida for no cash and 2,375,000 SVS. In connection with this transaction, the Company agreed to pay SRC $1,750 cash to retire principal and interest on the half of the Secured Promissory Notes – 2029 held by SRC. The acquisition and retirement of the notes was completed in August 2020.

Securities Class Action. On August 5, 2019, a purported class action was filed against the Company, Joseph Lusardi, Neil Davidson, and Jonathan Faucher (“Defendants”) in the United States District Court for the Eastern District of New York on behalf of persons or entities who purchased or otherwise acquired publicly traded securities of the Company from November 21, 2018 to July 22, 2019. On January 6, 2020, an Amended Class Action Complaint was filed against Defendants. The Amended Class Action Complaint alleges that Defendants made materially false and/or misleading statements regarding the Company’s CBD products based on a July 22, 2019 letter received from the U.S. Food and Drug Administration (“FDA Letter”). According to the Amended Class Action Complaint, the FDA Letter states that several of the CBD products sold on the Company’s website were “misbranded drugs” in violation of the Federal Food, Drug, and Cosmetic Act. The Amended Class Action Complaint asserts claims (1) against all Defendants for alleged violations of Section 10(b) of the Securities Exchange Act of 1934 and (2) against Lusardi, Davidson, and Faucher for alleged violations of Section 20(a) of the Securities Exchange Act of 1934. On March 6, 2020, Defendants filed a motion to dismiss arguing that the Amended Class Action Complaint failed to allege (1) any false or misleading statement or omission, (2) scienter, (3) any domestic transactions, or (4) control person liability. On February 15, 2021, the Company’s motion to dismiss was granted with prejudice.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Taxes

The Company records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. There is inherent uncertainty in quantifying income tax positions, especially considering the complex tax laws and regulations for federal, state and Canadian jurisdictions in which the Company operates. The Company has recorded tax benefits for those tax positions where it is more likely than not that a tax benefit will result upon ultimate settlement with a tax authority that has all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will result, no tax benefit has been recognized in the Interim Financial Statements.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and Canadian jurisdictions, where applicable. The Company is currently under Internal Revenue Service (“IRS”) examination for the tax years 2016, 2017, and 2018, and the Company’s subsidiary, Alternative Therapies Group, Inc., is currently under IRS examination for the tax year 2018. As of March 31, 2021, the Company recorded $2,900 of unrecognized tax benefits and expects there is reasonable possibility that these unrecognized tax benefits will change within 12 months due to expirations of statute of limitations or audit settlements. As of March 31, 2021, the Company also accrued interest and penalties of $949 for its uncertain tax positions. The Company records interest and penalties related to income tax amounts as a component of income tax expense.

The IRS has proposed adjustments relating to the U.S. Parent Company's treatment of expenses under Section 280E, however, the Company is defending its tax reporting positions before the IRS. The outcome of this audit remains unclear at this point. The Company also intends to litigate any further such challenges because it currently believes all of its other tax positions can be sustained under an IRS examination. The ultimate resolution of tax matters could have a material effect on the Company's Interim Financial Statements. As the IRS interpretations on Section 280E continue to evolve, the impact of any such challenges cannot be reliably estimated. The Company's tax years are still open under statute from December 31, 2016, to the present.

Note 19 – Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company incurred the following transactions with related parties during the three months ended March 31, 2021 and 2020:

	Three months ended						Balances as of
	March 31,						March 31,			December 31,
	2021			2020			2021			2020
Transaction	Related party transactions						Balance receivable (payable)
Processing fees ^(1)^	$	—		$	659		$	—		$	—
Consulting fees ^(2)^		94			—			—			—
Travel and reimbursement ^(2)^		1,255			—			—			—
Rent expense, net ^(3)^		(13	)		(60	)		—			—
Equipment purchases ^(4)^		1,426			—			—			—
Promissory Note - 2024 ^(5)^		325			—			(10,029	)		(9,700	)
Non-consolidated GR Companies ^(6)^		—			—			6,149			5,947
	$	3,087		$	599		$	(3,880	)	$	(3,753	)

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

(1) For the three months ended March 31, 2020, the Company recognized direct expenses of $659 for processing expenses with Sisu Extracts, a state licensed processor in California, that performed toll processing services for the Company. No such services were provided in the three months ended March 31, 2021. Cameron Forni, Select President, holds a passive investment in Sisu Extracts. Amounts recorded in connection with these expenses were recorded on a current cost basis at the time expenses were incurred. There are no ongoing contractual commitments related to these transactions.

(2) For the three months ended March 31, 2021, the Company recognized $1,255 in travel and other business development costs as expense to Measure 8 Venture Partners, a company controlled by Boris Jordan, Executive Chairman. For the three months ended March 31, 2021, the Company recognized consulting expense of $94 for real estate management and advisory services to Frontline Real Estate Partners, LLC, a company controlled by Mitchell Kahn, a Board Member. Amounts recorded in connection with these expenses were recorded on a current cost basis at the time expenses were incurred. There are no ongoing contractual commitments related to these transactions.

(3) For the three months ended March 31, 2021, the Company recognized a rent expense credit of $60 for a sublease between Curaleaf NY, Inc. and Measure 8 Venture Partners, a company controlled by Boris Jordan, Executive Chairman. For the three months ended March 31, 2021, the Company recognized a rent expense of $47 for a lease between GR Companies, Inc. and FREP Elm Place II, LLC, a company owned in part by Mitchell Kahn, a Board Member. Both arrangements represent on-going contractual commitments based on executed leases.

(4) For the three months ended March 31, 2021, the Company paid $1,426 to Sentia Wellness to purchase hemp processing equipment. Sentia Wellness is a Cannabidiol company that was formerly associated with Select, prior to the acquisition by Curaleaf. Boris Jordan, Executive Chairman and Cameron Forni, Select President, have interests in Sentia Wellness.

(5) For the three months ended March 31, 2021, the Company had an outstanding notes payable balance of $10,029 and recognized a related interest expense of $325 on the Promissory Note – 2024, which is held with Baldwin Holdings, LLC, in which Joseph F. Lusardi, the Company’s Executive Vice Chairman, has a direct equity interest. The Company entered into the Promissory Note – 2024 in October 2020 to replace the previously recorded contingent consideration liability (Note 11). Amounts recorded in connection with these expenses were recorded on a current cost basis at the time expenses were incurred. The liability contains certain repayment and interest components that represents on-going contractual commitments.

(6) Through its acquisition of Grassroots, the Company acquired an option to purchase Maryland Compassionate Care and Wellness, LLC (“MCCW”) from its sole owner, KDW Maryland Holding Corporation (“KDW”), subject to regulatory approval, which was received May 1, 2021. MCCW is the holder of cultivation, processing, and dispensary licenses in Maryland. The exercise price for the option is the cancellation of a secured promissory note issued by KDW to the Company in the principal amount of $32,000. MCCW is the sole owner of each of GR Vending MD Management, LLC and GR Vending MD, LLC. Mr. Kahn, a member of the Company’s board of directors, is a minority stockholder, the sole director and an officer of KDW.

The Company’s key management personnel have the authority and responsibility for planning, directing and controlling the activities of the Company and consists of the Company's executive management team and management directors. Key management personnel compensation and other related party expenses for the three months ended March 31, 2021 and 2020 are as follows:

	Three months ended March 31,
Key management personnel compensation	2021		2020
Short-term employee benefits	$	900	$	786
Other long-term benefits		10		7
Share-based payments		2,358		3,554
	$	3,268	$	4,347

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Note 20 – Fair value measurements

The Company’s financial instruments consist of cash, restricted cash and cash equivalents, notes receivable, accounts payable, accrued expenses, long-term debt, and redeemable non-controlling interest contingency. The fair values of cash, restricted cash, notes receivable, accounts payable, and accrued expenses approximate their carrying values due to the relatively short-term to maturity. The carrying value of the Company’s long-term notes payable at the effective interest rate approximates fair value.

Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of the inputs to fair value measurements. The three levels of hierarchy are:

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

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

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

The Company’s assets measured at fair value on a nonrecurring basis include investments, long-lived assets, indefinite-lived intangible assets, and goodwill. The Company reviews the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually as of December 31, for indefinite-lived intangible assets and goodwill. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 measurements.

There have been no transfers between fair value levels during the three months ended March 31, 2021 and 2020.

	Fair value measurements
	as of March 31, 2021 using:
	Level 1		Level 2		Level 3		Total
Assets:
Biological assets	$	—	$	—	$	46,452	$	46,452
	$	—	$	—	$	46,452	$	46,452
Liabilities:
Non-controlling interest redemption and contingent consideration liabilities	$	—	$	—	$	4,592	$	4,592
	$	—	$	—	$	4,592	$	4,592
	Fair value measurements
---	---	---	---	---	---	---	---	---
	as of December 31, 2020 using:
	Level 1		Level 2		Level 3		Total
Assets:
Biological assets	$	—	$	—	$	46,210	$	46,210
	$	—	$	—	$	46,210	$	46,210
Liabilities:
Non-controlling interest redemption and contingent consideration liabilities	$	—	$	—	$	4,592	$	4,592
	$	—	$	—	$	4,592	$	4,592

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Biological assets

The fair value of biological assets is categorized in Level 3 on the fair value hierarchy. The Company measures its biological assets at fair value less costs to sell. This is determined using a model which estimates the expected harvest yield in grams for plants that are actively growing, and then adjusts that amount for the expected selling price per gram in the market in which the biological asset is growing. The estimates used in determining the fair value of biological assets are subject to volatility and several uncontrollable factors, which could significantly affect the fair value of biological assets in future periods. The significant assumptions used in determining the fair value of biological assets include:

·	Expected yield by plant – represents the expected number of grams of finished cannabis inventory<br>which are expected to be obtained from each harvested cannabis plant;
·	Wastage of plants – represents the weighted average percentage of biological assets which are expected<br>to fail to mature into cannabis plants that can be harvested;
---	---
·	Duration of the production cycle – represents the weighted average number of weeks out of the 12<br>week growing cycle that biological assets have reached as of the measurement date;
---	---
·	Percentage of costs incurred as of this date compared to the total costs expected to be incurred –<br>this is calculated as the cost per gram of harvested cannabis to complete the sale of cannabis plants post harvest, consisting of the<br>cost of direct and indirect materials and labor related to further production, labeling, and packaging;
---	---
·	Percentage of costs incurred for each stage of plant growth – represents the direct and indirect<br>production costs incurred that are capitalized; and
---	---
·	Market values – this is calculated as the current market price per gram in the market in which the<br>biological asset is being produced. This is expected to approximate future selling price.
---	---

The Company accretes fair value on a straight-line basis according to stage of growth. As a result, a cannabis plant that is 50% through its 12-week growing cycle would be ascribed approximately 50% of its harvest date expected fair value. All plants are to be harvested cannabis and as of March 31, 2021 and December 31, 2020, on average, were 48% and 57% complete, respectively. An increase or decrease in the estimated sale price would result in a significant change in the fair value of biological assets.

The following table highlights the sensitivities and impact of changes in significant assumptions to the fair value of biological assets:

	Sensitivity Inputs ('000s)					(+/-) Impact on Fair Value ('000s)
Significant inputs & Assumptions	March 31,<br><br>2021		December 31,<br><br>2020		Sensitivity	March 31,<br><br>2021		December 31,<br><br>2020
Total expected grams yielded		8,637		9,776	(+/-) 10% grams yield	$	3,476	$	3,017
Average cost per gram to complete production	$	1.48	$	1.78	(+/-) $1.00 per gram	$	8,658	$	9,734
Average selling price per gram, less cost	$	4.02	$	3.09	(+/-) $1.00 per gram	$	17,275	$	9,713

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Non-controlling interest contingency and buyout

During 2018 the Company agreed to acquire the remaining non-controlling interest in Costa Nursery Farms, LLC, d/b/a Modern Health Concepts (“MHC”) and Double Road Holdings, LLC (“DRH”), therefore voiding the non-controlling interest put options and call options purchased by the non-controlling interest from the original agreements. The MHC acquisition’s consideration was for $25,000 in cash as well as common stock and the DRH acquisition consideration was for $40,142 in cash as well as common stock. Upon closing of each acquisition, the Company reversed the non-controlling interest contingency liabilities.

The non-controlling interest in MHC of $12,000 was calculated using the fair value method of the assets acquired and liabilities assumed. The value used in this determination was the purchase price for the controlling interest. The Company used the fair value method as it believes that the risks and rewards of the acquired entity are shared by the Company and the holder of the non-controlling interest. The MHC Agreement contained a put option under which the holder of the non-controlling interest could require the Company to redeem its equity interest in MHC. The redemption value was to be determined by mutual agreement or by an independent valuation expert subject to certain parameters that include a “floor” amount of $12,000 and a “ceiling” amount equal to 75% of the excess of the fair market value over $40,000 times the percentage interest held by the holder of the non-controlling interest (30% at the acquisition date). The Company had a call option under which it may require the holder of the non-controlling interest to sell under the same terms.

PT Florida was owned 77.2% by the Company and 22.8% by third parties (the “Remaining Florida Minority Holders”). The Remaining Florida Minority Holders, through their 22.8% non-controlling interest in PT Florida, indirectly held a 15.9% non-controlling interest in MHC as of December 31, 2019. In January 2020, half of the Remaining Florida Minority Holders agreed to sell their 11.4% equity in PT Florida for consideration of $2,500 cash and 1,772,062 SVS, valued at $12,272. In connection with this transaction, the Company paid the selling Remaining Florida Minority Holders $1,651 cash to retire principal and interest on the half of the Secured Promissory Notes – 2029 held by the selling Remaining Florida Minority Holders. In August 2020, the remaining half of the Remaining Florida Minority Holders agreed to sell their 11.4% equity in PT Florida for consideration of no cash and 2,375,000 SVS, valued at $19,996. In connection with this transaction, the Company paid the selling Remaining Florida Minority Holders $1,766 cash to retire principal and interest on the remaining half of the Secured Promissory Notes – 2029 held by the selling Remaining Florida Minority Holders.

In October 2018, the Company agreed to acquire from the minority members of DRH (the “DRH Minority Members”) their remaining 49% membership interests in DRH (the “DRH Minority Membership Units”) in consideration for $40,142 in cash (the “Connecticut Minority Buy-Out”) and $41,747 which was settled through the issuance of 4,755,548 SVS. This transaction closed immediately following completion of the Business Combination. The number of SVS to be paid to the DRH Minority Members for the DRH Minority Membership Units may be adjusted based upon an independent valuation to be conducted following the completion of the Business Combination. The valuation was to establish the value of DRH as a percentage of the value of Curaleaf Inc. as of March 8, 2018 (the “Exchange Ratio”), and then convert the Exchange Ratio into a percentage of the fully diluted equity as of the date of the Business Combination, not taking into account shares to be issued in connection with the Private Placement (the “Diluted Share Count”). Upon completion of this valuation, the number of additional SVS to be issued to DRH Minority Members was to be determined based on a prescribed formula, provided that the aggregate number of SVS issued to the DRH Minority Holders shall not exceed an additional 1.96% of the Diluted Share Count representing 8,962,380 SVS. In February 2020, the Company issued 2,016,858 SVS to the former minority members of DRH as a result of the second independent valuation.

As of both March 31, 2021 and December 31, 2020, the Company recognized a non-controlling interest redemption liability in the amount of $2,694, with the offset being recognized in redeemable non-controlling interest buyout as contra equity. An increase or decrease in the weighted average cost of capital (“WACC”) would result in an insignificant change in the fair value of the non-controlling interest contingency.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

Financial risk management

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Credit risk

Credit risk is the risk of a potential loss to the Company if a customer or third party to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s notes and accounts receivable. The maximum credit exposure at March 31, 2021 and December 31, 2020 is the carrying amount of cash and cash equivalents, accounts receivable and notes receivable. The Company does not have significant credit risk with respect to its customers. All cash and cash equivalents are placed with major U.S. financial institutions.

The Company provides credit to its wholesale and MSA customers in the normal course of business and has established processes to mitigate credit risk. The amounts reported in the unaudited condensed interim consolidated statements of financial position are net of allowances for bad debts, estimated by the Company’s management based on prior experience and its assessment of the current economic environment. The Company reviews its trade receivable accounts regularly and reduces amounts to their expected realizable values by adjusting the allowance for doubtful accounts when management determines that the account may not be fully collectible. The Company applies the IFRS 9 simplified approach to measuring expected credit losses (“ECL”) which uses a lifetime expected loss allowance for all trade receivables. The Company has not adopted standardized credit policies, but rather assesses on a customer-by-customer basis in an effort to minimize those risks.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due.

In addition to the commitments outlined for notes payable in Note 11 and lease liabilities in Note 18, the Company has the following gross remaining contractual obligations:

	< 1 Year		1 to 3 Years		Total
For the three months ended March 31, 2021:
Accounts payable	$	38,651	$	—	$	38,651
Accrued expenses		54,368		—		54,368
Other current liabilities		1,454		—		1,454
Non-controlling interest redemption liability		—		2,694		2,694
Contingent consideration liability		—		1,898		1,898
	$	94,473	$	4,592	$	99,065
	< 1 Year		1 to 3 Years		Total
---	---	---	---	---	---	---
For the three months ended December 31, 2020:
Accounts payable	$	47,043	$	—	$	47,043
Accrued expenses		57,475		—		57,475
Other current liabilities		6,568		—		6,568
Non-controlling interest redemption liability		—		2,694		2,694
Contingent consideration liability		—		1,898		1,898
	$	111,086	$	4,592	$	115,678

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

(in thousands, except for gram, share, and per share amounts)

The Company is monitoring the impacts of COVID-19 closely, and although liquidity has not been materially affected by the COVID-19 outbreak to date, the ultimate severity of the outbreak and its impact on the economic environment is uncertain. Given the current uncertainty of the future economic environment, the Company has taken additional measures in monitoring and deploying its capital to minimize the negative impact on liquidity.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Cash and cash equivalents bear interest at market rates. The Company’s notes receivable and financial debts have fixed rates of interest and are carried at amortized cost. The Company does not account for any fixed-rate financial assets or financial liabilities at fair value, therefore, a change in interest rates at the reporting date would not affect profit or loss.

Capital management

The Company’s objectives when managing capital are to ensure that there are adequate capital resources to safeguard the Company’s ability to continue as a going concern and maintain adequate levels of funding to support its ongoing operations and development such that it can continue to provide returns to shareholders and benefits for other stakeholders.

The capital structure of the Company consists of items included in shareholders’ equity and debt, net of cash and cash equivalents. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the Company’s underlying assets. The Company plans to use existing funds, as well as funds from the future sale of products to fund operations and expansion activities.

As disclosed in Note 11, the Company has various notes payable in place. Certain of these notes are subject to financial covenants which are mainly in the form of cash related covenants. Other than these items related to notes payable, as of March 31, 2021 and December 31, 2020, the Company was not subject to externally imposed capital requirements.

Note 21 – Subsequent events

EMMAC Life Sciences Limited, a corporationexisting under the laws of England and Wales

In April 2021, Curaleaf announced that it had successfully completed the acquisition of EMMAC, the largest vertically integrated independent cannabis company in Europe, for base consideration of approximately $50,000 in cash and approximately 17,500,000 SVS, with additional consideration to be paid based upon the successful achievement of performance milestones. Curaleaf simultaneously established Curaleaf International Holdings Limited (“Curaleaf International”) in Guernsey to hold the EMMAC investment and further its European expansion.

Curaleaf also announced that in order to accelerate the expansion of Curaleaf International, it had secured an investment of $130,000 from a single strategic institutional investor in exchange for a 31.5% equity stake in Curaleaf International, implying a $413,000 post money valuation, with $80,000 in cash available to spend. The subscription was used to fund the entire cash portion of the EMMAC Transaction consideration of $50,000 with the remaining $80,000 to be used to fund Curaleaf International's current capital expenditures plan through 2022, as well as its pipeline of potential acquisitions. This infusion of outside capital into Curaleaf International significantly accelerates Curaleaf's expansion plans in Europe by fully funding Curaleaf's cash outlay for the EMMAC Transaction and providing the capital required to support Curaleaf International's near-term European rollout. With its foreseeable expansion budget fully funded, Curaleaf's new international business can focus on executing its further European expansion.

Curaleaf and the strategic investor have entered into a shareholders' agreement regarding the governance of Curaleaf International pursuant to which Curaleaf will have control over operational issues as well as raising capital and the ability to exit the business. In addition, the strategic investor's stake is subject to put/call rights which permit either party to cause the stake to be bought out by Curaleaf for Curaleaf equity starting in 2025.

The new Curaleaf International platform includes cultivation, EU GMP-certified processing, distribution, and R&D operations across several key European medical cannabis markets, including the United Kingdom, Germany, Italy, Spain and Portugal. Terra Verde, Curaleaf International's European market cultivation facility in Portugal, is one of the oldest licensed cannabis growing facilities in Europe with approximately 2 hectares of cultivation area and is an industry leader on the cannabis production cost efficiency front. The Portugal based cultivation facility provides Curaleaf International with the potential to serve customers across key European medical cannabis markets as well as supporting exports to countries such as Israel, among others. Curaleaf International plans to significantly increase its cultivation capacity in 2021, and to exceed 10 tons per year by 2022, in order to accommodate future growth related to the expansion of access to cannabis across the major European medical and adult-use, as well as export markets. Curaleaf International also has an operational presence and partnerships in European Union countries that are enacting new medical cannabis access programs. Curaleaf International will also serve as the platform for other possible acquisitions in Europe and adjacent areas, and for its participation in pilot adult use programs.

Mr. Antonio Costanzo has been appointed as the new Chief Executive Officer of Curaleaf International, with the former EMMAC management team continuing to lead Curaleaf's new European presence as well as driving local European strategy and day-to-day operations. The EMMAC Transaction constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) as a result of Measure 8 Ventures, LP, an investment fund managed by Mr. Boris Jordan, the Executive Chairman and control person of the Company, having an interest in the EMMAC Transaction by way of a profit interest and a convertible debt instrument which converted into shares of EMMAC representing 8% of EMMAC equity at closing of the EMMAC Transaction. Mr. Jordan owns a minority interest in Measure 8 Ventures, LP. The Company relied upon the exemptions provided under Sections 5.5(b) of MI 61-101 – Issuer Not Listed on Specified Markets and 5.7(1)(a) of MI 61-101 – Fair Market ValueNot More the 25% of Market Capitalization from the requirements that the Company obtain a formal valuation of the EMMAC Transaction and that the EMMAC Transaction receive the approval of the minority shareholders of the Company.

The terms of the EMMAC Transaction were negotiated by management and advisors under guidance of, and unanimously recommended for approval by, a committee composed of members of the Board of Directors free from any conflict of interest with respect to the proposed EMMAC Transaction (the “Special Committee”), all of which are independent members of the Board of Directors within the meaning of National Instrument 52-110. The Special Committee has received a fairness opinion from Eight Capital to the effect that, in its opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration paid by the Company as part of the EMMAC Transaction is fair from a financial point of view, to the Company. The fee paid to Eight Capital in connection with the delivery of its fairness opinion was not contingent on the successful implementation of the EMMAC Transaction.

Post-EMMAC Transaction, the former shareholders of EMMAC have approximately 3% pro forma ownership of the Company on a fully-diluted basis, before factoring in the performance-based earn-outs. The portion of the consideration to be paid through the issuance of SVS will be subject to a statutory four-month hold period as well as a lock-up agreement with each recipient restricting trading of the share received, with release of 5% from such restrictions at the end of each calendar quarter following the closing.

Further information about the EMMAC Transaction can be found in the Company's material change report dated March 19, 2021, a copy of which is available on SEDAR (www.sedar.com) under the Company's profile. A copy of the EMMAC Purchase Agreement is also available on SEDAR under the Company’s issuer profile at www.sedar.com.

See Note 4 for information regarding additional acquisitions that were signed after March 31, 2021.

See Note 7 for information regarding transactions that were completed after March 31, 2021.

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Amounts in thousands, except share and pershare amounts)

Thismanagement discussion and analysis (“MD&A”) of the financial condition and results of operations of Curaleaf Holdings, Inc.(the “Company” or “Curaleaf”) is for the three months ended March 31, 2021 and 2020 prepared as of May 11,2021. It is supplemental to, and should be read in conjunction with, the Company’s unaudited condensed interim consolidated financialstatements and the accompanying notes for the three months ended March 31, 2021 and 2020. For the purposes of this MD&A,the terms “Company” and “Curaleaf” mean Curaleaf Holdings, Inc. and, unless the context otherwise requires,includes its subsidiaries. Additional information regarding Curaleaf is available on the Company’s website at www.curaleaf.com orthrough the SEDAR website at www.sedar.com. The Company’s interim financial statements have been prepared in compliancewith International Accounting Standard 34 - Interim Financial Reporting. The Company followed the same accounting policies and methodsof application as those disclosed in the annual audited consolidated financial statements of the Company for the year ended December 31,2020. The Company’s interim financial statements should be read in conjunction with the annual audited consolidated financial statementsof the Company for the year ended December 31, 2020, which have been prepared in accordance with International Financial ReportingStandards ("IFRS"). Financial information presented in this MD&A is presented in United States (“U.S.”) dollars(“$” or “US$”), unless otherwise indicated.

This MD&A has been prepared by referenceto the MD&A disclosure requirements established under National Instrument 51-102 – Continuous Disclosure Obligations ofthe Canadian Securities Administrators and Staff Notice 51-352 (Revised) – Issuers with US Marijuana Related Activities (“StaffNotice 51-352”).

ThisMD&A contains “forward-looking information” and “forward-looking statements” within the meaning of Canadiansecurities laws and United States securities laws (“forward-looking statements”). Forward-looking statements are neither historicalfacts nor assurances of future performance. Instead, they are based on management’s current beliefs, expectations or assumptionsregarding the future of the business, future plans and strategies, operational results and other future conditions of the Company. Inaddition, the Company may make or approve certain statements in future filings with Canadian securities regulatory authorities, in pressreleases, or in oral or written presentations by representatives of the Company that are not statements of historical fact and may alsoconstitute forward-looking statements. All statements, other than statements of historical fact, made by the Company that address activities,events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements, including,but not limited to, statements preceded by, followed by or that include words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable wordsand includes, among others, information regarding: expectations for the effects and potential benefits of any transactions; expectationsfor the effects of COVID-19 on the business’ operations and financial condition; statements relating to the business and futureactivities of, and developments related to, the Company after the date of this MD&A, including such things as future business strategy,competitive strengths, goals, expansion and growth of the Company’s business, operations and plans; expectations that planned acquisitionswill be completed; expectations that licenses applied for will be obtained; potential future legalization of adult-use and/or medicalcannabis under U.S. federal law; expectations of market size and growth in the U.S. and the states in which the Company operates; expectationsfor other economic, business, regulatory and/or competitive factors related to the Company or the cannabis industry generally; the abilityfor U.S. holders of securities of the Company to sell them on the Canadian Securities Exchange (“CSE”); and other events orconditions that may occur in the future. Forward-looking statements may relate to future financial conditions, results of operations,plans, objectives, performance or business developments. These statements speak only as of and at the date they are made and are basedon information currently available and on the then current expectations. Holders of securities of the Company are cautioned that forward-lookingstatements are not based on historical facts but instead are based on reasonable assumptions, estimates, analysis and opinions of managementof the Company at the time they were provided or made, i**n lightof its experience and its perception of trends, current conditions and expected developments, as well as other factors that managementbelieves to be relevant and reasonable in the circumstances, and involve known and unknown risks, uncertainties and other factorswhich may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any futureresults, performance or achievements expressed or implied by such forward-looking statements, including, but not limited to, risks anduncertainties related to: business structure risks; the Company’s status as a holding company; the absence of a dividend record;the concentrated voting control of the Company; risks relating to sales of substantial amounts of SVS; market volatility; liquidity risks;legal and regulatory risks inherent in the cannabis industry; financing risks related to additional financing and restricted access tobanking; general regulatory and legal risks including risk of civil asset forfeiture; risks relating to anti-money laundering laws andregulations; risks relating to the lack of access to U.S. bankruptcy protections; the risk of heightened scrutiny by regulatory authorities;risk of legal, regulatory or political change; general regulatory and licensing risks; risks relating to limitations on ownership of licenses;risks relating to regulatory actions and approvals from the Food and Drug Administration and risks of litigation; increased costs as aresult of being a public company; newly established legal regimes; the risk relating to enforcement of judgements outside Canada; environmentalrisks including environmental regulation and unknown environmental risks; general business risks including risks related to the COVID-19pandemic; the Company’s possible failure to complete acquisitions; risks related to the senior secured debt facility of the Company;risks related to service providers; risks relating to the enforceability of contracts; risks relating to the resale of the Company’ssubordinate voting shares (“SVS”) on the CSE; the Company’s reliance on the expertise and judgment of senior managementof the Company, and its ability to retain such senior management; risk relating to the concentrated voting control of the Company’sExecutive Chairman, Boris Jordan; risks inherent in an agricultural business; risks relating to unfavorable publicity or consumer perception;product liability risks; risks relating to product recalls; risks relating to the results of future clinical research; risks relatingto the difficulty of attracting and retaining personnel; the Company’s dependence on suppliers; the Company’s reliance oninputs; risks relating to the limited market data and difficulty to forecast results; intellectual property risk; constraints on marketingproducts; risks relating to fraudulent or illegal activity by employees, contractors and consultants; risks relating to information technologysystems and cyber-attacks; risks relating to security breaches; the Company’s reliance on management services agreements with subsidiariesand affiliates; risks relating to website accessibility; high bonding and insurance coverage risk; risks of leverage; risks relating toexpansion into foreign jurisdictions; risks relating to future acquisitions or dispositions; the Company’s management of growth;the fact that past performance is not indicative of future results and that financial projections may prove materially inaccurate or incorrect;risks relating to conflicts of interest; global economic conditions; tax risks; as well as those risk factors discussed under “RiskFactors” section of the Company’s annual information form for the year ended December 31, 2020. The Company’s annualinformation form is available under the Company’s profile on SEDAR at www.sedar.com.

The discussion of risk factors in this MD&Ahas been updated to include discussion of risks related to the current pandemic caused by the spread of COVID-19. The nature and scopeof the pandemic and its impact are rapidly developing, and it is difficult for management to identify at the current time all risks, orquantify those identified, or to assess their impact on particular financial measures and operating results. Nevertheless, discussionunder the “Risk Factors” section of the Company’s annual information form identifies potential areas of negative impactthat may be caused by the pandemic.

The purpose of forward-looking statements isto provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriatefor any other purpose. In particular, but without limiting the foregoing, disclosure in this MD&A as well as statements regardingthe Company’s objectives, plans and goals, including future operating results and economic performance may make reference to orinvolve forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements arereasonable, it can give no assurance that such expectations will prove to have been correct. Certain of the forward-looking statementsand other information contained herein concerning the cannabis industry, its medical, adult-use and hemp-based CBD markets, and the generalexpectations of the Company concerning the industry and the Company’s business and operations are based on estimates prepared bythe Company using data from publicly available governmental sources as well as from market research and industry analysis and on assumptionsbased on data and knowledge of this industry which the Company believes to be reasonable. However, although generally indicative of relativemarket positions, market shares and performance characteristics, such data is inherently imprecise. While the Company is not aware ofany misstatement regarding any industry or government data presented herein, the cannabis industry involves risks and uncertainties thatare subject to change based on various factors.

A number of factors could cause actual events,performance or results to differ materially from what is projected in the forward-looking statements. You should not place undue relianceon forward-looking statements contained in this MD&A. Such forward-looking statements are made as of the date of this MD&A. Weundertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise,except as required by applicable law. The Company’s forward-looking statements are expressly qualified in their entirety by thiscautionary statement.

This MD&A contains future-oriented financialinformation and financial outlook information (collectively, "FOFI") about the Company’s prospective results of operations,production and production efficiency, commercialization, revenue and cash on hand, all of which are subject to the same assumptions, riskfactors, limitations, and qualifications as set forth in the above paragraph. FOFI contained in this MD&A was approved by managementas of the date of this MD&A and was provided for the purpose of providing further information about the Company’s future businessoperations. The Company disclaims any intention or obligation to update or revise any FOFI contained in this MD&A, whether as a resultof new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI containedin this MD&A should not be used for purposes other than for which it is disclosed herein.

OVERVIEW OF THE COMPANY

Curaleaf operates as a life science company developing full scale cannabis operations, with core competencies in cultivation, manufacturing, dispensing and medical cannabis research. Curaleaf is a leading vertically-integrated medical and wellness cannabis operator in the United States. Headquartered in Wakefield, Massachusetts, the Company has operations in 23 states and, as of March 31, 2021, operated 102 dispensaries, 23 cultivation sites and 30 processing sites with a focus on highly populated, limited license states, including New York, New Jersey, Florida, Illinois, Pennsylvania and Massachusetts. The Company leverages its extensive research and development capabilities to distribute cannabis products with the highest standard for safety, effectiveness, consistent quality and customer care. The Company is committed to leading the industry in education and advancement through research and advocacy. The Company markets to medical and adult-use customers through brand strategies intended to build trust and loyalty.

The Company was an early entrant into the U.S. state-legal cannabis industry, which is one of the fastest growing industries in the U.S. Formed in 2010, the Company began as a medical device company, and was the first to develop and patent a medical cannabis vaporizing unit capable of delivering single metered doses of cannabis medicine to patients. Curaleaf entered the cannabis business in 2011 as the operator of Compassionate Sciences ATC, one of the original six vertically-integrated medical cannabis license holders in the State of New Jersey.

Currently, the Company is a diversified holding company dedicated to delivering market-leading products and services while building trusted national brands within the state-legal cannabis industry. Through its team of physicians, pharmacists, medical experts and industry innovators, the Company has developed a portfolio of branded cannabis-based therapeutic offerings in multiple formats and a strategic network of branded retail dispensaries.

The Company is operated by an executive team that has significant experience in the cannabis industry and a robust operational and acquisition track-record as to all facets of the Company’s operations, which has executed its business plan to rapidly scale its business.

Curaleaf Holdings, Inc., formerly known as Lead Ventures, Inc., was incorporated under the laws of British Columbia, Canada on November 13, 2014. The Company changed its name to “Curaleaf Holdings, Inc.” as part of its business combination with Curaleaf, Inc. completed on October 25, 2018 (the “Business Combination”). Additional information relating to the Business Combination can be found in the Company’s Annual Information Form dated April 28, 2021 filed on the Company’s SEDAR profile at www.sedar.com.

The SVS are listed for trading on the CSE under the ticker symbol “CURA” and on the OTCQX under the ticker symbol “CURLF”.

On September 25, 2020, the Company filed a shelf registration statement on Form F-10 (the “Registration Statement”) with the SEC under the U.S./Canada Multijurisdictional Disclosure System (“MJDS”). The Registration Statement allows the Company to offer up to $1 billion SVS, debt securities, subscription receipts, warrants, and units, or any combination thereof, from time to time during the 25-month period that the Registration Statement is effective (subject to MJDS eligibility). The specific terms of any future offering of securities, including the use of proceeds from any offering, will be established in a supplement to the Registration Statement, which will be filed with the applicable Canadian securities regulatory authorities and the SEC.

In order to achieve its strategy, the Company has completed several acquisitions since its formation. The Company expects to continue to actively pursue other acquisitions, dispositions and investment opportunities in the future. See “Recent Acquisitions”.

The unaudited condensed interim consolidated financial statements of the Company include the financial statements of the Company and its direct subsidiaries, indirect subsidiaries that are not wholly owned by the Company and other entities consolidated on a basis other than ownership:

		March 31,	December 31,
	State of	2021	2020
Business name ^(1)^	operations	ownership %	ownership %
CLF AZ, Inc.	AZ	100%	100%
CLF NY, Inc.	NY	100%	100%
Curaleaf CA, Inc.	CA	100%	100%
Curaleaf KY, Inc.	KY	100%	100%
Curaleaf Massachusetts, Inc.	MA	100%	100%
Curaleaf MD, LLC	MD	100%	100%
Curaleaf OGT, Inc.	OH	100%	100%
Curaleaf PA, LLC	PA	100%	100%
Curaleaf, Inc.	MA	100%	100%
Focused Investment Partners, LLC	MA	100%	100%
CLF Maine, Inc.	ME	100%	100%
PalliaTech CT, Inc.	CT	100%	100%
CLF Oregon, LLC (formerly PalliaTech OR, LLC)	OR	100%	100%
PalliaTech Florida, Inc.	FL	100%	100%
Curaleaf Florida, LLC	FL	100%	100%
CLF MD Processing, LLC	MD	100%	100%
PT Nevada, Inc.	NV	100%	100%
CLF Sapphire Holdings, Inc.	OR	100%	100%
Curaleaf NJ II, Inc.	NJ	100%	100%
Focused Employer, Inc.	MA	100%	100%
GR Companies, Inc.	IL	100%	100%
HMS Health LLC	MD	—	—
HMS Processing LLC	MD	—	—
HMS Sales LLC	MD	—	—
MI Health LLC	MD	—	—
Town Center Wellness, LLC	MD	—	—
Grassroots OpCo AR, LLC	AR	—	—
WCCC, LLC	IL	—	—
Compass Dispensary Holdings, LLC	IL	—	—
Greenhouse Group, LLC	IL	—	—
GR Vending MI, LLC	MI	—	—
GR Companies OK, LLC	OK	—	—
Remedy Compassion Center, Inc	ME	—	—
Primary Organic Therapy, Inc. (d/b/a Maine Organic Therapy)	ME	—	—
^(1)^ This table specifically excludes EMMAC Life Sciences Limited ("EMMAC"), a subsidiary of the Company, as EMMAC was acquired after March 31, 2021 (the date of the interim financial statements of the Company). See the "Recent Acquisitions" section of this MD&A for other examples of entities that have been excluded from the financial statements.
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Company Performance and Objectives

The Company is currently active in numerous cannabis programs across the U.S. In the U.S., 39 states have legalized the use of medical cannabis for patients with certain qualifying conditions. In most of these medical states, a regulatory framework is in place whereby patients can receive a recommendation from a certified physician to purchase medical cannabis in approved dispensaries. In the U.S., 18 states have legalized cannabis for adult-use. In many of these adult-use states, customers can purchase cannabis from approved dispensaries by providing identification proving the customer is 21 years of age or older.

A key aspect of the Company’s business plan is achieving “vertical integration” in each cannabis program in which it operates. Vertical integration means controlling the entire supply chain: from cultivating cannabis, to processing the cannabis into oils and other formulated products and, ultimately, selling the end-product to customers and/or patients.

The Company plans to continue growth of its operations via expansion in three dimensions: acquiring licenses in limited-license markets, increasing presence in current markets, and increasing exposure in mass markets. While the Company’s goal is to have its own licensed operations in each of its markets, we may enter a market through production and/or marketing arrangements where such arrangements provide opportunity for accelerated roll-out.

Limited-LicenseMarkets. The majority of the markets in which the Company currently operates have formal regulations limiting the number of cannabis licenses that will be awarded, thus forming high barriers to entry, limited market participants, and protected market share in these limited-license states. Curaleaf intends to apply for new licenses or acquire businesses within limited-license markets in which the Company does not currently operate.

IncreasingPresence in Current Markets. The Company plans to grow within its current markets by pursuing opportunities for vertical integration, acquiring additional dispensary licenses and/or entering into production and marketing relationships to further build its retail brand and expand its retail footprint, and intends to apply for new licenses as available and determined by each state.

IncreasingExposure in Mass Markets. The Company has established itself as a market leader and has become a dominant player due to its competitive pricing, experienced management, strong capitalization and strong brand goodwill. In mass markets exhibiting a free market dynamic typical of other industries, such as California and Oregon, the Company intends to leverage its extensive experience to grow cannabis and/or process more efficiently and reliably, while taking advantage of wholesale and retail opportunities and establishing a strong brand.

The Company expects acquisition related costs, marketing and selling expenses, and capital expenditures to increase as it expands its presence in current markets and expands into new markets.

Operating Segments

The Company currently operates in two segments:

Cannabis Operations

The Company engages in the production and sale of cannabis via retail and wholesale channels. As of March 31, 2021, the Company operated 102 retail dispensaries in 18 states, 23 cultivation sites in 16 states and 30 processing sites in 23 states which sell cannabis through wholesale channels.

Non-Cannabis Operations

The Company provides professional services including cultivation, processing, retail know-how, back office administration, intellectual property licensing, real estate leasing services, and lending facilities to medical and adult-use cannabis licensees under management service agreements. The Company provided services to two integrated cannabis licensees in Maine. The management fee income for services rendered to these licensees eliminates upon consolidation due to obtaining operational control and substantially all economic benefits of the entities holding the licenses as a result of changes in Maine state regulations. See “Recent Acquisitions” section below for further details regarding these licensees.

Principal Products and Services

The Company, through its subsidiaries and affiliates, operates in highly regulated markets that require expertise in cultivation, manufacturing, retail operations and logistics. The Company leverages its internal research and development capabilities to assist its state-licensed entities to manufacture cannabis products in multiple formats with high standards for safety, effectiveness, consistent quality and customer care. Currently, the Company’s subsidiary entities cultivate, process, market and/or dispense a wide-range of permitted cannabis products across its operating markets, including: flower, pre-rolls and flower pods, dry-herb vaporizer cartridges, concentrates for vaporizing such as pre-filled vaporizer cartridges and disposable vaporizer pens, concentrates for dabbing such as distillate droppers, mints, topical balms and lotions, tinctures, lozenges, capsules and edibles.

In most of the Company's markets, its licensed entities are vertically-integrated, meaning the entire supply chain is managed from seed to sale, cultivating cannabis flower, processing the flower into manufactured products, and selling the product to registered patients and/or legal adult-use consumers. In most states in which its licensed entities operate, products are sold under the Curaleaf and Select brands, and in Curaleaf dispensaries. The Company is committed to be the industry's leading resource in education and advancement through research and advocacy, and is focused on developing a trusted, national brand.

The Company believes that it has developed the in-house resources to ensure its state-licensed entities maintain best practices in cannabis cultivation, processing and dispensing and are dedicated to staying at the forefront of technology in the industry. The Company continues to invest strategically in infrastructure to ensure its state-licensed entities maintain low overall production costs and adaptability in their product mix to ensure timely response to the rapidly developing cannabis market. The Company intends to use its footprint to share know-how and technology throughout its operation.

•	Cultivation: The Company’s cultivation facilities have grown over 266 strains of cannabis, which<br>have been tested and characterized for yield, cannabinoid content and other properties. Additionally, the Company’s state-licensed<br>entities cultivate cannabis using a variety of methods, including greenhouse, outdoor, indoor, and two-tier indoor cultivation.
•	Extraction and Purification: The Company’s extraction facilities use proprietary processes for cannabis<br>and terpene purification. The Company believes its manufacturers are industry leaders in achieving the desired composition of cannabinoids<br>and terpenes in finished products through processing and purification, thereby enabling timely response to trends in medical product formulation.
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•	Formulation and Quality Control: The Company's processing facilities produce across the range of solid,<br>liquid and inhaled products utilizing its vast in-house knowledge and experience. By combining expert cultivation, manufacturing and analytical<br>laboratory operations, our processors have developed a complete in-house quality assurance and quality control program. In-house quality<br>assurance enables rapid product development cycles and production of higher quality consumer products.
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Research and Development

The Company's research and development activities primarily focus on optimizing cultivation and manufacturing techniques and developing new manufactured products.

The Company collects data on the number of grams of cannabis flower produced per watt of light, per square foot, and per plant. This allows cultivators to gain insights on optimal cultivation methods by adjusting certain variables such as cannabis strain variety and plant spacing. The Company’s cultivators also institute pest management techniques in facilities and document successes and failures, sharing this knowledge across its cultivation operations.

The Company also researches new methods of cannabis extraction for the development of new manufactured products. The Company's research and development activities operate on an on-going basis as the Company continually seeks to improve current methods for our licensed businesses.

Production and Sales

As of March 31, 2021, the Company has 23 cultivation facilities totaling approximately 1.8 million square feet. Current annual production capacity in these facilities is estimated at over 220,000 pounds of dry flower. As of March 31, 2021, the Company has 30 processing facilities. Each new manufacturing site is built to ISO 8 clean room specifications and employs advanced nutritional and pharmaceutical formulations technology for optimal delivery methods. Each production facility (cultivation and processing) primarily focuses on the commercialization of cannabis products, with a strict focus on quality control and patient care. Illustrating this commitment, our Florida operations were the first in the cannabis industry to receive the Safe Quality Food certification under the Global Food Safety Initiative. See “Risk Factors – General Business Risks – COVID-19 Pandemic” section of the Company’s annual information form for the year ended December 31, 2020 for additional information.

The Company's primary method of sales currently occur in its licensed dispensaries across the U.S. Also, the Company’s dispensaries offer home delivery services across the States of Arizona, Florida, Nevada and New York, in compliance with all state regulations. In Florida, our licensee also offers drive-thru service at two of its dispensaries. In multiple States, our dispensaries offer customers the option to order online to pick-up in store. Curaleaf aims to expand dispensaries e-commerce operations and delivery operations, where permitted, to offer convenient access for its customers and meet the demands of an evolving retail landscape.

Intellectual Property

The Company has developed multiple proprietary product formats, technologies and processes to ensure the high quality of licensees’ premium cannabis products. These proprietary technologies and processes include its cultivation and extraction techniques, product formulations and cannabis delivery and monitoring systems. While actively determining and pursuing the patentability of these processes and materials, Curaleaf ensures confidentiality through the use of non-disclosure and confidentiality agreements.

The Company has spent considerable time and resources to establish a premium and recognizable brand amongst consumers and retailers in the cannabis industry. The Company has three federally registered patents with the United States Patent and Trademark Office (“USPTO”). Additionally, as of March 31, 2021, 46 trademarks were currently filed and pending approval with the USPTO, and we are actively pursuing the filing of additional trademarks.

In addition to its patents and pending trademarks, Curaleaf owned, as of March 31, 2021, numerous website domains, including www.curaleaf.com, as well as numerous social media accounts across all major platforms.

Curaleaf maintains an in-house legal team, as well as engages outside legal counsel, to actively monitor and identify potential infringements on its intellectual property.

Competitive Conditions

The cannabis industry is highly competitive. We compete on quality, price, brand recognition and distribution strength. Our cannabis products compete with other products for consumer purchases, as well as shelf space in retail dispensaries and wholesaler attention. We compete with numerous cannabis producing companies with various business models, from small family-owned operations to multi-billion-dollar market capitalized multi-state operators. In certain markets, such as California, there are also a number of illegally operating dispensaries, which serve as competition as well. The Company maintains an operational footprint of primarily limited-license states, with natural high barriers to entry and limited market participants. The majority of the markets in which our licensees operate have formal regulations limiting the number of cannabis licenses that will be awarded, helping to ensure the Company's market share is protected in these limited-market States under the current regulatory framework.

As cannabis remains federally illegal in the U.S., businesses seeking to enter the industry face additional challenges when accessing capital. Presently, there exists no reliable source of U.S. bank lending or equity capital available to fund operations in the U.S. cannabis sector. Nevertheless, the Company is well-capitalized, and believes that the level of expertise and significant capital investment required to operate its large-scale, vertically-integrated cannabis operations make it difficult and inefficient for smaller cannabis operators to enter this sector of the market. Due to the rapid growth of the cannabis industry in the U.S., we acknowledge that the Company will face competition from other companies accessing equity capital markets in the sector.

The States We Operate In, Their Legal Frameworkand How It Affects Our Business

Arizona Operations

Arizona’s medical cannabis program was introduced in November 2010 when voters approved the Proposition 203 “Arizona Medical Marijuana Initiative” ballot measure that legalized medical cannabis for patients with certain qualifying conditions. The first sales were made to patients in December 2012. In November 2020, Arizona voters approved Proposition 207 with approximately 60% of the vote, legalizing adult-use cannabis in the state. Dispensaries began selling to customers 21 years of age and older in January 2021.

The Arizona Department of Health Services (“AZDHS”) has allocated 130 medical cannabis dispensary certificates. Each medical dispensary certificate permits the license holder to open one dispensary location, which can be approved for both medical and adult-use sales and gives the license holder the option to open one cultivation facility and/or one processing facility. Cultivation and processing sites can be located anywhere in the state and are not restricted based on where the license holder’s dispensary is located. Dispensaries are limited to their district for their first three years of operation. Prior to the adoption of Proposition 207, all medical dispensaries had to be held by not-for-profit, entities. With the adoption of Proposition 207, both medical and adult-use licenses may be held by for-profit entities. Extracted oils, edibles, and flower products are permitted. Wholesale transactions are permitted. Per Proposition 207, the AZDHS intends to issue an additional 26 dispensary certificates to entities that qualify under the Social Equity Ownership Program. The AZDHS will begin accepting applications for these additional 26 licenses within six months of adopting final rules for the Social Equity Ownership program, the timing of which is uncertain. Additionally, it is expected the AZDHS will issue 10 dispensary certificates in rural counties that are currently home to one or no dispensaries, with applications for these additional 10 licenses accepted by the AZDHS until March 9, 2021; the licenses were awarded in April 2021.

As of March 31, 2021, the Company operated eight dispensaries in Arizona, primarily located in the metro-Phoenix area. Through the acquisitions of GR Companies, Inc. (“Grassroots”), the Company acquired the rights to operate a ninth dispensary license, which is expected to become operational in the metro-Phoenix area in the third quarter of 2021. The Company also operates a 100,000 square foot indoor cultivation facility in Holbrook, Arizona, 50,000 square feet of which is already constructed for cultivation on a 68-acre plot of land. The Company is currently undergoing an expansion project to build out the entire 100,000 square feet of indoor cultivation in the Holbrook facility, which is expected to be complete in the second quarter of 2021. The Company also operates a separate 19,400 indoor cultivation facility in the metro-Phoenix area. Through the acquisition of Cura Partners, Inc., the Company also owns the Select brand, a leading wholesale brand in Arizona, among other states.

Arkansas Operations

Arkansas’s medical cannabis program was introduced in November 2016 when 53% of voters approved Issue 6, the “Medical Marijuana Amendment,” which legalized medical cannabis for patients with certain qualifying conditions. The first sales were made to patients in May 2019.

The Arkansas Department of Health (“AR DOH”) is the regulatory agency that oversees the program. The market is divided into two main classes of licenses: cultivation/processing and dispensary. The AR DOH has awarded 8 cultivation/processing licenses and 38 dispensary licenses. As of March 31, 2021, there were 32 operational dispensaries. A large variety of medical cannabis products are allowed in the state, including the smoking of cannabis flower.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in Arkansas, among other states, which manages one dispensary in Little Rock, Arkansas.

California Operations

California’s medical cannabis program was introduced in 1996 when voters passed the Proposition 215 ballot initiative, that allowed patients with a valid doctor’s recommendation to possess and cultivate cannabis for personal medical use. In October 2015, Governor Brown signed the Medical Cannabis Regulation and Safety Act into law, which provided a regulatory framework around the longstanding, though unregulated, medical cannabis industry. In November 2016, voters approved Proposition 64, the Adult Use of Marijuana Act, with 57% of the vote, legalizing adult-use cannabis in the state for adults 21 years of age and older and created a licensing system for commercial cannabis business. On June 27, 2017, Governor Brown signed SB-94 into law. SB-94 combines California’s medicinal and adult-use regulatory framework into one licensing structure under the Medicinal and Adult-Use of Cannabis Regulation and Safety Act (“MAUCRSA”). Dispensaries began selling to customers 21 years of age and older in January 2018.

Pursuant to MAUCRSA, three state agencies are responsible for licensing and regulating each aspect of the industry: (i) the Bureau of Cannabis Control regulates retailers, distributors, testing labs, microbusinesses, and temporary cannabis events; (ii) the Manufactured Cannabis Safety Branch, a division of the California Department of Public Health, regulates manufacturers of cannabis-infused edibles for both medical and nonmedical use; and (iii) the California Department of Food and Agriculture regulates cultivators of medicinal and adult-use cannabis.

Permitted products include oil-based formulations, edibles, and flower. Wholesaling and home delivery are permitted.

As of March 31, 2021, the Company operated two processing facilities, one in Davis, CA, and one in Sacramento, CA, and one cultivation facility in the Salinas Valley. Through the acquisition of Cura Partners, Inc., is the Company also owns the Select brand, a leading wholesale brand in California, among other states.

Colorado Operations

Colorado’s medical cannabis program was introduced in November 2000, when 54% of voters approved “Amendment 20”. Colorado became the first state in the nation to legalize adult-use cannabis when 55% of voters approved “Amendment 64” in November 2012. The first adult-use dispensaries opened in January 2014.

The market is divided into three main classes of licenses: cultivation, processing, and retail. Extracted oils, edibles, and flower products are permitted.

As of March 31, 2021, the Company operated one processing facility, located in Denver, CO. Through the acquisition of Cura Partners, Inc., the Company also owns the Select brand, a wholesale brand in Colorado, among other states.

Connecticut Operations

Connecticut’s medical cannabis program was introduced in May 2012 when the General Assembly passed legislation PA 12-55 ‘An Act Concerning the Palliative Use of Marijuana.’ The first dispensaries sold medical cannabis to patients in September 2014.

The program is divided into two classes of licenses: producers and dispensaries. Producers cultivate and process medicinal cannabis and wholesale to dispensaries. Dispensaries sell cannabis directly to patients and must have a pharmacist on staff. The program is regulated by the Connecticut Department of Consumer Protection (“CTDCP”). As of March 31, 2021, the CTDCP issued 18 dispensary licenses and four producer licenses, all of which are operational.

Extracted oils and flower products are permitted. Edibles are permitted, with the exception of confectionaries.

As of March 31, 2021, the Company operated four dispensaries across the state: three of which were acquired from Arrow Alternative Care, and one of which was obtained through the acquisition of Grassroots. Curaleaf also holds one of the four approved producer licenses in the state and operates out of a 60,000 square foot facility, which includes cultivation space, extraction, purification facilities, and a commercial kitchen for the production of edibles. In June 2020, the Company launched the first sales of the Select brand in Connecticut.

Florida Operations

Florida’s medical cannabis program was introduced in June 2014 when the Florida Legislature passed the Compassionate Medical Cannabis Act of 2014 (“CMCA”). The CMCA permitted low-THC cannabis oils to be dispensed and purchased by patients suffering from cancer and epilepsy. Under this program, six organizations called Medical Marijuana Treatment Centers (“MMTCs”) were licensed to dispense low-THC cannabis to patients.

In November 2016, Florida voters approved the Amendment 2 “Expand Medical Marijuana” ballot measure with 71% of the vote. This constitutional amendment expanded the program by legalizing cannabis oils for individuals with specific debilitating diseases or conditions, including chronic pain, as determined by a licensed state physician. In June 2018, Governor Scott signed Senate Bill 8-A: “Medical Use of Marijuana,” which outlined how patients can qualify and receive medical cannabis under the state’s constitutional amendment.

A single MMTC license allows for the cultivation, processing, and dispensing of cannabis products. As of April 1, 2020, each MMTC is permitted to open an unlimited number of dispensaries across the state, so long as the MMTC receives the necessary local approvals. As of April 9, 2021, there were 527,432 qualified patients with an approved medical ID card, 22 approved MMTCs and 328 approved retail dispensing locations.

Permitted products originally included only oil-based formulations, though flower and edibles are now also permitted. Smokable flower was approved in March 2019, and edibles were approved in August 2020.

Each MMTC is required to cultivate and process all medical cannabis products they dispense. Wholesale transactions are permitted on a case by case basis to alleviate shortages. Home delivery is permitted.

The Company holds one of the original six vertically-integrated medical cannabis licenses issued in the state. In October 2016, Curaleaf’s Florida business became the third license holder to begin sales to patients. As of March 31, 2021, Curaleaf operated a 24,000 square foot indoor growing facility and a 130,000 square foot hoophouse facility in Homestead, a 278,000 square foot greenhouse growing facility, and a 50,000 square foot indoor growing facility in Mt. Dora, and 37 dispensaries, with plans to open additional dispensaries in 2021. In August 2020, the Company launched the first sales of the Select brand in Florida. As of April 14, 2021, the Company opened four new Florida dispensaries and now operates 37 dispensaries across Florida.

Illinois Operations

In 2013, the Illinois General Assembly passed the Compassionate Use of Medical Cannabis Pilot Program Act (410 ILCS 130), Public Act 98-0122 (the “Illinois Act”), which was signed into law by the Governor on August 1, 2013 and went into effect on January 1, 2014. The Illinois Act allows an individual who is diagnosed with a debilitating condition to register with the state to obtain cannabis for medical use. The program currently allows 60 Dispensing Organizations (each, a “DO”) and 22 cultivation centers state-wide; all separately registered in a non-vertically-integrated model. A large variety of medical cannabis products are allowed in the state, including the smoking of cannabis flower. Overall, the program is administered by the Illinois Department of Public Health, the Illinois Department of Financial and Professional Regulations (the “IDFPR”) is the regulatory agency overseeing the medical marijuana program for DOs and the Illinois Department of Agriculture is the regulatory agency overseeing the medical marijuana program for cultivation centers.

In June 2019, Illinois governor signed legislation legalizing marijuana for recreational use. The Cannabis Regulation and Tax Act, legalizing and regulating marijuana for recreational use, went into effect on June 25, 2019, however recreational sales of marijuana began in the state on January 1, 2020. The adult use program allowed existing medical marijuana license holders to apply for Early Approval Adult Use Dispensing Organization (“EAAUDO”) licenses to be able to sell adult use product at existing medical marijuana dispensaries (known as “co-located” or “same site” dispensaries) on January 1, 2020, and to have the privilege of opening a secondary adult use only retail site for every medical marijuana dispensary location the DO already had in its portfolio. All EAAUDO license holders were also required to commit to the state’s groundbreaking Social Equity program either through a financial contribution, grant agreement, donation, incubation program, or sponsorship program. IDFPR was authorized to issue an additional 75 Adult Use Dispensing Organization (“AUDO”) licenses in 2020 but, as of March 31, 2021, those licenses have yet to be issued and it is uncertain when they will be issued. The IDFPR is also authorized to issue an additional 110 AUDO licenses by December 21, 2021. No single person or entity can have direct or indirect financial interest in more than 10 adult use dispensary licenses.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in Illinois, among other states. Through the acquisition, the Company owns a cultivation and processing facility in Illinois and, after receiving regulatory approval in April 2021, 5 dispensary licenses. As of March 31, 2021, 9 dispensaries operated under these licenses, which permit up to 10 dispensaries to be operated. The Company opened the 10^th^ dispensary location in April 2021. The Company also has certain rights to the proceeds from the sale of three Illinois medical dispensary licenses and six adult use dispensary licenses owned by former affiliates of Grassroots as described below. A definitive agreement has been signed for the sale of these licenses.

The Company also has certain rights to the proceeds from the sale of three Illinois medical dispensary licenses and six adult use dispensary licenses owned by former affiliates of Grassroots (the “Illinois Assets”). Currently, three medical dispensaries and two adult use dispensaries operate under these licenses. On April 1, 2021, the owners of these licenses signed definitive agreements to sell the Illinois assets to Parallel (formerly Surterra Wellness, Inc.). The transaction is subject to regulatory approval. Under the terms of the transaction, the purchase price for the Illinois asset consists of a $100,000 base price to be paid $60,000 in cash and $40,000 in Parallel stock, plus earnouts of up to an additional $55,000 payable through 2023. Pursuant to the Grassroots Merger Agreement, the proceeds net of expenses and taxes from the sale of the Illinois Assets shall be shared by the Company with the former owners of Grassroots as follows: (i) the first $25,000 of net proceeds shall be retained by the Company; (ii) the next $25,000 of net proceeds shall be remitted to the former Grassroots owners; and (iii) the Company shall keep 50% of the net proceeds above $50,0000, and the other 50% shall be remitted to the Grassroots owners. The Company has received from Parallel a $10,000 deposit, which is refundable under limited circumstances and will be applied to the base purchase price for the Illinois Assets at closing. Additionally, the Company has been marketing certain rights and interests in certain real estate assets associated with the Grassroots Acquisition.

Kentucky Operations

Kentucky’s hemp program was introduced in 2013 when the Kentucky state legislature passed Senate Bill 50, “An Act Relating to Industrial Hemp.” The program is regulated by the Kentucky Department of Agriculture. The market is divided into two main classes of licenses: growers, and processor/handlers. As of December 31 2020, there were 970 licensed growers, and 178 licensed processor/handlers.

Curaleaf holds a hemp processor/handler license in Kentucky and leases a 74,000 square foot facility in Lexington. This industrial scale manufacturing facility distributes hemp-derived products, mainly cannabinoids such as CBD and CBG, at wholesale quantities to certain Curaleaf licensed medical cannabis facilities in other states, as permitted by applicable federal and state regulations. In addition, this facility serves as a centralized hub for key equipment and supplies to support Curaleaf’s national operations. During the early onset of the Covid-19 pandemic, the facility also produced and distributed hand sanitizer to Curaleaf facilities across the U.S.

Maine Operations

Maine’s medical cannabis program was introduced in November 1999 when voters approved Question 2, the “Maine Medical Marijuana for Specific Illnesses Initiative,” with 61% of the vote. This program permitted qualified patients, or their designated caregiver, to grow and consume cannabis, but did not create a licensing structure whereby entities could apply to cultivate, process, and/or dispense cannabis.

In November 2009, Maine voters expanded the medical program by passing Question 5, the “Maine Medical Marijuana Initiative,” with 59% of the vote, which established a licensing structure in which eight vertically-integrated, not-for-profit dispensaries could sell cannabis directly to registered patients. The first dispensary opened to patients in October 2010.

Medical dispensaries are vertically-integrated and cultivate, process, and dispense products to patients from a maximum of one dispensary per license. Wholesaling is only permitted in emergency situations. Extracted oils, edibles, and flower products are permitted. In July 2018, the Maine legislature approved a bill that removed the requirement that medical cannabis license holders operate as not-for-profit entities, and also formally approved registered caregivers to open medical dispensary storefronts. As of March 31, 2021, there were eight vertically-integrated medical dispensaries in Maine, and an undetermined number of caregiver storefronts.

In November 2016, Maine voters approved Question 1, the “Maine Marijuana Legalization Measure,” which legalized adult-use cannabis sales in the state. In May 2018, the Maine legislature approved a bill to formally approve the cannabis legalization legislation and lay the groundwork for the adult-use market, including the establishment of separate classes of adult-use licenses (dispensaries, cultivators, processors) with no caps in place on the number of licenses that can be issued. In April 2019, the Department of Administrative and Financial Services, which oversees both the medical and adult-use programs, finalized the rules and regulations for the adult-use program, which were signed by the Governor in June 2019. The first adult-use sales were made to customers in October 2020.

As of March 31, 2021, the Company managed two of the eight integrated medical cannabis licensees in the state: Maine Organic Therapy (“MEOT”) and Remedy Compassion Center (“RCC”). MEOT operates a more than 91,000 square foot indoor grow facility and a dispensary. RCC operates a small grow facility and a dispensary and obtains most of its product wholesale via MEOT. In July 2020, the Company launched the first sales of the Select brand in Maine. In February 2021, the Company opened a Curaleaf-branded dispensary in Bangor, ME, pursuant to a management service agreement with an affiliated entity. The Company plans to open branded adult-use locations in Maine and has received local approval for two adult-use dispensaries while the state adult-use licenses are pending regulatory approval.

Maryland Operations

Maryland’s medical cannabis program was introduced in May 2013 when then Governor O’Malley signed House Bill 1101 into law. The Maryland Medical Cannabis Commission (“MMCC”) issued preliminary licenses to 102 dispensaries, 15 cultivators, and 15 processors in 2016. The first dispensaries opened to patients in December 2018.

The market is divided into three classes of licenses: dispensaries, cultivators, and processors. Wholesaling is permitted. Dispensary locations are tied to the Senate District in which they were awarded, with the exception of dispensary licenses that were awarded to applicants who also were awarded a cultivation license – these dispensaries can be located at the discretion of the license holder. One company may hold up to one cultivation license, one processing license, and up to four dispensary licenses. Permitted products include oil-based formulations and flower.

In April 2018, the Maryland House and Senate approved a bill, which was later signed by Governor Hogan, that expanded the license pool, allowing for a maximum of seven additional cultivation licenses, for a total of 22, and 13 additional processing licenses, for a total of 28. In October 2020, the MMCC issued 3 additional cultivation licenses and seven additional processing licenses. As of March 31, 2021, there were approximately 92 operational dispensaries, 17 operational cultivators, and 18 operational processors.

Curaleaf received one of 102 preliminary medical cannabis dispensary licenses in December 2016. The Company launched its dispensary in the first quarter of 2018, shortly after the market launched in December 2017. The Company also acquired a company holding a cannabis processing license, Curaleaf Maryland, Inc., which began operations in the first quarter of 2018.

In January 2019, the Company completed a convertible debt financing with the owners of a cultivation facility, a processing facility, and two dispensaries (the “HMS/MI Businesses”). Concurrently with completion of the convertible debt financing, the Company entered into supply, offtake, branding, and services agreements with the HMS/MI Businesses. As described below, the Company reached an agreement in November 2020 to sell the HMS Assets to a third party; this transaction closed May 1, 2021.

In January 2019, the Company entered into an option purchase agreement to purchase all of Town Center Wellness, LLC, subject to regulatory approval, which operates the Elevate Takoma dispensary located in Takoma Park, Maryland, which was subsequently rebranded as Curaleaf Takoma. The Company had been marketing the assets of Town Center Wellness, LLC for sale. In November 2020, the Company signed a definitive agreement to sell 100% of Town Center Wellness, LLC to PharmaCann LLC for a total consideration of $2,000, all payable in cash upon closing. The transaction closed up receipt of regulatory approval by the Maryland Medical Cannabis Commission on May 1, 2021. This sale, along with the HMS Assets sale described below, enable the Company to finalize the acquisition of the Maryland dispensary, cultivation and processing assets previously owned by Grassroots, which were previously restricted by the legal limits on license ownership in the state of Maryland.

In May 2019, Maryland passed legislation allowing for the sale of edibles in the market, and the Company has constructed a processing and manufacturing facility at Curaleaf’s Frederick facility in anticipation of the implementation of these rules.

In February 2020, the Company closed the acquisition of Cura Partners, Inc., owners of the Select brand. Select is a leading wholesale brand in Maryland, among other states.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator. In connection with the acquisition, the Company acquired the right to purchase entities affiliated with certain former Grassroots stockholders that own a cultivation and processing facility and a dispensary in Maryland and that manage another dispensary in Maryland. See “Recent Acquisitions” section of this MD&A.

In November 2020, the Company announced the signing of a definitive agreement to sell its rights to the assets of HMS Health, LLC and the cultivation and processing assets of HMS Processing, LLC (collectively, the “HMS Assets”) in Maryland to TerrAscend Corp. for a total consideration of $27,500. The HMS Assets sale includes the divestiture of operations of a 22,000 square foot co-located cultivation and processing facility in Frederick, MD. The transaction closed May 4, 2021 after receipt of regulatory approval by the Maryland Medical Cannabis Commission. After working capital adjustments, the total consideration of $24,899 includes $22,399 payable in cash upon closing as well as a $2,500 interest bearing note due and payable to the Company in April 2022. As a result, the HMS Assets are classified as assets held for sale in the financial statements to which this MD&A relates.

Furthermore, the Company had been marketing the assets of Curaleaf Maryland, Inc., its licensed processing business in Maryland, with the intent to divest Curaleaf from these assets to ensure compliance with Maryland regulations. The Company signed definitive agreements to sell 100% of Curaleaf Maryland, Inc. in October 2020. In November 2020, the Company announced the closing of its divestiture of the assets of Curaleaf Maryland, Inc. for a total consideration of $4,000, including $1,000 in cash and $3,000 as an interest bearing note due and payable to Curaleaf in June 2023. Certain conditions triggering prepayment of this note have been met and the note was paid in full with interest in May 2021.

Massachusetts Operations

Massachusetts’ medical cannabis program was established by “An Act for the Humanitarian Medical Use of Marijuana” in November 2012 when voters passed Ballot Question 3 “Massachusetts Medical Marijuana Initiative” with 63% of the vote. The first dispensary opened in June 2015.

In November 2016, Massachusetts voters legalized adult-use cannabis by passing Ballot Question 4 “Legalize Marijuana” with 54% of the vote. In July 2017, Governor Baker signed legislation that laid the groundwork for the adult-use market. In March 2018, the Cannabis Control Commission (the “CCC”), now the regulatory body of both the medical and adult-use programs, was set up to regulate the adult-use market and approve the rules that will govern the industry. The first adult-use sale occurred in November 2018.

Each medical licensee must be vertically-integrated and may have up to three medical dispensaries. For adult-use, there are three separate classes of licenses—cultivation, processing, and dispensary—and vertical integration is permitted but not required. One company may own up to three adult-use dispensaries, up to three adult-use cultivation licenses, and up to three adult-use processing licenses. Adult-use cultivators are grouped into 11 tiers of production—ranging from 5,000 square feet of canopy to no larger than 100,000 square feet of canopy, and regulators will bump a licensee down to a lower tier if that licensee has not shown an ability to sell at least 70 percent of what it produces. As of March 31, 2021, there were approximately 118 adult-use dispensaries permitted to open across the state.

In both the medical and adult-use markets, extracted oils, edibles, and flower products are permitted. Wholesaling is also permitted.

The Company holds an integrated medical cannabis license and operates a 104,000 square foot indoor grow and processing facility in Webster, MA, a 53,000 square foot indoor grow and processing facility in Amesbury, MA, and 4 dispensaries; one licensed for medical and adult-use sales in Oxford, one licensed for medical sales in Hanover, one licensed for adult-use sales in Provincetown, and one licensed for adult-use sales in Ware.

In July 2020, the Company launched the first sales of the Select brand in Massachusetts.

In October 2020, the Company’s acquisition of Alternative Therapies Group (“ATG”), another licensed medical cannabis operator in Massachusetts, which operates the 53,000 square foot cultivation and processing facility in Amesbury, MA, was unanimously approved by the CCC. The transaction was completed in November 2020.

Michigan Operations

Michigan’s medical cannabis program was introduced in November 2008, when 63% of voters approved the “Michigan Compassionate Care Initiative.” In November 2018, 56% of voters approved the “Michigan Regulation and Taxation of Marijuana Act,” which legalized adult-use cannabis in the state. The first adult-use dispensaries opened in December 2019.

The market is divided into three main classes of licenses: cultivation, processing, and retail. Extracted oils, edibles, and flower products are permitted.

In February 2020, the Company completed the acquisition of Cura Partners, Inc., owners of the Select brand, a wholesale brand in Michigan, among other states.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in Michigan, among other states. As of March 31, 2021, Grassroots operated 4 dispensaries across Michigan.

Missouri Operations

Missouri’s medical cannabis program was introduced in November 2018 when 66% of voters approved Amendment 2, the “Medical Marijuana and Veteran Healthcare Services Initiative,” which legalized medical cannabis for patients with certain qualifying conditions. The first dispensary opened in October 2020.

The Missouri Department of Health and Senior Services (“MO DHSS”) is the regulatory agency that oversees the program. The market is divided into three main classes of licenses: cultivation, processing, and dispensary. The MO DHSS has awarded 60 cultivation, 86 processing, and 192 dispensary licenses. As of March 31, 2021, there were approximately 40 dispensaries approved to operate. A large variety of medical cannabis products are allowed in the state, including smokable cannabis flower.

The Company has reached a preliminary agreement with the holder of an Infused Product Manufacturing license to operate a roughly 6,700 square foot processing and manufacturing facility located in the Kansas City, Missouri region. This facility will supply the Missouri market with products under the Select brand. The licensee is expected to commence operations at the end of May 2021.

Nevada Operations

Nevada’s medical cannabis program was introduced in June 2013 when the legislature passed SB374, legalizing the medicinal use of cannabis for certified patients. The first dispensaries opened to patients in August 2015. In November 2016, Nevada voters approved Question 2 with 55% of the vote, legalizing adult-use cannabis in the state. Adult-use sales launched on July 1, 2018.

The market is divided into five classes of licenses: dispensaries, cultivators, distribution, product manufacturing, and testing. Licenses are tied to the locality in which they were awarded. As of March 31, 2021, there were approximately 81 operational dispensaries, 152 operational cultivators, and 108 operational processors. Extracted oils, edibles, and flower products are permitted. Wholesaling is permitted. In 2018, the Company agreed to acquire a 10,000 square foot licensed indoor cannabis cultivation facility and a licensed dispensary, both operating in Las Vegas, NV. Both businesses are licensed for both medical and adult-use sales. Each of these transactions is subject to regulatory approval; conditional approval was granted in April 2021 and final approval is expected in May 2021. The Company also operates an additional Las Vegas dispensary, a dispensary in Ely, NV, and a 269,000 square foot cultivation facility in Amargosa Valley, NV.

In February 2020, the Company completed the acquisition of Cura Partners, Inc., a leading wholesale brand in Nevada, among other states.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in Nevada, among other states. The closing of the Grassroots transaction provides the Company with the rights to acquire seven additional cannabis dispensary licenses in Nevada. The Company has not realized these rights at this time.

New Jersey Operations

New Jersey’s medical cannabis program was introduced in January 2010 when then Governor Corzine signed the New Jersey Compassionate Use Medical Marijuana Act (“NJCUMMA”) into law. The NJCUMMA legalized medical cannabis for patients with certain qualifying conditions. The first sales were made to patients in December 2012.

The medical program is regulated by the New Jersey Department of Health (“NJDOH”), who has issued licenses to 12 Alternative Treatment Centers (“ATCs”). Each ATC is vertically integrated and permitted to open up to three dispensaries each. As of March 31, 2021, there were 10 operational ATCs dispensing medical cannabis to patients from a total of 13 dispensaries. In 2019, the NJDOH accepted applications for an additional 4 vertically integrated licenses, as well as 5 cultivation licenses and 15 dispensary licenses. These licenses are expected to be issued in 2021.

Extracted oils and flower products are permitted. Governor Murphy’s Executive Order 6 Report, issued in March 2018, recommended adding edibles as a permitted product, with rulemaking for edibles the responsibility of the state legislature. As of the date hereof the legislature has yet to develop rules for edibles, and a timeline for edibles rulemaking is yet to be determined. Wholesaling is permitted with approval from the NJDOH.

In November 2020, New Jersey voters approved Public Question 1 Marijuana Legalization Amendment with 67% of the vote, legalizing the cultivation, processing and sale of adult-use marijuana in the state. The Cannabis Regulatory Commission will be responsible for regulating the cultivation, processing and sale of adult-use marijuana. In February 2021, the New Jersey Legislature passed, and the Governor signed, an adult-use implementation bill which lays the groundwork for adult-use sales. Governing rule and regulations are expected to follow.

The Company holds one of the original six ATC medical licenses in New Jersey and operates a vertically-integrated campus in Bellmawr, NJ, comprised of 42,150 square feet of cultivation space and an adjacent 12,000 foot facility, of which 4,000 square feet is utilized for dispensary operations, with the remainder used for ancillary operations such as packaging and storage. The Company also operates a 111,000 square foot cultivation facility in the township of Winslow, NJ. Since the start of sales in October 2015, Curaleaf NJ Inc. (“Curaleaf NJ”) has established itself as a market leader, dispensing 36% of all product sold in the state in 2018.The Company plans to open two more dispensary locations in the state.

New York Operations

New York’s medical cannabis program was introduced in July 2014 when Governor Cuomo signed the Compassionate Care Act, which legalized cannabis oils for patients with certain qualifying conditions. The first sales were made to patients in January 2016.

The New York State Department of Health (“NYSDOH”) regulates the program. The NYSDOH issued licenses to 10 companies, called Registered Organizations (each, a “RO”). A single RO license allows for the cultivation, processing, and dispensing of medical cannabis products. Each RO is permitted to open four dispensaries in NYSDOH designated regions throughout the state and one cultivation/processing facility. The adult-use legalization bill, The Marijuana Revenue and Taxation Act (“MRTA”), signed in March of 2021 enables each RO to add adult use cultivation and processing to their existing facilities and also add dispensing of adult-use products from up to three of its existing medical dispensaries. Each RO will still be required to cultivate and process all medical cannabis products they dispense; however, wholesale transactions are permitted with approval from the state.

Permitted products include oil-based formulations (vaporizer cartridges, tinctures, capsules), and ground-flower sold in tamper-proof vessels. Home delivery is also permitted. Under MRTA, the sale of whole flower for adult use will be permitted.

The Company was awarded a vertically-integrated RO license in May 2018 with the right to open 4 dispensaries. The Company is only one of 10 license holders in the state. Curaleaf currently operates 4 dispensaries located in Newburgh, Plattsburgh, Queens, and Nassau County, as well as a 72,000 square foot cultivation and manufacturing facility in Ravena, New York. In September 2020, the Company launched the first sales of the Select brand in New York.

North Dakota Operations

North Dakota’s medical cannabis program was introduced in November 2016 when 64% of voters approved Measure 5, “Medical Marijuana,” which legalized medical cannabis for patients with certain qualifying conditions. The first sales were made to patients in March 2019.

The North Dakota Department of Health (“ND DOH”) is the regulatory agency that oversees the program. The market is divided into two main classes of licenses: cultivation/processing and dispensary. The ND DOH has awarded 2 cultivation/processing licenses and 8 dispensary licenses. As of March 31, 2021, all 8 dispensaries were operational. A large variety of medical cannabis products are allowed in the state, including smokable flower.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in North Dakota, among other states, with four operational dispensaries and one cultivation and processing facility in North Dakota. The cultivation and processing facility, located in Fargo, is 33,000 square feet and is also operational.

Ohio Operations

Ohio’s medical cannabis program was introduced in June 2016 when House Bill 523 was signed into law. The first dispensaries opened in January 2019.

The Ohio Department of Commerce is responsible for regulating cultivators and processors. The Ohio State Board of Pharmacy is responsible for regulating dispensaries and the patient and caregiver registry. The Ohio State Medical Board is responsible for certifying physicians and reviewing petitions to add qualifying medical conditions.

The market is divided into four main classes of licenses: dispensary, processing, “Level I” cultivation, which permits up to 25,000 square feet of canopy, and “Level II” cultivation, which permits up to 3,000 square feet of canopy. One company is permitted to own up to one cultivator, one processor, and up to five dispensaries. As of March 31, 2021, the state has issued 57 dispensary licenses, 48 processing licenses, 19 Level I cultivation licenses, and 14 Level II cultivation licenses.

Extracted oils, edibles, and non-combustible flower products are permitted.

In May 2019, the Company entered into an agreement granting it an option to acquire Ohio Grow Therapies (“OGT”), a holder of one of the 19 Level 1 cultivation licenses and a processing license. OGT completed construction of a 32,000 square foot production facility in Johnstown, Ohio, and received its final licenses on July 1, 2020. The transfer of the OGT licenses and operations to the Company is pending regulatory approval. See “Proposed Transactions” section of this MD&A.

In October 2020, the Company launched the first sales of the Select brand in Ohio.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in Ohio, among other states, with rights to acquire one cultivation facility, one processing facility and two dispensaries in Ohio. The Company will own and operate the dispensaries upon receipt of regulatory approval. Due to license ownership limitations in Ohio, the Company will not exercise its rights to acquire the Ohio cultivation and processing facility, but will receive a portion of the proceeds from their sale by the current owners.

In April 2021, the current owners of these assets and the Company signed definitive agreements with Jushi OH, LLC pursuant to which the owners agreed to sell these assets to Jushi OH and the Company agreed to assign certain debt of the Ohio Assets to Jushi OH. Upon closing of the transaction, which is subject to regulatory approval by the Ohio Department of Commerce, the Company will receive $5,000 in proceeds from the transaction.

Oklahoma Operations

Oklahoma’s medical cannabis program was introduced in June 2018, when 57% of voters approved Oklahoma State Question 788, the “Medical Marijuana Legalization Initiative.” The first medical dispensaries opened in October 2018.

The market is divided into three main classes of licenses: cultivation, processing, and retail. Extracted oils, edibles, and flower products are permitted.

In May 2020, the Company announced the expansion of the Select brand to the Oklahoma medical cannabis market.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in Oklahoma, among other states. As of December 31, 2020, a Grassroots affiliated entity no longer operated any dispensaries in Oklahoma due to the saturation of the Oklahoma dispensary market, where over 2,000 dispensary licenses have been issued.

Oregon Operations

Oregon’s medical cannabis program was introduced in November 1998 when voters approved Measure 67, the Oregon Medical Marijuana Act.

In November 2014, voters approved Measure 91, the “Oregon Legalized Marijuana Initiative”, which legalized adult-use cannabis in the state. In October 2015, the first adult-use dispensaries opened.

The market is divided into six classes of licenses: dispensaries, cultivators, wholesalers, processors, laboratories and research. The Oregon Liquor Control Commission regulates the adult-use program, while the Oregon Health Authority regulates the medical program. Extracted oils, edibles, and flower products are permitted. Wholesaling and delivery are also permitted.

The Company operates one dispensary, one cultivation facility, and two processing facilities in Oregon. The dispensary, located in Portland, OR, opened in 2018. The cultivation center, located in The Dalles, OR, consists of a 20,000 square foot outdoor grow and an adjacent 17,000 square foot indoor growing facility.

In February 2020, the Company completed the acquisition of Cura Partners, Inc., owners of the leading Select wholesale brand in Oregon, among other states, with processing facilities in Portland, Oregon.

Pennsylvania Operations

Pennsylvania’s medical cannabis program was introduced in April 2016 when Governor Wolf signed into law SB 3 “Medical Marijuana Act”, which legalized medical cannabis oils for patients with certain qualifying conditions. The law also called for a class of licenses, called “Clinical Registrant” licenses, whereby accredited medical institutions in the state can partner with medical cannabis companies to conduct research. In February 2018, the first dispensaries opened to patients.

The Pennsylvania Department of Health (“PADOH”) regulates the program. There are two primary classes of licenses: licenses to grow/process cannabis products, and licenses to dispense cannabis products to patients. Grower/processors wholesale products to dispensaries. Each dispensary license permits the licensee to open up to three dispensaries in the region in which the license was awarded. A Clinical Registrant license is vertically integrated, permitting one grow/processing facility and up to six dispensaries. As of March 31, 2021, the PADOH has issued 50 dispensary licenses, 25 grow/processing licenses, and 8 Clinical Registrant licenses.

Oil-based formulations and flower are permitted, while edibles are currently prohibited.

The Company, through its Pennsylvania subsidiary, has partnered with an accredited medical school and, in February 2020, the Company’s Pennsylvania subsidiary was approved as a Clinical Registrant in Pennsylvania by the PADOH, Office of Medical Marijuana. Under this designation, the Company’s Pennsylvania subsidiary is entitled to open a cultivation and processing facility and up to six dispensaries, under the Commonwealth's medical marijuana research program. Pennsylvania’s medical cannabis program created this class of license to promote cooperation between industry and academia in the research of medical benefits of cannabis. In February 2021, the Company’s subsidiary opened its first dispensary under the Clinical Registrant license, located in Harrisburg, PA, and is in the process of building out a 50,000 square foot cultivation and processing facility in King of Prussia, PA, as part of the Clinical Registrant license. In April 2021, the Company’s subsidiary opened its second dispensary under the Clinical Registrant license, located in Philadelphia, PA.

In July 2020, the Company acquired Grassroots, a cannabis multi-state operator in Pennsylvania, among other states. Grassroots’ subsidiaries hold cultivation, processing and three dispensary licenses, and also held the right to acquire a fourth dispensary license, which was exercised in May 2021. Each dispensary license entitles the license holder to operate up to three dispensaries. The Pennsylvania subsidiaries, as of March 31, 2021, have an operating 75,000 square foot cultivation and processing facility and 10 dispensaries. In April 2021, two additional Curaleaf branded dispensaries were opened in the state.

Utah Operations

Utah’s medical cannabis program was introduced in November 2018, when 53% of voters approved “Proposition 2, Medical Marijuana Initiative”. In December 2018, the state legislature passed a bill that legalized medical cannabis, but implemented several changes to the Proposition 2 ballot measure, including removing home cultivation rights for patients and adding a requirement that dispensaries employ pharmacists.

The market is divided into three main classes of licenses: cultivation, processing, and retail. In July 2019, the Utah Department of Agriculture and Food (“UDAF”) awarded eight cultivation licenses. In January 2020, the Utah Department of Health awarded 14 retail licenses. The UDAF issues processing licenses on a rolling basis, with processing licenses awarded to 12 companies as of March 31, 2021. All medical cannabis form factors are permitted, as is wholesaling. The market began sales in March 2020.

In January 2020, the Company was awarded a medical cannabis retail license from the Utah Department of Health. The Company opened its dispensary in Lehi, Utah in August 2020. In January 2020, the Company announced that it received preliminary approval for a processing license by the UDAF. As of December 31, 2020, the Company completed the building of the processing facility. In February 2021, the Company launched the first sales of the Select brand in Utah.

Vermont Operations

Vermont’s medical cannabis program was introduced in May 2004 when Senate Bill 76 was approved by the Vermont House and Senate and became law without the governor’s signature. This legislation permitted state-qualified patients to grow and possess marijuana for medicinal purposes. This legislation was expanded in June 2007 when Senate Bill 7 was approved by the Vermont House and Senate and again became law without the governor’s signature. Senate Bill 7 expanded the list of qualifying conditions and increased the number of plants that patients may legally cultivate, among other things. In June 2011, the Vermont legislate passed Senate Bill 17, the “Vermont Marijuana for Symptom Relief Act,” which, among other things, authorized a state-regulated system for medical cannabis sales through licensed dispensaries. The first sales were made to patients in 2012.

The Vermont Department of Public Safety is the regulatory agency that oversees the medical program. The market consists of five vertically-integrated licenses. Each license permits the owner to operate a grow/processing facility and up to two dispensaries. As of December 31, 2020, there were 7 operational dispensaries. A large variety of medical cannabis products are allowed in the state, including smokable cannabis flower.

In January 2018, Vermont became the first state to legalize cannabis via the legislature when Governor Scott signed H. 511, which legalized possession of up to one ounce of cannabis, among other things, though did not create a state-regulated system for adult-use sales. In October 2020, Governor Scott announced that he would allow legislation to regulate and tax cannabis sales to become law without his signature, with adult-use sales expected to begin in late 2022.

In July 2020, the Company acquired Grassroots, which operates two dispensaries and one cultivation and processing facility in Vermont.

Components of Our Results of Operations

Revenue

Retail and Wholesale Revenue

The Company derives its retail and wholesale revenue in states in which it is licensed to cultivate, process, distribute, and sell cannabis. The Company sells directly to customers at its retail stores and sells wholesale to other dispensaries or processors not owned by the Company. For the three months ended March 31, 2021 and 2020, our wholesale revenue represented approximately 28% and 27% of total retail and wholesale revenue, respectively.

Management Fee Income

Management fee income represents revenue related to management services agreements pursuant to which the Company provides professional services, including cultivation, processing, retail know-how, back office administration, intellectual property licensing, real estate leasing services, and lending facilities to medical and adult-use cannabis licensees. The Company recognizes revenue from these consulting services on a straight-line basis over the term of third-party consulting agreements as services are provided.

Cost of Goods Sold

Cost of goods sold are derived from costs related to the cultivation and production of cannabis and from wholesale purchases made from other licensed producers operating within state markets in which the Company operates. Cost of goods sold includes the costs directly attributable to the production of inventory and includes amounts incurred in the cultivation and manufacture of finished goods, such as flower, concentrates, and edibles. Direct and indirect costs include, but are not limited to material, labor, supplies, depreciation expense on production equipment, utilities, and facility costs associated with cultivation.

Change in Fair Value of Biological Assets

Biological assets are considered plants that are actively growing. In accordance with IAS 41 – Agriculture, biological assets are recorded at fair value, less costs to sell, at the time of harvest, which are transferred to inventory. The amount transferred becomes the carrying value of the inventory on a go-forward basis. When the inventory is sold, the fair value is relieved from inventory and the amount is expensed to the cost of goods sold. The cost of goods sold also includes the product cost and costs related to products acquired from other suppliers.

Gross Profit

Gross profit is revenue less cost of goods sold. During the three months ended March 31, 2021 and 2020, the Company did not operate at full capacity and the Company expects gross profit to increase over the foreseeable future as it continues to invest in its current operations.

Operating Expenses

Salaries and benefits include non-cost-of-goods sold labor for each retail location and corporate labor expenses. The Company expects salaries and benefits to increase proportionally with store openings in the foreseeable future, but these expenses are expected to level off as operations are scaled in each market.

Sales and marketing expenses consist of selling costs to support the Company’s retail stores, including branding and marketing expenses and product development expenses. The Company expects selling costs to increase proportionally with each retail store opening.

Professional fees consist of accounting, legal, and acquisition related expenses. The Company expects these fees to increase as expansion continues and subsequent acquisitions occur.

Other general and administrative expenses consist of travel, general office supplies and monthly services, facilities and occupancy, insurance, director fees, and new business development expenses.

Other Income (Expense)

Interest income

The Company has notes receivable with various parties that earn interest income at rates ranging from 2% to 13%.

Interest expense

Interest expense consists of interest on outstanding borrowings under various promissory note and credit facility agreements as well as amortization of debt discounts.

Other income (expense)

Other income consists of gains related to the non-substantial modification of debt discount and investments for contingent considerations deemed no longer payable, offset by the gains and losses on the disposal of assets and liabilities and impairment on an intangible asset.

Income taxes

As the Company operates in the state-legal cannabis industry, the Company is subject to Section 280E of the Internal Revenue Code which prohibits businesses engaged in the trafficking of controlled substances (within the meaning of Schedule I and II of the CSA) from deducting normal business expenses associated with the sale of cannabis, such as payroll and rent, from gross income (revenue less cost of goods sold). Section 280E, therefore, has a significant impact on the retail side of cannabis, but a lesser impact on cultivation and manufacturing operations. Section 280E was originally intended to penalize criminal market operators, but because cannabis remains a Schedule I controlled substance for U.S. Federal purposes, the Internal Revenue Service (“IRS”) has subsequently applied Section 280E to state-legal cannabis businesses. The effective tax rate on a cannabis business depends on how large its ratio of non-deductible expenses is to its total revenues. In the states that the Company operates in that align their tax codes with Section 280E, it is also unable to deduct normal business expenses for state tax purposes. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable and a higher effective tax rate than most industries.

SELECTED FINANCIAL INFORMATION

The Company reports results of operations of its affiliates from the date that control commences. Control exists when the Company has the power, directly and indirectly, to govern the financial and operating policies of an entity and is exposed to the variable returns from its activities. The following selected financial information includes only the results of operations after the Company established control of its affiliates. Accordingly, the information included below may not be representative of the results of operations if such affiliates had included their results of operations for the entire reporting period.

The following table sets forth selected financial information for the periods indicated that was derived from the Company’s condensed interim consolidated financial statements and the respective accompanying notes prepared in accordance with IFRS. The selected consolidated financial information set out below may not be indicative of the Company’s future performance:

	Three months ended
	March 31,			December 31,			March 31,
	2021			2020			2020
Revenue	$	260,320		$	230,253		$	96,496
Cost of goods sold		131,853			119,658			44,013
Gross profit before impact of biological assets		128,467			110,595			52,483
Net change in fair value of biological assets		12,347			14,867			15,556
Gross profit		140,814			125,462			68,039
Operating expenses		107,109			104,835			63,046
Other income (expense), net		(20,208	)		(17,893	)		(7,196	)
Net loss		(17,211	)		(35,109	)		(15,452	)
Loss per share attributable to Curaleaf Holdings, Inc. - basic and diluted	$	(0.03	)	$	(0.05	)	$	(0.03	)
	March 31,		December 31,		March 31,
---	---	---	---	---	---	---
	2021		2020		2020
Total assets	$	2,681,368	$	2,386,591	$	1,296,753
Long-term debt		335,320		285,001		272,015
Long-term lease liabilities		270,948		270,495		87,147

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDEDMARCH 31, 2021 AND MARCH 31, 2020 AND THE THREE MONTHS ENDED DECEMBER 31, 2020

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020 and the three months ended December 31, 2020:

	Three<br> months ended
	Q1 '21			Q4 '20			Q1 '21 vs		Q1 '21 vs			Q1 '20			Q1 '21 vs		Q1 '21 vs
	March 31,			December 31,			Q4 '20		Q4 '20			March 31,			Q1 '20		Q1 '20
	2021			2020			Change		% Change			2020			Change		% Change
Revenues:
Retail<br> revenue	$	187,677		$	164,932					14	%	$	56,633					231	%
Wholesale<br> revenue		72,206			64,351					12	%		20,422					254	%
Management<br> fee income		437			970			)		(55	)%		19,441			)		(98	)%
Total revenues		260,320			230,253					13	%		96,496					170	%
Cost of<br> goods sold		131,853			119,658					10	%		44,013					200	%
Gross profit before impact of<br> biological assets		128,467			110,595					16	%		52,483					145	%
Realized fair value amounts<br> included in inventory sold		(68,914	)		(57,265	)		)		20	%		(21,191	)		)		225	%
Unrealized<br> fair value gain on growth of biological assets		81,261			72,132					13	%		36,747					121	%
Gross profit		140,814			125,462					12	%		68,039					107	%
Operating<br> expenses		107,109			104,835					2	%		63,046					70	%
Income from operations		33,705			20,627					63	%		4,993					575	%
Other expense,<br> net		(20,208	)		(17,893	)		)		13	%		(7,196	)		)		181	%
Income (Loss) before provision<br> for income taxes		13,497			2,734					394	%		(2,203	)				713	%
Income<br> tax expense		(30,708	)		(37,843	)				(19	)%		(13,249	)		)		132	%
Net loss		(17,211	)		(35,109	)				(51	)%		(15,452	)		)		11	%
Less:<br> Net income (loss) attributable to redeemable non-controlling interest		—			165			)		(100	)%		(363	)				(100	)%
Net loss<br> attributable to Curaleaf, Holdings Inc.	$	(17,211	)	$	(35,274	)				51	%	$	(15,089	)		)		(14	)%

All values are in US Dollars.

	Three months ended
	Q1 '21			Q4 '20			Q1 '20
	March 31,			December 31,			March 31,
	2021			2020			2020
Retail revenue	$	187,677		$	164,932		$	56,633
Wholesale revenue		72,206			64,351			20,422
Management fee income		437			970			19,441
Total revenues		260,320			230,253			96,496
Cost of goods sold		131,853			119,658			44,013
Gross profit before impact of biological assets		128,467			110,595			52,483
Realized fair value amounts included in inventory sold		(68,914	)		(57,265	)		(21,191	)
Unrealized fair value gain on growth of biological assets		81,261			72,132			36,747
Gross profit	$	140,814		$	125,462		$	68,039
Gross margin		54	%		54	%		71	%
Gross profit before impact of management fee income and biological assets	$	128,030		$	109,625		$	33,042
Gross margin before impact of management fee income and biological assets		49	%		48	%		43	%
Gross profit before impact of management fee income and after net gain on biological assets	$	140,377		$	124,492		$	48,598
Gross margin before impact of management fee income and after net gain on biological assets		54	%		54	%		63	%

Comparison of the three months ended March 31, 2021 and March 31, 2020

Revenue

Revenue for the three months ended March 31, 2021 was $260,320, an increase of $163,824 or 170% compared to revenue of $96,496 for the three months ended March 31, 2020.

Retail and wholesale revenue for the three months ended March 31, 2021 was $259,883, an increase of $182,828 or 237% compared to $77,055 for the three months ended March 31, 2020. The increase in retail and wholesale revenue was primarily due to organic growth and new store openings in in Florida, Massachusetts, Arizona and New York, as well as the impact of the Grassroots, Curaleaf NJ, Arrow, and Maine Organic Therapy acquisitions. See the “General Development of the Business – Three year History” section of the Company’s annual information form for the year ended December 31, 2020 for additional details on these transactions. During the quarter ended March 31, 2021 there were no significant seasonality impacts on retail and wholesale revenue.

The decrease in management fee income of $19,004 is primarily due to the acquisition of Curaleaf NJ, the managed not-for-profit in New Jersey in July 2020 and ATG in November 2020, for which the Company previously provided management services.

Cost of Goods Sold & Change in Fair Value of BiologicalAssets

Cost of goods sold, excluding any adjustments to the fair value of biological assets, for the three months ended March 31, 2021 was $131,853, an increase of $87,840 or 200% compared to cost of goods sold for the three months ended March 31, 2020. The increase was primarily due to cultivation and processing costs directly related to the increase in cannabis revenue for the three months ended March 31, 2021 as described above.

Biological asset transformation for the three months ended March 31, 2021 was $12,347, a decrease of $3,209 or 21% compared to $15,556 for the three months ended March 31, 2020. The decrease was primarily due to expanded cultivation capacity in New York, Connecticut, and Massachusetts, and the corresponding increase in the unrealized fair value gain on the growth of biological assets offset by the amounts realized and included in cost of goods sold.

Gross Profit

Gross profit for the three months ended March 31, 2021 was $140,814, or 54%, compared to $68,039, or 71%, for the three months ended March 31, 2020.

Gross profit before management fee income and biological asset adjustments for the three months ended March 31, 2021 was $128,030 compared to $33,042 for the three months ended March 31, 2020. Gross margin for the three months ended March 31, 2021 was 49% compared to 43% for the three months ended March 31, 2020. The increase was primarily due to the increased revenue as mentioned above and increased efficiencies in the Company’s cultivation and manufacturing processes.

Gross profit before management fee income and after net gains on biological assets for the three months ended March 31, 2021 was $140,377 or 54%, compared to $48,598, or 63%, for the three months ended March 31, 2020. The dollar increase in gross profit was primarily due to increased cultivation capacity in New York, Connecticut, and Massachusetts, while gross margin percentage declined due to the relative impact of net gain on biological assets.

Operating Expenses

	Three months ended						Q1 '21 vs		Q1 '21 vs
	March 31,		December 31,		March 31,		Q4 '20		Q1 '20
	2021		2021		2020		Change		Change
Salaries and benefits	$	41,067	$	33,469	$	18,769
Sales and marketing		10,489		9,057		3,608
Rent and occupancy		6,905		5,165		823
Travel		781		1,111		1,663		)		)
Professional fees		6,693		8,419		14,086		)		)
Office supplies and services		7,337		6,302		2,785
Other		6,818		4,766		4,123
Total selling, general, and administrative		80,090		68,289		45,857
Depreciation and amortization		22,112		20,432		12,688
Share-based compensation		4,907		16,114		4,501		)
Total operating expenses	$	107,109	$	104,835	$	63,046

All values are in US Dollars.

Total operating expenses represented 41% and 65% of total revenue for the three months ended March 31, 2021 and 2020, respectively. Total operating expenses for the three months ended March 31, 2021 were $107,109, an increase of $44,063 or 70%, compared to $63,046 for the three months ended March 31, 2020. The dollar increase in operating expenses was primarily attributable to an increase in salaries and benefits and rent, as well as sales and marketing expenses as the Company expanded the number of retail dispensaries from 54 at March 31, 2020 to 102 at March 31, 2021, which increased the level of support staff necessary to run the expanded operations.

Salaries and benefits totaled $41,067 for the three months ended March 31, 2021, compared to $18,769 for the three months ended March 31, 2020, which represents an increase of $22,298. The increase was primarily due to an increase in headcount at the corporate level as well as headcount from expanding operations in markets from organic growth as mentioned previously.

Sales and marketing expenses totaled $10,489 for the three months ended March 31, 2021, compared to $3,608 for the three months ended March 31, 2020, which represents an increase of $6,881. The increase was due primarily to marketing cost associated with the new Cannabis with Confidence campaign and the inclusion of Select and Grassroots after completion of these acquisitions.

Rent and Occupancy expenses totaled $6,905 for the three months ended March 31, 2021, compared $823 for the three months ended March 31, 2020. The increase of $6,082 was primarily attributable to the cost associated with an increased number of facilities and dispensaries through organic growth and acquisitions.

Travel expenses totaled $781 for the three months ended March 31, 2021, compared to $1,663 for the three months ended March 31, 2020, which represents a decrease of $882. The decrease was primarily the result of travel restrictions during the COVID-19 pandemic.

Professional fees totaled $6,693 for the three months ended March 31, 2021 compared to $14,086 for the three months ended March 31, 2020, which represents a decrease of $7,393. This decrease was primarily due to higher legal and accounting fees associated with the expansion into new operating markets and costs associated with multiple acquisitions in 2020 as compared to 2021. See “Recent Acquisitions” section of this MD&A and the “General Development of the Business” section of the Company’s annual information form for the year ended December 31, 2020 for additional details on the acquisitions recently completed.

Office supplies and services and other selling, general and administrative expenses were $14,155 for the three months ended March 31, 2021 compared to $6,908 for the three months March 31, 2020, which represents an increase of $7,247. This increase was primarily due to increased expenditures in office supplies and monthly services such as computer and software, telecommunication, and bank and license fees at the corporate level, Florida, Connecticut, and Oregon.

Depreciation and amortization was $22,112 for the three months ended March 31, 2021, compared to $12,688 for the three months ended March 31, 2020, which represents an increase of $9,424. The increase was primarily due to the Company’s expansion of retail operations as previously described.

Share-based compensation was $4,907 for the three months ended March 31, 2021, compared to $4,501 for the three months ended March 31, 2020 which represents an increase of $406. The increase was primarily due to the share-based cost associated with options and restricted stock units granted.

Other Expense

	Three Months Ended									Q1 '21 vs		Q1 '21 vs
	March 31,			December 31,			March 31,			Q4 '20		Q1 '20
	2021			2020			2020			Change		Change
Interest income	$	88		$	24		$	2,846					)
Interest expense		(12,151	)		(13,695	)		(10,492	)				)
Interest expense related to lease liabilities		(8,560	)		(11,695	)		(2,158	)				)
Other income (expense)		415			7,473			2,608			)		)
Total other expense, net	$	(20,208	)	$	(17,893	)	$	(7,196	)		)		)

All values are in US Dollars.

Total other expense for the three months ended March 31, 2021 was $20,208 compared to $7,196 for the three months ended March 31, 2020. The increase was primarily due to additional interest expense related to the $300,000 Senior Secured Term Loan Facility executed by the Company in January 2020, the $10,000 Promissory Note executed by the Company in October 2020, and the $50,000 Credit Facility entered into by the Company in January 2021. See the Company’s annual information form for the year ended December 31, 2020 for additional details.

Interest income for the three months ended March 31, 2021 and 2020 was $88 and $2,846, respectively. The decrease of $2,758 was primarily due to the conversion of the notes receivable related to Curaleaf NJ as part of the acquisition consideration.

Interest expense for the three months ended March 31, 2021 and 2020 was $12,151 and $10,492 respectively. The increase of $1,659 was primarily due to the debt as described above.

Interest expense related to lease liabilities for the three months ended March 31, 2021 and 2020 was $8,560 and $2,158, respectively. The increase relates to additional leases in 2021 in addition to inclusions from the Select, Grassroots and Curaleaf New Jersey acquisitions.

Provision for Income Taxes

The Company recorded total income tax expense of $30,708 for the three months ended March 31, 2021 compared to $13,249 for the three months ended March 31, 2020. The increase was the result of increased gross profit in certain of the Company’s subsidiaries that are subjected to the restrictions of Section 280E.

Net Loss

Net loss for the three months ended March 31, 2021 was $17,211 compared to a net loss of $15,452 for the three months ended March 31, 2020; representing an increase of $1,759, or 11%. The increase was primarily driven by increased tax expense as described above.

Comparison of the three months ended March 31, 2021 andDecember 31, 2020

Revenue

Revenue for the three months ended March 31, 2021 was $260,320, an increase of $30,067 or 13% compared to revenue of $230,253 for the three months ended December 31, 2020. The increase in revenue was driven by an increase of $22,745 in retail revenue.

Retail and wholesale revenue for the three months ended March 31, 2021 was $259,883, an increase of $30,600 or 13% compared to $229,283 for the three months ended December 31, 2020. The increase in retail and wholesale revenue was primarily due to organic growth in dispensaries.

Cost of Goods Sold & Change in FairValue of Biological Assets

Cost of goods sold, excluding any adjustments to the fair value of biological assets, for the three months ended March 31, 2021 was $131,853, an increase of $12,195 or 10% compared to cost of goods sold for the three months ended December 31, 2020. The increase was primarily due to cultivation and processing costs directly related to the increase in cannabis revenue for the three months ended March 31, 2021.

Biological asset transformation for the three months ended March 31, 2021 was $12,347 compared to $14,867 for the three months ended December 31, 2020.

Gross Profit

Gross profit for the three months ended March 31, 2021 was $140,814, compared to $125,462 for three months ended December 31, 2020. Gross margin for the three months ended March 31, 2021 and December 31, 2020 was 54% for both periods.

Gross profit before management fee income and biological asset adjustments for the three months ended March 31, 2021 was $128,030 compared to $109,625 for the three months ended December 31, 2020. Gross margin for the three months ended March 31, 2021 was 49% compared to 48% for the three months ended December 31, 2020. The gross profit increase was primarily due to the reasons discussed above under revenue.

Gross profit before management fee income and after net gains on biological assets for the three months ended March 31, 2021 was $140,377, compared to $124,492 for the three months ended December 31, 2020. Gross margin for the three months ended March 31, 2021 and December 31, 2020 was 54% for both periods. The increase in gross profit is primarily due to higher operating capacity of the Company’s cultivation and processing facilities.

Comparison of the three months ended March 31, 2021 andDecember 31, 2020

Operating Expenses

Total operating expenses for the three months ended March 31, 2021 were $107,109, an increase of $2,274 or 2%, compared to $104,835 for the three months ended December 31, 2020, which represents 41% and 46% of total revenue for the three months ended March 31, 2021 and December 31, 2020, respectively. The increase in total operating expenses was primarily attributable to an increase in salaries and benefits as well as an increase in professional fees.

Salaries and benefits totaled $41,067 for the three months ended March 31, 2021, compared to $33,469 for the three months ended December 31, 2020, which represents an increase of $7,598. The expense growth was primarily due to an increase in headcount at the corporate level as well as headcount additions to support operating market organic growth.

Sales and marketing expenses totaled $10,489 for the three months ended March 31, 2021, compared to $9,057 for the three months ended December 31, 2020, which represents an increase of $1,432. The increase was largely due to marketing cost associated with the new Cannabis with Confidence campaign and other branding, lobbying, and public relations costs due to the inclusion of Grassroots and Curaleaf NJ expenses after completion of the acquisitions in July 2020.

Rent and occupancy expenses totaled $6,905 for the three months ended March 31, 2021, compared to $5,165 for the three months ended December 31, 2020. The increase of $1,740 was primarily due to the increase of facility expenses associated with new dispensaries.

Travel expenses totaled $781 for the three months ended March 31, 2021, compared to $1,111 for the three months ended December 31, 2020, which represents a decrease of $330. COVID related travel restrictions have lessened, but travel is still limited in both periods.

Professional fees totaled $6,693 for the three months ended March 31, 2021 compared to $8,419 for the three months ended December 31, 2020, which represents a small decrease of $1,726.

Office supplies and services and other selling, general and administrative expenses totaled $14,155 for the three months ended March 31, 2021 compared to $11,068 for the three months ended December 31, 2020, which represents an increase of $3,087. This increase was primarily due to increased expenditures in office supplies and monthly services at the corporate level as well as to support expanding retail operations.

Depreciation and amortization totaled $22,112 for the three months ended March 31, 2021, compared to $20,432 for the three months ended December 31, 2020, which represents an increase of $1,680. The increase was primarily due to expense associated with additional retail operations.

Share-based compensation totaled $4,907 for the three months ended March 31, 2021, compared to $16,114 for the three months ended December 31, 2020 which represents a decrease of $11,207. The decrease was primarily due to the annual compensation cycle and the recognition of an $8,493 expense for the Select rollover share fair value adjustment in the three months ended December 31, 2020.

Comparison of the three months ended March 31, 2021 andDecember 31, 2020

Other Expense

Total other expense, net for the three months ended March 31, 2021 was $20,208 compared to $17,893 for the three months ended December 31, 2020.

Interest income for the three months ended March 31, 2021 and December 31, 2020 was $88 and $24, respectively. Interest expense, excluding interest related to lease liabilities, for the three months ended March 31, 2021 and December 31, 2020 was $12,151 and $13,695, respectively. The decrease of $1,544 was primarily due to the interest expense on the current contingent consideration liability entered into with Baldwin Holdings LLC, a related party. Interest expense related to lease liabilities was $8,560 and $11,695 for the three months ended March 31, 2021 and December 31, 2020, respectively.

Provision for Income Taxes

The Company recorded an income tax expense of $30,708 for the three months ended March 31, 2021, compared to an income tax expense of $37,843 for the three months ended December 31, 2020. The decrease was the result of decreased unrecognized deferred tax assets on current year losses.

Net Loss

Net loss for the three months ended March 31, 2021 was $17,211 compared to net loss of $35,109 for the three months ended December 31, 2020, which represents an increase of $17,898, or 51%. The increase was primarily driven by the increase in gross profit and decrease in income tax expense described above.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Capital Resources

The Company’s primary need for liquidity is to fund working capital requirements of its business, capital expenditures, acquisitions, debt service, and for general corporate purposes. To date the Company’s primary source of liquidity has been from funds generated by financing activities, including the private placement completed in connection with the Company’s Business Combination, and the senior secured debt financing completed in January 2020. The Company’s ability to fund operations, to make planned capital expenditures, to make planned acquisitions, to make scheduled debt payments, and to repay or refinance indebtedness depends on our future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business and other factors, some of which are beyond the Company’s control. See the “Financial Instruments and Financial Risk Management” and “Risk Factors” sections of this MD&A.

As of March 31, 2021, we had $314,591 of cash and working capital of $481,507 (current assets minus current liabilities), compared with $73,542 of cash and $197,736 of working capital as of December 31, 2020. The increase of $283,771 in our working capital was primarily due to a $241,049 increase in cash largely resulting from the Credit Facility entered into by the Company in January 2021.

The Company is generating cash from sales and is investing its capital reserves in current operations and new acquisitions that are expected to generate additional earnings in the long term.

The Company expects that its cash on hand and cash flows from operations, along with private and/or public financing, will be adequate to meet its capital requirements and operational needs for the next 12 months.

Recent Financing Transactions

The Company satisfied its obligations in full under the Financing Agreement – 2021 in connection with, and out of the proceeds of the Term Loan Facility.

Beginning with the fiscal quarter ending, December 31, 2020, the Term Loan Facility is subject to a mandatory amortization payment and a yield maintenance premium. The mandatory amortization payment is paid ratably to each lender based on the aggregate principal amount of all initial term loans times an applicable rate that is based on the leverage ratio.

For the quarter ended March 31, 2021, and all remaining quarters in 2021, the applicable percentage ranges from 0% to 6.00% depending on the leverage ratio. For all quarters in 2022, the applicable percentage ranges from 0% to 8.00% depending on the leverage ratio. For all quarters 2023 through September 30, 2023, the applicable percentage ranges from 0% to 9.00% depending on the leverage ratio.

Promissory Note – 2024

In October 2020, the Company entered into a Promissory Note with a principal sum of $10,000 (“Promissory Note – 2024”) with Baldwin Holdings, LLC, in which Joseph F. Lusardi, the Company’s Executive Vice Chairman, has a direct equity interest, to replace the contingent liability incurred in connection with the Curaleaf, MA acquisition which was deemed completed in March 2020. The issue price of the Promissory Note – 2024 is equal to 97.00% of the principal amount of the Promissory Note – 2024 and the remaining $300 is treated as Original Issue Discount.

The Promissory Note – 2024 carries a fixed interest rate per quarter equal to 3.25%. Interest is payable in arrears on the last day of each fiscal quarter, commencing December 31, 2020. The maturity date of the Promissory Note – 2024 is June 10, 2024.

The Promissory Note – 2024 contains other terms substantially similar to the Financing Agreement, except that the Promissory Note – 2024 is secured by separate collateral consisting solely of the equity of, and guarantees given by, the Company’s subsidiaries Curaleaf Hartford, Inc. and Curaleaf Stamford, Inc., which operate medical cannabis dispensaries in Hartford and Stamford, CT, respectively.

Secured Expansion Credit Facility

In January 2021, the Company entered into a $50,000 secured credit facility (the “Expansion Credit Facility”) with a syndicate of lenders which matures on January 10, 2024. The net proceeds from borrowings under the Expansion Credit Facility are expected to be used to fund capital expenditures to support future growth initiatives, potential acquisitions, and for general corporate purposes. Borrowings under the Expansion Credit Facility bear interest on any outstanding principal of 10.25% per annum. The facility was fully drawn at closing.

The Expansion Credit Facility may be pre-paid but is subject to a prepayment premium dependent on the loan year. Any prepayment made between January 8, 2022 and January 7, 2023, will incur a prepayment premium of 5.125%. Any prepayment made between January 8, 2023 and January 7, 2024, will incur a prepayment premium of 2.50%.

The Expansion Credit Facility is subject to a yield maintenance premium. The yield maintenance premium is paid based on amounts repaid. The premium is determined by the amount of interest that would have otherwise been payable on the prepayment less the aggregate amount of interest that would have been earned if the prepayment were to be reinvested from the date of prepayment until January 8, 2022 at the yield maintenance premium rate. The yield maintenance premium rate is the rate per annum equal to the rate in effect 3 days before the repayment date for U.S. Treasury instruments that have a maximum term of 3 months or less times 0.50%.

The Expansion Credit Facility contains other terms substantially similar to those of the Financing Agreement and the two facilities are secured by the same collateral.

Equity Offering

On January 12, 2021, the Company closed on an overnight marketed offering of 18,975,000 SVS at a price of C$16.70 per share in an underwritten public offering, for total gross proceeds of C$316,883, before deducting the underwriters’ fees and estimated offering expense. The Company intends to use the net proceeds of $240,569 from the overnight marketed offering for working capital and general corporate purposes.

Cash Flows

The following table summarizes the sources and uses of cash or each of the periods presented:

	Three months ended
	March 31,
	2021			2020
Net cash used in operating activities	$	(5,983	)	$	(1,635	)
Net cash used in investing activities		(31,429	)		(44,786	)
Net cash provided by financing activities		278,461			180,466
Net increase in cash and cash equivalents	$	241,049		$	134,045

Operating Activities

During the three months ended March 31, 2021, operating activities used $5,983 of cash, primarily resulting from a net loss of $17,211. Cash used by changes in operating assets and liabilities was primarily due to an increase in inventories and prepaid expenses, partially offset by an increase in income tax payable.

During the three months ended March 31, 2020, operating activities used $1,635 of cash, primarily resulting from a net loss of $15,452 and net non-cash gains including unrealized changes in fair value of biological assets of $5,597, partially offset by net cash provided by changes in our operating assets and liabilities of $8,220. Cash provided by changes in operating assets and liabilities was primarily due to increases in income tax payable, inventory and biological assets of $13,249, $18,724 and $7,691, respectively.

Investing Activities

During the three months ended March 31, 2021, investing activities used $31,429 of cash, consisting almost entirely of purchases of property, plant and equipment.

During the three months ended March 31, 2020, investing activities used $44,786 of cash, consisting of payments totaling $22,687 in purchases of property and equipment, $7,500 in connection with acquisitions and $14,599 in connection with the amounts advanced under notes receivable.

Financing Activities

During the three months ended March 31, 2021, financing activities provided $278,461 of cash, consisting primarily of $240,569 cash received in issuance of SVS and $49,930 in cash received from a financing agreement, partially offset by $13,071 of lease liability payments.

During the three months ended March 31, 2020, financing activities provided $180,466 of cash, consisting primarily of $185,723 cash received from new debt borrowing and option exercise of $721, offset by $3,470 of lease liability payments and minority buyouts of $2,508.

Contractual Obligations and Commitments

The Company leases space for its offices, cultivation centers, processing locations and retail dispensaries. Key future minimum payments related to these lease balances are presented below:

Period	Scheduled payments
2021 (remaining nine months)	$	38,015
2022		49,419
2023		47,804
2024		46,248
2025 and thereafter		388,568
Total undiscounted lease liability		570,054
Impact of discount		(279,994	)
Lease liability at March 31, 2021		290,060
Less current portion of lease liability		(16,382	)
Less long-term lease liabilities transferred to liabilities associated with assets held for sale		(2,730	)
Long-term portion of lease liability	$	270,948

Real estate leases typically extend for a period of 1 to 10 years. Some leases for office space include extension options exercisable up to one year before the end of the cancellable lease term. Typically, the option to renew the lease is for an additional period of 5 years after the end of the initial contract term and are at the option of the Company as the lessee. Lease payments are in substance fixed, and most real estate leases include annual escalation clauses with reference to an index or contractual rate.

The Company leases machinery and equipment but does not purchase or guarantee the value of leased assets. The Company considers these assets to be of low-value or short-term in nature and therefore no right-of-use assets and lease liabilities are recognized for these leases. Expenses recognized relating to short-term leases and leases of low value during the three months ended March 31, 2021 and 2020 were immaterial.

Amounts in the table below reflect the contractually required principal payments payable under promissory note agreements and other long-term debt. The various borrowings bear interest at rates between 2.5% and 16.5% per annum:

Period	Amount
2021 (remaining nine months)	$	4,193
2022		—
2023		300,000
2024		60,000
2025		—
2026 and thereafter		402
	$	364,595

SUMMARY OF QUARTERLY RESULTS

	Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019			Q3 2019			Q2 2019
Revenue	$	260,320		$	230,253		$	182,408		$	117,480		$	96,496		$	75,457		$	61,820		$	48,489
Cost of goods sold		131,853			119,658			90,633			56,844			44,013			35,695			27,079			22,469
Net change in fair value of biological assets		12,347			14,867			24,008			20,591			15,556			5,533			13,810			1,392
Gross profit		140,814			125,462			115,783			81,227			68,039			45,295			48,551			27,412
Operating expenses		107,109			104,835			99,412			59,536			63,046			52,563			47,108			39,713
Other expense, net		(20,208	)		(17,893	)		(6,557	)		(9,993	)		(7,196	)		(7,858	)		(3,598	)		(3,942	)
Net loss		(17,211	)		(35,109	)		(8,931	)		(1,836	)		(15,452	)		(27,152	)		(7,434	)		(24,435	)
Less: Net income (loss) attributable to redeemable non-controlling interest		—			165			412			193			(363	)		(591	)		(599	)		106
Net loss attributable to Curaleaf Holdings, Inc.		(17,211	)		(35,274	)		(9,343	)		(2,029	)		(15,089	)		(26,561	)		(6,835	)		(24,541	)
Loss per share - basic and diluted	$	(0.03	)	$	(0.05	)	$	(0.01	)	$	(0.00	)	$	(0.03	)	$	(0.06	)	$	(0.01	)	$	(0.05	)
Weighted average common shares outstanding - basic and diluted		682,041,420			660,398,593			625,228,556			533,192,806			507,700,498			468,445,941			464,073,130			461,313,741

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this filing, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.

RELATED PARTY TRANSACTIONS

	Three months ended						Balances as of
	March 31,						March 31,			December 31,
	2021			2020			2021			2020
Transaction		Related party transactions						Balance receivable (payable)
Processing fees ^(1)^	$	—		$	659		$	—		$	—
Consulting fees ^(2)^		94			—			—			—
Travel and reimbursement ^(2)^		1,255			—			—			—
Rent expense, net ^(3)^		(13	)		(60	)		—			—
Equipment purchases ^(4)^		1,426			—			—			—
Promissory Note - 2024 ^(5)^		325			—			(10,029	)		(9,700	)
Non-consolidated GR Companies ^(6)^		—			—			6,149			5,947
	$	3,087		$	599		$	(3,880	)	$	(3,753	)

(1) For the three months ended March 31, 2020, the Company recognized direct expenses of $659 for processing expenses with Sisu Extracts, a state licensed processor in California, that performed toll processing services for the Company. Cameron Forni, Select President, holds a passive investment in Sisu Extracts. Amounts recorded in connection with these expenses were recorded on a current cost basis at the time expenses were incurred. There are no ongoing contractual commitments related to these transactions.

(2) For the three months ended March 31, 2021, the Company recognized $1,255 in travel and other business development expense to Measure 8 Venture Partners, a company controlled by Boris Jordan, Executive Chairman. For the three months ended March 31, 2021, the Company recognized consulting expense of $94 for real estate management and advisory services to Frontline Real Estate Partners, LLC, a company controlled by Mitchell Kahn, a Board Member. Amounts recorded in connection with these expenses were recorded on a current cost basis at the time expenses were incurred. There are no ongoing contractual commitments related to these transactions.

(3) For the three months ended March 31, 2021, the Company recognized a rent expense credit of $60 for a sublease between Curaleaf NY, Inc. and Measure 8 Venture Partners, a company controlled by Boris Jordan, Executive Chairman. For the three months ended March 31, 2021, the Company recognized rent expense of $47 for a lease between GR Companies, Inc. and FREP Elm Place II, LLC, a company owned in part by Mitchell Kahn, a Board Member. Both arrangements represent on-going contractual commitments based on executed leases.

(5) For the three months ended March 31, 2021, the Company had an outstanding notes payable balance of $10,029 and recognized a related interest expense of $325 on the Promissory Note – 2024, which is held with Baldwin Holdings, LLC, in which Joseph F. Lusardi, the Company’s Executive Vice Chairman, has a direct equity interest. The Company entered into the Promissory Note – 2024 in October 2020 to replace the previously recorded contingent consideration liability. Amounts recorded in connection with these expenses were recorded on a current cost basis at the time expenses were incurred. The liability contains certain repayment and interest components that represent on-going contractual commitments.

(6) Through its acquisition of Grassroots, the Company acquired an option to purchase Maryland Compassionate Care and Wellness, LLC (“MCCW”) from its sole owner, KDW Maryland Holding Corporation (“KDW”), subject to regulatory approval. MCCW is the holder of cultivation, processing, and dispensary licenses in Maryland. The exercise price for the option is the cancellation of a secured promissory note issued by KDW to the Company in the principal amount of $32,000. MCCW is the sole owner of each of GR Vending MD Management, LLC and GR Vending MD, LLC. Mr. Kahn, a member of the Company’s board of directors, is a minority stockholder, the sole director and an officer of KDW.

	Three months ended March 31,
Key management personnel compensation	2021		2020
Short-term employee benefits	$	900	$	786
Other long-term benefits		10		7
Share-based payments		2,358		3,554
	$	3,268	$	4,347

RECENT ACQUISITIONS

No acquisitions were closed during the quarter ended March 31, 2021.

TRANSACTIONS CLOSED SUBSEQUENT TO MARCH 31,2021

The following acquisition was completed subsequent to March 31, 2021. Due to the timing of the transaction closing, sufficient information was not available to complete Purchase Price and Pro Forma accounting at the time of filing. Accordingly, the results of the following entity are not included in the Interim Financial Statements of the Company:

In April 2021, Curaleaf announced that it had successfully completed the acquisition of EMMAC, the largest vertically integrated independent cannabis company in Europe, for base consideration of approximately $50,000 in cash and approximately 17.5 SVS, with additional consideration to be paid based upon the successful achievement of performance milestones (the “EMMAC Transaction”). Curaleaf simultaneously established Curaleaf International Holdings Limited (“Curaleaf International”) in Guernsey to hold the EMMAC investment and further its European expansion.

Mr. Antonio Costanzo has been appointed as the new Chief Executive Officer of Curaleaf International, with the former EMMAC management team continuing to lead Curaleaf's new European presence as well as driving local European strategy and day-to-day operations. The EMMAC Transaction constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) as a result of Measure 8 Ventures, LP, an investment fund managed by Mr. Boris Jordan, the Executive Chairman and control person of the Company, having an interest in the EMMAC Transaction by way of a profit interest and a convertible debt instrument which converted into shares of EMMAC representing 8% of EMMAC equity at closing of the EMMAC Transaction. Mr. Jordan owns a minority interest in Measure 8 Ventures, LP. The Company relied upon the exemptions provided under Sections 5.5(b) of MI 61-101 – Issuer Not Listed on Specified Markets and 5.7(1)(a) of MI 61-101 – Fair Market Value Not More the 25% of Market Capitalization from the requirements that the Company obtain a formal valuation of the EMMAC Transaction and that the EMMAC Transaction receive the approval of the minority shareholders of the Company.

PENDING TRANSACTIONS

The following acquisition has been signed, but has not yet been completed as of March 31, 2021, as the transaction is pending regulatory approval. In accordance with IFRS 10 – Consolidated Financial Statements, the Company has concluded that it does control the operations of the acquiree and therefore consolidates the results of the entity in the Interim Financial Statements

Ohio Grown Therapies, LLC, an Ohio limitedliability company (“OGT”)

In May 2019, the Company entered into an agreement granting it an option to acquire OGT for $20,000. The Company paid $5,000 cash in May 2019 and $7,500 in cash in July 2020 recorded as a non-current asset on the consolidated statements of financial position. The remaining consideration will be paid upon completion of milestones, culminating with regulatory approval of the transfer of the final licenses and OGT facility to Curaleaf. The closing of this transaction is currently pending regulatory approval.

The following acquisition has been signed, but has not yet been completed as of March 31, 2021. The Company has concluded that they do not control the operations of the acquiree in accordance with IFRS 10 – Consolidated Financial Statements, IFRS 10 – Consolidated Financial Statements and accordingly, the results of the following entity are not included in the Interim Financial Statements for the three months ended March 31, 2021 and 2020:

Maryland Compassionate Care and Wellness, LLC(“MCCW”)

CHANGES IN OR ADOPTION OF ACCOUNTING PRACTICES

The following is a brief summary of the new standards issued but not yet effective:

Amendments to IAS 1: Classification of Liabilitiesas Current or Non-Current

Amendments to IAS 37: Onerous Contracts –Cost of Fulfilling a Contract

In May 2020, the IASB issued Onerous Contracts – Cost of Fulfilling a Contract, amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendment is effective for annual reporting periods beginning on or after January 1, 2022.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Company’s Interim Financial Statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the review affects both current and future periods.

Significant judgments, estimates and assumptions that have the most significant effect on the amounts recognized in the audited consolidated financial statements are described below. Significant judgments, estimates and assumptions made by management in preparing the unaudited condensed interim consolidated financial statements for the three months ended March 31, 2021 and 2020 were the same as those that applied to the annual audited consolidated financial statements.

Biological assets

Biological assets are dependent upon estimates of future economic benefits as a result of past events to determine the fair value through an exercise of significant judgment by the Company. In estimating the fair value of an asset or a liability, the Company uses market observable data to the extent it is available. The Company uses the average selling price per gram in the market in which the biological assets are produced to determine fair value. The Company assess market prices on a quarterly basis in order to ensure biological assets are measured at the most relevant fair value.

Business combinations

In a business combination, all identifiable assets, liabilities and contingent liabilities acquired are recorded at their fair values. The Company accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Company. In determining whether a particular set of activities and assets is a business, the Company assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

One of the most significant estimates relates to the determination of the fair value of assets and liabilities of the acquiree. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in the consolidated statements of profits and losses immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in the consolidated statements of profits and losses. Contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 9 – Financial Instruments with the corresponding gain or loss being recognized in the consolidated statement of profits and losses. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. Certain fair values may be estimated at the acquisition date pending confirmation or completion of the valuation process. Where provisional values are used in accounting for a business combination, they may be adjusted retrospectively in subsequent periods, not to exceed one year from the acquisition date.

The Company utilizes the guidance prescribed by the IFRS 3 Amendment. The IFRS 3 Amendment changes the definition of a business and allows entities to use a concentration test to determine if transactions should be accounted for as a business combination or an asset acquisition. Under the optional concentration test, where substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business and the transaction would be accounted for as an asset acquisition. Management performs a concentration test where appropriate and if the concentration of assets is 85% or above, the transaction is generally accounted for as an asset acquisition.

Share-based payment arrangements

The Company uses the Black-Scholes valuation model to determine the fair value of options granted to employees and directors under share-based payment arrangements, where appropriate. In instances where stock options have performance or market conditions, the Company utilized the Monte Carlo valuation model to simulate the various outcomes that affect the value of the option. In estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility of the Company’s future share price, risk free rates, future dividend yields and estimated forfeitures at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results.

Assets held for sale

The Company classifies assets held for sale in accordance with IFRS 5, “Non-Current Assets Held for Sale and Discontinued Operations”. When the Company makes the decision to sell an asset or to stop some part of its business, the Company assesses if such assets should be classified as an asset held for sale. To classify as an asset held for sale, the asset or disposal group must meet all of the following conditions: i) the asset is available for immediate sale in its present condition, ii) management is committed to a plan to sell, iii) an active program to locate a buyer and complete the plan has been initiated, iv) the asset is being actively marketed for sale at a sales price that is reasonable in relation to its fair value, v) the sale is highly probable within one year from the date of classification, and vi) actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed or withdrawn. Assets held for sale are measured at the lower of its carrying amount or fair value less cost to sell (“FVLCTS”) unless the asset held for sale meets the exceptions as denoted by IFRS 5. FVLCTS is the amount obtainable from the sale of the asset in an arm’s length transaction, less the costs of disposal. Once classified as held for sale, any depreciation and amortization cease to be recorded (see Note 7 of the Company's unaudited condensed interim consolidated financial statements as of and for the three months ended March 31, 2021 and 2020).

COVID-19 estimation uncertainty

The novel coronavirus commonly referred to as “COVID-19” was identified in December 2019 in Wuhan, China. On January 30, 2020, the World Health Organization declared the outbreak a global health emergency, and on March 11, 2020, the spread of COVID-19 was declared a pandemic by the World Health Organization. On March 13, 2020, the spread of COVID-19 was declared a national emergency in the United States by former President Donald Trump. The outbreak has spread throughout the globe, causing companies and various international jurisdictions to impose restrictions such as quarantines, business closures, and travel restrictions.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, notes receivable, accounts payable, accrued expenses, long-term debt, and redeemable non-controlling interest contingency. The fair values of cash, restricted cash, notes receivable, accounts payable and accrued expenses approximate their carrying values due to the relatively short-term to maturity. The Company’s long-term notes payable carrying value at the effective interest rate approximate fair value. Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of the inputs to fair value measurements. The three levels of hierarchy are:

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

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

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

The Company’s assets measured at fair value on a nonrecurring basis include investments, long-lived assets and indefinite-lived intangible assets and goodwill. The Company reviews the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually as of December 31, for indefinite-lived intangible assets and goodwill. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 measurements.

Financial Risk Management

Credit Risk

Credit risk is the risk of a potential loss to the Company if a customer or third party to a financial instrument fails to meet its contractual obligations. The maximum credit exposure at March 31, 2021 and December 31, 2020 is the carrying amount of cash and cash equivalents, accounts receivable and notes receivable. The Company does not have significant credit risk with respect to its customers. All cash and cash equivalents are placed with major U.S. financial institutions.

The Company provides credit to its wholesale and MSA customers in the normal course of business and has established processes to mitigate credit risk. The amounts reported in the consolidated statements of financial position are net of allowances for bad debts, estimated by the Company’s management based on prior experience and its assessment of the current economic environment. The Company reviews its trade receivable accounts regularly and reduces amounts to their expected realizable values by adjusting the allowance for doubtful accounts when management determines that the account may not be fully collectible. The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. The Company has not adopted standardized credit policies, but rather assesses credit on a customer-by-customer basis in an effort to minimize those risks.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages liquidity risk through the management of its cash flows necessary to fund operations and development and its capital structure. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due.

The Company has access to equity and debt financing from public and private markets in Canada as well as from current significant shareholders. If such financing were no longer available in the public markets in Canada due to changes in applicable law, then the Company expects that it would have to raise financing privately.

Market Risk

Currency Risk

The operating results and financial position of the Company are reported in U.S. dollars. Some of the Company’s financial transactions have been and may be denominated in currencies other than the U.S. dollar. The results of the Company’s operations are subject to currency transaction and translation risks.

As of March 31, 2021, and December 31, 2020, the Company had no hedging agreements in place with respect to foreign exchange rates. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Cash and cash equivalents bear interest at market rates. The Company’s financial debts have fixed rates of interest and are caried at amortized cost. The Company does not account for any fixed-rate financial assets or financial liabilities at fair value, therefore, a change in interest rates at the reporting date would not affect the consolidated statements of profits and losses.

REGULATORY ENVIRONMENT: ISSUERS WITH UNITEDSTATES CANNABIS-RELATED ASSETS

In accordance with Staff Notice 51-352, below is a discussion of the current federal and state-level U.S. regulatory regimes in those jurisdictions where the Company is currently directly and indirectly involved, through its subsidiaries and investments, in the cannabis industry.

In accordance with Staff Notice 51-352, the Company evaluates, monitors and reassesses this disclosure, and any related risks, on an ongoing basis and the same will be supplemented, amended and communicated to investors in public filings, including in the event of government policy changes or the introduction of new or amended guidance, laws or regulations regarding the cannabis industry. Any non-compliance, citations or notices of violation which may have an impact on the Company’s licenses, business activities, or operations will be promptly disclosed by the Company.

The Company derives its revenues from thecannabis industry in certain states of the U.S., and the industry is illegal under U.S. federal law.

The Company is involved (through its licensed subsidiaries) in the cannabis industry in the U.S. where local state laws permit such activities. Currently, its subsidiaries and managed entities are directly engaged in the manufacture, possession, use, sale or distribution of cannabis and/or hold licenses in the adult-use and/or medicinal cannabis marketplace in the states of Arizona, Arkansas, California, Colorado, Connecticut, Florida, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Utah, and Vermont; and have partnered with an accredited medical school and obtained a “clinical registrant” license in Pennsylvania. In addition, the Company is indirectly involved (through management services which include the use of the “Curaleaf” brand and retail and cultivation and production operations, human resources, finance and accounting, marketing, sales, legal and compliance support services) in both the adult-use and medical cannabis industry in the states of Maine and Massachusetts.

The Company’s Statement of FinancialPosition and Operating Statement Exposure to U.S. Marijuana Related Activities

As of the date of this MD&A, all of the Company’s business was directly derived from U.S. cannabis-related activities. As such, the Company’s statement of financial position and statement of profits and losses exposure to U.S. cannabis-related activities is 100%.

Readers are cautioned that the foregoing financial information, though extracted from the Company’s financial systems that supports its annual consolidated financial statements, has not been audited in its presentation format and accordingly is not in compliance with IFRS based on consolidation principles.

U.S. Federal Overview

The United States federal government regulates drugs through the federal Controlled Substances Act (21 U.S.C. § 811) (the “CSA”), which places controlled substances, including cannabis, in one of five different schedules. Cannabis, except hemp, is classified as a Schedule I drug. As a Schedule I drug, the federal Drug Enforcement Agency considers cannabis to have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use of the drug under medical supervision^2^. The classification of cannabis as a Schedule I drug is inconsistent with what the Company believes to be many valuable medical uses for cannabis accepted by physicians, researchers, patients, and others. As evidence of this, the federal Food and Drug Administration (“FDA”) on June 25, 2018 approved Epidiolex (CBD) oral solution with an active ingredient derived from the cannabis plant for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in patients two years of age and older. This is the first FDA-approved drug that contains a purified drug substance derived from the cannabis plant. In this case, the substance is CBD, a chemical component of cannabis that does not contain the intoxication properties of tetrahydrocannabinol (“THC”), the primary psychoactive component of cannabis. The Company believes the CSA categorization as a Schedule I drug is not reflective of the medicinal properties of cannabis or the public perception thereof, and numerous studies show cannabis is not able to be abused in the same way as other Schedule I drugs, has medicinal properties, and can be safely administered^3^.

The federal position is also not necessarily consistent with democratic approval of cannabis at the state government level in the United States. Unlike in Canada, which has federal legislation uniformly governing the cultivation, distribution, sale and possession of cannabis under the Cannabis Act, S.C. 2018, c. 16, (Canada) and the Cannabis for Medical Purposes Regulations, cannabis is largely regulated at the state level in the United States. State laws regulating cannabis conflict with the CSA, which makes cannabis use and possession federally illegal. Although certain states and territories of the United States authorize medical or adult-use cannabis production and distribution by licensed or registered entities, under United States federal law, the possession, use, cultivation, and transfer of cannabis and any related drug paraphernalia is illegal, and any such acts are criminal acts. Although the Company’s activities are compliant with applicable state and local laws, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under United States federal law nor provide a defense to federal criminal charges that may be brought against the Company. The Supremacy Clause of the United States Constitution establishes that the United States Constitution and federal laws made pursuant to it are paramount and, in case of conflict between federal and State law, federal law shall apply.

^2^ 21 U.S.C. 812(b)(1).

^3^ See Lachenmeier, DW & Rehm, J. (2015). Comparative risk assessment of alcohol, tobacco, cannabis and other illicit drugs using the margin of exposure approach. ScientificReports, 5, 8126. doi: 10.1038/srep08126; see also Thomas, G & Davis, C. (2009). Cannabis, Tobacco and Alcohol Use in Canada: Comparing risks of harm and costs to society. Visions Journal, 5. Retrieved from http://www.heretohelp.bc.ca/sites/default/files/visions_cannabis.pdf; see also Jacobus et al. (2009). White matter integrity in adolescents with histories of marijuana use and binge drinking. Neurotoxicologyand Teratology, 31, 349-355. https://doi.org/10.1016/j.ntt.2009.07.006; Could smoking pot cut risk of head, neck cancer? (2009 August 25). Retrieved from https://www.reuters.com/article/us-smoking-pot/could-smoking-pot-cut-risk-of-head-neck-cancer-idUSTRE57O5DC20090825; Watson, SJ, Benson JA Jr. & Joy, JE. (2000). Marijuana and medicine: assessing the science base: a summary of the 1999 Institute of Medicine report. Arch Gen Psychiatry Review, 57, 547-552. Retrieved from https://www.ncbi.nlm.nih.gov/pubmed/10839332; see also Hoaken, Peter N.S. & Stewart, Sherry H. (2003). Drugs of abuse and the elicitation of human aggressive behavior. Addictive Behaviours,28, 1533-1554. Retrieved from http://www.ukcia.org/research/AgressiveBehavior.pdf; and see also Fals-Steward, W., Golden, J. & Schumacher, JA. (2003). Intimate partner violence and substance use: a longitudinal day-to-day examination. Addictive Behaviors,28, 1555-1574. Retrieved from https://www.ncbi.nlm.nih.gov/pubmed/14656545.

Nonetheless, 39 U.S. states, the District of Columbia, and the territories of Puerto Rico, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands have legalized some form of cannabis for medical use, while 18 states and the District of Columbia have legalized the adult use of cannabis for recreational purposes. As more and more states legalized medical and/or adult-use cannabis, the federal government attempted to provide clarity on the incongruity between federal prohibition under the CSA and these state-legal regulatory frameworks. Notwithstanding the foregoing, cannabis remains illegal under U.S. federal law, with cannabis listed as a Schedule I drug under the CSA. Until 2018, the federal government provided guidance to federal law enforcement agencies and banking institutions regarding cannabis through a series of memoranda from the Department of Justice (“DOJ”). The most recent such memorandum was drafted by former Deputy Attorney General James Cole on August 29, 2013 (the “Cole Memorandum”)^4^.

The Cole Memorandum offered guidance to federal enforcement agencies as to how to prioritize civil enforcement, criminal investigations and prosecutions regarding cannabis in all states, and acknowledged that, notwithstanding the designation of cannabis as a Schedule I controlled substance at the federal level, several states have enacted laws authorizing the use of cannabis. The Cole Memorandum also noted that jurisdictions that have enacted laws legalizing cannabis in some form have also implemented strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession of cannabis. As such, conduct in compliance with those laws and regulations is less likely to be a priority at the federal level.

The Cole Memorandum put forth eight prosecution priorities:

1.	Preventing the distribution of marijuana to minors;
2.	Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels;
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3.	Preventing the diversion of marijuana from states where it is legal under state law in some form to other<br>states;
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4.	Preventing the state-authorized marijuana activity from being used as a cover or pretext for the trafficking<br>of other illegal drugs or other illegal activity;
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5.	Preventing the violence and the use of firearms in the cultivation and distribution of marijuana;
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6.	Preventing drugged driving and the exacerbation of other adverse public health consequences associated<br>with marijuana use;
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7.	Preventing the growing of marijuana on public lands and the attendant public safety and environmental<br>dangers posed by marijuana production on public lands; and
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8.	Preventing marijuana possession or use on federal property.
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The Cole Memorandum was seen by many state-legal marijuana companies as a safe harbor for their licensed operations that were conducted in full compliance with all applicable state and local regulations.

On January 4, 2018, former United States Attorney General Jeff Sessions rescinded the Cole Memorandum by issuing a new memorandum to all United States Attorneys (the “Sessions Memorandum”). Rather than establish national enforcement priorities particular to cannabis-related crimes in jurisdictions where certain cannabis activity was legal under state law, the Sessions Memorandum instructs that “in deciding which cannabis activities to prosecute... with the DOJ's finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions.” Namely, these include the seriousness of the offense, history of criminal activity, deterrent effect of prosecution, the interests of victims, and other principles.

^4^ See James M. Cole, Memorandum for all United StatesAttorneys re: Guidance Regarding Marijuana Enforcement (Aug. 29, 2013), available at https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf.

In the absence of a uniform federal policy, as had been established by the Cole Memorandum, numerous United States Attorneys with state-legal cannabis programs within their jurisdictions have announced enforcement priorities for their respective offices. For instance, Andrew Lelling, United States Attorney for the District of Massachusetts, stated that while his office would not immunize any businesses from federal prosecution, he anticipated focusing the office's cannabis enforcement efforts on: (1) overproduction; (2) targeted sales to minors; and (3) organized crime and interstate transportation of drug proceeds. Other United States attorneys provided less assurance, promising to enforce federal law, including the CSA in appropriate circumstances. One of those United State Attorneys, Greg Scott, the Interim U.S. Attorney for the Eastern District of California, has a history of prosecuting medical cannabis activity: his office published a statement that cannabis remains illegal under federal law, and that his office would “evaluate violations of those laws in accordance with our district’s federal law enforcement priorities and resources”.

Former United States Attorney General Sessions resigned on November 7, 2018 and was replaced by William Barr on February 14, 2019. On December 14, 2020, former President Trump announced that Mr. Barr would be resigning from his post as Attorney General, effective December 23, 2020. President Joseph Biden has nominated Merrick Garland to succeed Mr. Barr as the U.S. Attorney General. It is unclear what specific impact the new Biden administration will have on U.S. federal government enforcement policy. There is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. Unless and until the United States Congress amends the CSA with respect to cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current U.S. federal law.

The Company believes it is too soon to determine if any prosecutorial policy at the federal level will be forthcoming in the absence of the Cole Memorandum, or if President Biden's nominee will reinstitute the Cole Memorandum or a similar guidance document for United States attorneys. The sheer size of the cannabis industry, in addition to various level of legalization at the State and local governments, suggests that a largescale enforcement operation would possibly create unwanted political backlash for the DOJ and the new administration. Moreover, state and local tax revenues generated by the cannabis business is an increasingly important source of funding for state and local government programs.

As an industry best practice, despite the recent rescission of the Cole Memorandum, the Company abides by the following standard operating policies and procedures to ensure compliance with the guidance provided by the Cole Memorandum:

1.	Ensure that its operations are compliant with all licensing requirements as established by the applicable<br>state, county, municipality, town, township, borough, and other political/administrative divisions;
2.	Ensure that its cannabis related activities adhere to the scope of the licensing obtained (for example:<br>in the states where cannabis is permitted only for adult-use, the products are only sold to individuals who meet the requisite age requirements);
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3.	Implement policies and procedures to ensure that cannabis products are not distributed to minors;
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4.	Implement policies and procedures to ensure that funds are not distributed to criminal enterprises, gangs<br>or cartels;
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5.	Implement an inventory tracking system and necessary procedures to ensure that such compliance system<br>is effective in tracking inventory and preventing diversion of cannabis or cannabis products into those states where cannabis is not permitted<br>by state law, or across any state lines in general;
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6.	Ensure that its state-authorized cannabis business activity is not used as a cover or pretense for trafficking<br>of other illegal drugs, is engaged in any other illegal activity or any activities that are contrary to any applicable anti-money laundering<br>statutes; and
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7.	Ensure that its products comply with applicable regulations and contain necessary disclaimers about the<br>contents of the products to prevent adverse public health consequences from cannabis use and prevent impaired driving.
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In addition, the Company conducts background checks to ensure that the principals and management of its operating subsidiaries are of good character, have not been involved with other illegal drugs, engaged in illegal activity or activities involving violence, or use of firearms in cultivation, manufacturing or distribution of cannabis. The Company will also conduct ongoing reviews of the activities of its cannabis businesses, the premises on which they operate and the policies and procedures that are related to possession of cannabis or cannabis products outside of the licensed premises, including the cases where such possession is permitted by regulation. See “Compliance and Monitoring”.

Although the Cole Memorandum has been rescinded, one legislative safeguard for the medical cannabis industry remains in place: Congress has passed a so-called “rider” provision in the FY 2015, 2016, 2017, 2018, 2019, 2020 and 2021 Consolidated Appropriations Acts to prevent the federal government from using congressionally appropriated funds to enforce federal cannabis laws against regulated medical cannabis actors operating in compliance with state and local law. The rider is known as the "Rohrabacher-Farr" Amendment after its original lead sponsors (it is also sometimes referred to as the “Rohrabacher-Blumenauer” or “Joyce-Leahy” Amendment, but it is referred to in this MD&A as “Rohrabacher-Farr Amendment”). Most recently, the Rohrabacher-Farr Amendment was included in the Consolidated Appropriations Act of 2021, which was signed by former President Trump on December 27, 2020 and funds the departments of the federal government through the fiscal year ended September 30, 2021.

There is a growing consensus among cannabis businesses and numerous members of Congress that guidance is not law and temporary legislative riders, such as the Rohrabacher-Farr Amendment, are an inappropriate way to protect lawful medical cannabis businesses. Numerous bills have been introduced in Congress in recent years to decriminalize aspects of state-legal cannabis trades. For example, for fiscal year 2019, the strategy amongst the bipartisan Congressional Marijuana Working Group in Congress, was to introduce numerous cannabis-related appropriations amendments in the Appropriations Committee in both the House and Senate, similar to the strategy employed in fiscal year 2018. The amendments included protections for cannabis-related businesses in states with medical and adult-use cannabis laws, as well as protections for financial institutions that provide banking services to state-legal cannabis businesses. The Company also has observed that each year more congressmen and congresswomen sign on and cosponsor cannabis legalization bills. These include the CARERS Act, REFER Act and others. In light of all this, it is anticipated that the federal government will eventually repeal the federal prohibition on cannabis and thereby leave the states to decide for themselves whether to permit regulated cannabis cultivation, production and sale, just as states are free today to decide policies governing the distribution of alcohol or tobacco. Given current political trends, however, the Company considers these developments unlikely in the near-term.

For the time being, cannabis remains a Schedule I controlled substance at the federal level, and neither the Cole Memorandum nor its rescission nor the continued passage of the Rohrabacher-Farr Amendment has altered that fact. The federal government of the United States has always reserved the right to enforce federal law regarding the sale and disbursement of medical or adult-use cannabis, even if state law sanctions such sale and disbursement. If the United States federal government begins to enforce United States federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing applicable state laws are repealed or curtailed, the Company’s business, results of operations, financial condition and prospects could be materially adversely affected.

Additionally, under United States federal law, it may potentially be a violation of federal money laundering statutes for financial institutions to take any proceeds from the sale of any Schedule I controlled substance. Due to the CSA categorization of marijuana as a Schedule I drug, federal law makes it illegal for financial institutions that depend on the Federal Reserve's money transfer system to take any proceeds from marijuana sales as deposits. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to cannabis businesses under the United States Currency and Foreign Transactions Reporting Act of 1970 (the “Bank Secrecy Act”). Therefore, under the Bank Secrecy Act, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be charged with money laundering or conspiracy.

On September 26, 2019, the U.S. House of Representatives passed the Secured and Fair Enforcement Banking Act of 2019 (commonly known as the “SAFE Banking Act”), which aims to provide safe harbor and guidance to financial institutions that work with legal U.S. cannabis businesses. On May 11, 2020, the U.S. House of Representatives introduced the Health and Economic Recovery Omnibus Emergency Solutions Act (the “HEROES Act”), an economic stimulus package which included the language of the SAFE Banking Act. On September 28, 2020, the House introduced a revised version of the HEROES Act, including the text of the SAFE Banking Act for a second time. The revised bill was passed by the House of Representatives on October 1, 2020 before going to the Senate. On December 21, 2020, Congress reached a deal for a different $900 billion stimulus package. On April 19, 2021, the House again passed the SAFE Banking Act. While Congress may consider legislation in the future that may address these issues, there can be no assurance of the content of any proposed legislation or that such legislation is ever passed. The Company’s inability, or limitations on the Company's ability, to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

While there has been no change in U.S. federal banking laws to accommodate businesses in the large and increasing number of U.S. states that have legalized medical and/or adult-use marijuana, in 2014, the Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) issued guidance to prosecutors of money laundering and other financial crimes (the “FinCEN Guidance”) and notified banks that it would not seek enforcement of money laundering laws against banks that service cannabis companies operating under state law, provided that strict due diligence and reporting standards are met. The FinCEN Guidance advised prosecutors not to focus their enforcement efforts on banks and other financial institutions that serve marijuana-related businesses so long as that business is legal in their state and none of the federal enforcement priorities referenced in the Cole Memorandum are being violated (such as keeping marijuana away from children and out of the hands of organized crime). The FinCEN Guidance also clarifies how financial institutions can provide services to marijuana-related businesses consistent with their Bank Secrecy Act obligations, including thorough customer due diligence, but makes it clear that they are doing so at their own risk. The customer due diligence steps include:

1.	Verifying with the appropriate state authorities whether the business is duly licensed and registered;
2.	Reviewing the license application (and related documentation) submitted by the business for obtaining<br>a state license to operate its marijuana-related business;
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3.	Requesting from state licensing and enforcement authorities available information about the business and<br>related parties;
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4.	Developing an understanding of the normal and expected activity for the business, including the types<br>of products to be sold and the type of customers to be served (e.g., medical versus adult-use customers);
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5.	Ongoing monitoring of publicly available sources for adverse information about the business and related<br>parties;
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6.	Ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance;<br>and
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7.	Refreshing information obtained as part of customer due diligence on a periodic basis and commensurate<br>with the risk.
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With respect to information regarding state licensure obtained in connection with such customer due diligence, a financial institution may reasonably rely on the accuracy of information provided by state licensing authorities, where states make such information available.

Because most banks and other financial institutions are unwilling to provide any banking or financial services to cannabis businesses, these businesses can be forced into becoming “cash-only” businesses. While the FinCEN Guidance decreased some risk for banks and financial institutions considering serving the industry, in practice it has not increased banks' willingness to provide services to cannabis businesses, and most banks continue to decline to operate under the strict requirements provided under the FinCEN Guidance. This is because, as described above, the current law does not provide banks immunity from prosecution, and it also requires banks and other financial institutions to undertake time-consuming and costly due diligence on each cannabis business they accept as a customer.

The few state-chartered banks and/or credit unions that have agreed to work with marijuana businesses are limiting those accounts to small percentages of their total deposits to avoid creating a liquidity risk. Since, theoretically, the federal government could change the banking laws as it relates to marijuana businesses at any time and without notice, these credit unions must keep sufficient cash on hand to be able to return the full value of all deposits from marijuana businesses in a single day, while also keeping sufficient liquid capital on hand to serve their other customers. Those state-chartered banks and credit unions that do have customers in the marijuana industry charge marijuana businesses high fees to pass on the added cost of ensuring compliance with the FinCEN Guidance. Unlike the Cole Memorandum, however, the FinCEN Guidance from 2014 has not been rescinded.

The former Secretary of the U.S. Department of the Treasury, Stephen Mnuchin, publicly stated that he did not have a desire to rescind the FinCEN Guidance.^5^ The newly nominated Secretary of the Treasury, Janet Yellen, has not yet articulated an official Treasury Department position with regard to the FinCEN Guidance and thus as an industry best practice and consistent with its standard operating procedures, the Company adheres to all customer due diligence steps in the FinCEN Guidance.

In both Canada and the United States, transactions involving banks and other financial institutions are both difficult and unpredictable under the current legal and regulatory landscape. Legislative changes could help to reduce or eliminate these challenges for companies in the cannabis space and would improve the efficiency of both significant and minor financial transactions.

^5^Angell, Tom. (2018 February 6). Trump Treasury Secretary Wants Marijuana Money In Banks, available at https://www.forbes.com/sites/tomangell/2018/02/06/trump-treasury-secretary-wants-marijuana-money-in-banks/#2848046a3a53; see also Mnuchin: Treasury is reviewing cannabis policies. (2018 February 7), available at http://www.scotsmanguide.com/News/2018/02/Mnuchin--Treasury-is-reviewing-cannabis-policies/.

Another bill, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, would decriminalize and deschedule cannabis from the CSA, provide for reinvestment in certain persons adversely impacted by the “War on Drugs,” and provide for expungement of certain cannabis offenses, among other things. On November 20, 2019 the U.S. House of Representatives Judiciary Committee voted to advance the bill to the full House. Although the House of Representatives voted to pass the MORE Act on December 4, 2020, it failed to pass in the Senate prior to the end of the 2020 legislative session. There can be no assurance that it will be passed in its current form or at all.

An additional challenge to cannabis-related businesses is that the provisions of the Internal Revenue Code Section 280E are being applied by the IRS to businesses operating in the medical and adult-use cannabis industry. Section 280E prohibits businesses from deducting certain expenses associated with the trafficking of controlled substances within the meaning of Schedule I and II of the CSA. The IRS has applied Section 280E broadly in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws, seeking substantial sums in tax liabilities, interest and penalties resulting from underpayment of taxes due to the lack of deductibility of otherwise ordinary business expenses, the deduction of which is prohibited by Section 280E. Although the IRS issued a clarification allowing the deduction of certain expenses that can be categorized as cost of goods sold, the scope of such items is interpreted very narrowly, and the bulk of operating costs and general administrative costs are not permitted to be deducted. Therefore, businesses in the state-legal cannabis industry may be less profitable than they would otherwise be.

On December 20, 2018, former President Trump signed the Agriculture Improvement Act of 2018, Pub. L. 115-334, (popularly known as the “2018 Farm Bill”) into law.^6^ Under the 2018 Farm Bill, industrial and commercial hemp is no longer to be classified as a Schedule I controlled substance in the United States. Hemp includes the plant cannabis sativa L and any part of that plant, including seeds, derivatives, extracts, cannabinoids and isomers, which contain no more than 0.3% of delta-9-THC concentration by dry weight. The 2018 Farm Bill allows states to create regulatory programs allowing for the licensed cultivation of hemp and production of hemp-derived products. Hemp and products derived from it, such as CBD, may then be sold into commerce and transported across state lines, provided that the hemp from which any product is derived was cultivated under a license issued by an authorized state program approved by the U.S. Department of Agriculture and otherwise meets the definition of hemp.

To date, three different hemp seed-derived ingredients have received Generally Recognized As Safe (“GRAS”) notices from the FDA: hulled hemp seed, hemp seed protein powder, and hemp seed oil. The hemp seed-derived ingredients that are the subject of these GRAS notices contain only trace amounts of THC and CBD, which the seeds may pick up during harvesting and processing when they are in contact with other parts of the plant. Aside from these three hemp seed ingredients, no other cannabis or cannabis-derived ingredients, including ingredients sourced from hemp, have been the subject of a food additive petition, an evaluated GRAS notification, or have otherwise been approved for use in food by the FDA. The FDA's current stated position is that it is a prohibited act under the Federal Food, Drug, and Cosmetic Act to introduce into interstate commerce a food to which CBD or THC has been added, or to market a product containing these ingredients as a dietary supplement.

The results of the 2020 Presidential and Congressional elections may impact the likelihood of any legal developments regarding cannabis at the national level, including the passage of the SAFE Banking Act and the MORE Act, as well as potential executive action to clarify federal policy toward the industry, although it is uncertain whether and in what manner any such federal changes will occur. On a federal level, President Joseph R. Biden campaigned on a platform that included cannabis decriminalization. Democrats, who are generally more supportive of federal cannabis reform than Republicans, maintained their majority in the House of Representatives, although at a smaller margin than initially expected, and have gained sufficient seats in the Senate to achieve control.

On a state level, the November 2020 elections included multiple initiatives on state ballots regarding cannabis, all of which passed. In Arizona and New Jersey, two markets where the Company already has medical operations described herein, adult-use cannabis ballot initiatives passed. Similarly, adult-use passed in Montana, medical use passed in Mississippi, and both adult-use and medical use passed in South Dakota. Barring any further legal challenges, these states are expected to adopt governing rules and regulations to expand their cannabis programs accordingly.

^6^ H.R.2 - 115th Congress (2017-2018): Agriculture Improvement Act of 2018, Congress.gov (2018), https://www.congress.gov/bill/115th-congress/house-bill/2/text.

Service Providers

As a result of any adverse change to the approach in enforcement of U.S. cannabis laws, adverse regulatory or political change, additional scrutiny by regulatory authorities, adverse change in public perception in respect of the consumption of marijuana or otherwise, third party service providers to the Company could suspend or withdraw their services, which may have a material adverse effect on the Company’s business, revenues, operating results, financial condition or prospects.

Ability to Access Capital

Given the current laws regarding cannabis at the federal law level in the United States, traditional bank financing is typically not available to United States cannabis companies. Specifically, the federal illegality of marijuana in the United States means that financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under money laundering statutes, the unlicensed money transmitter statute and the Bank Secrecy Act. As a result, businesses involved in the cannabis industry often have difficulty finding a bank willing to accept their business. Banks who do accept deposits from cannabis-related businesses in the United states must do so in compliance with the Cole Memorandum and the FinCEN guidance, both discussed above.

The Company requires equity and/or debt financing to support on-going operations, to undertake capital expenditures or to undertake acquisitions or other business combination transactions. There can be no assurance that additional financing will be available to the Company when needed or on terms which are acceptable. The Company’s inability to raise financing through traditional banking to fund on-going operations, capital expenditures or acquisitions could limit its growth and may have a material adverse effect upon the Company’s business, results of operations, financial condition or prospects.

If additional funds are raised through further issuances of equity or convertible debt securities, existing Company Shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to existing holders of SVS.

Restricted Access to Banking

As discussed above, the FinCEN Memorandum remains effective to this day, in spite of the fact that the 2014 Cole Memorandum was rescinded and replaced by the Sessions Memorandum. The FinCEN Memorandum does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the Department of Justice, FinCEN or other federal regulators, though. Thus, most banks and other financial institutions in the U.S. do not appear to be comfortable providing banking services to cannabis-related businesses, or relying on this guidance, which can be amended or revoked at any time by the Biden administration. In addition to the foregoing, banks may refuse to process debit card payments and credit card companies generally refuse to process credit card payments for cannabis-related businesses. As a result, the Company may have limited or no access to banking or other financial services in the U.S. The inability or limitation in the Company’s ability to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

On September 26, 2019, the U.S. House of Representatives passed the Secure and Fair Enforcement Banking Act of 2019 (commonly known as the “SAFE Banking Act”), which aims to provide safe harbor and guidance to financial institutions that work with legal U.S. cannabis businesses. The SAFE Banking Act is currently being reviewed by the U.S. Senate Banking Committee. While the Senate is contemplating the SAFE Banking Act, the passage of which would permit commercial banks to offer services to cannabis companies that are in compliance with state law, if Congress fails to pass the SAFE Banking Act, the Company’s inability, or limitations on the Company’s ability, to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

Anti-Money Laundering Laws and Regulations

The Company is subject to a variety of laws and regulations domestically and in the U.S. that involve money laundering, financial recordkeeping and proceeds of crime, including the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), Sections 1956 and 1957 of U.S.C. Title 18 (the Money Laundering Control Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S. and Canada. Further, under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering, aiding and abetting, or conspiracy.

In the event that any of the Company’s operations, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such operations in the U.S. were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could restrict or otherwise jeopardize the ability of the Company to declare or pay dividends, affect other distributions, or subsequently repatriate such funds back to Canada. Furthermore, while there are no current intentions to declare or pay dividends on the SVS in the foreseeable future, in the event that a determination was made that the Company’s proceeds from operations (or any future operations or investments in the U.S.) could reasonably be shown to constitute proceeds of crime, the Company may decide or be required to suspend declaring or paying dividends without advance notice and for an indefinite period of time.

Heightened Scrutiny by Regulatory Authorities

For the reasons set forth above, the Company’s existing operations in the U.S., and any future operations or investments of the Company, may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in Canada. As a result, the Company may be subject to significant direct and indirect interaction with public officials. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on the Company’s ability to operate or invest in any other jurisdictions, in addition to those described herein.

Change to government policy or public opinion may also result in a significant influence on the regulation of the cannabis industry in Canada, the United States, or elsewhere. A negative shift in the public’s perception of medical or adult-use cannabis in the United States or any other applicable jurisdiction could affect future legislation or regulation, or enforcement. Such a shift could cause state jurisdictions to abandon initiatives or proposals to legalize medical or adult-use cannabis, thereby limiting the number of new state jurisdictions into which the Company could expand. Any inability to fully implement the Company’s business strategy in the states in which the Company currently operates or in the Company’s ability to expand its business into new states, may have a material adverse effect on the Company’s business, financial condition, and results of operations. See “Risk Factors” section of this MD&A.

Further, violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions, or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture. Any enforcement action against the Company or any of its licensed operating facilities could have a material adverse effect on (1) the Company’s reputation, (2) the Company’s ability to conduct business, (3) the Company’s holdings (directly or indirectly) of medical or adult-use cannabis licenses in the United States, (4) the listing or quoting of the Company’s securities on various stock exchanges, (5) the Company’s financial position, (6) the Company’s operating results, profitability, or liquidity, or (7) the market price of the Company’s publicly traded shares. In addition, it is difficult for the Company to estimate the time or resources that would be needed for the investigation of any such matters or their final resolution because the time and resources that may be necessary depend on the nature and extent of any information requested by the applicable authorities involved, and such time or resources could be substantial. See “Risk Factors” section of this MD&A. The Company’s business activities, and the business activities of its subsidiaries, while believed to be compliant with applicable U.S. state and local laws, currently are illegal under U.S. federal law.

Further to the indication by CDS Clearing and Depository Services Inc. (“CDS”), Canada's central securities depository, clearing and settling trades in the Canadian equity, fixed income and money markets that it would refuse to settle trades for cannabis issuers that have investments in the U.S., the TMX Group, the owner and operator of CDS, subsequently issued a statement in August 2017 reaffirming that there is no CDS ban on the clearing of securities of issuers with cannabis-related activities in the U.S., despite media reports to the contrary and that the TMX Group was working with regulators to arrive at a solution that will clarify this matter, which would be communicated at a later time.

In February 2018, following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group announced the signing of a Memorandum of Understanding (“MOU”) with The Aequitas NEO Exchange Inc., the CSE, the Toronto Stock Exchange, and the TSX Venture Exchange. The MOU outlines the parties' understanding of Canada's regulatory framework applicable to the rules, procedures, and regulatory oversight of the exchanges and CDS as it relates to issuers with cannabis-related activities in the U.S. The MOU confirms, with respect to the clearing of listed securities, that CDS relies on the exchanges to review the conduct of listed issuers. As a result, there is currently no CDS ban on the clearing of securities of issuers with cannabis-related activities in the U.S. However, there can be no guarantee that this approach to regulation will continue in the future. If such a ban were to be implemented at a time when the SVS are listed on a stock exchange, it would have a material adverse effect on the ability of holders of SVS to make and settle trades. In particular, the SVS would become highly illiquid as until an alternative was implemented, investors would have no ability to affect a trade of securities through the facilities of the applicable stock exchange. Curaleaf has obtained eligibility with the Depository Trust Company (“DTC”) for its SVS quotation on the OTCQX® Best Market and such eligibility provides another possible avenue to clear the SVS in the event of a CDS ban. Revocation of DTC eligibility or implementation by DTC of a ban on the clearing of securities of issuers with cannabis-related activities in the United States would similarly have a material adverse effect on the ability of holders of the SVS to make and settle trades.

Compliance and Monitoring

As of the date of this MD&A, the Company believes that each of its licensed operating entities (a) holds all applicable licenses to cultivate, manufacture, possess, and/or distribute cannabis in each respective state, and (b) is in good standing and in material compliance with each respective state’s cannabis regulatory program. The Company is in material compliance with its obligations under state law related to its cannabis cultivation, processing and dispensary licenses, other than minor violations that would not result in a material fine, suspension or revocation of any relevant license.

The Company uses reasonable commercial efforts to ensure that its business is in material compliance with laws and applicable licensing requirements and engages in the regulatory and legislative process nationally and in every state we operate through our compliance department, government relations department, outside government relations consultants, cannabis industry groups and legal counsel.

The compliance department consists of our Chief Compliance Officer (“CCO”), James Shorris, Vice President, Keisha Brice and local compliance officers in our subsidiaries. Compliance officers in each operating subsidiary are charged with knowing the local regulatory process and monitoring developments and ongoing developments with their governing bodies. Each compliance officer regularly reports regulatory developments to the Company’s CCO and VP of Compliance through written and oral communications and are charged with the creation and implementation of plans regarding all regulatory developments. The Company’s CCO and VP of Compliance work with external legal advisors in the states in which the Company operates to ensure that the Company is in on-going compliance with applicable state laws.

The government relations department, consisting of Senior Vice President, Ed Conklin, Vice President, Matt Harrell, and Vice President, Don Williams, work closely with Curaleaf management to develop relationships with local and state regulators, industry groups, and elected officials in order to effectively monitor and engage in the regulatory and legislative processes. The Company’s Government Relations Department develops strategies, engages legislative consultant’s, directly lobbies and works with third party groups to protect the Company’s right to operate and to advocate for legislation, regulations and oversight under which it can be successful.

Although the Company believes that its business activities are materially compliant with applicable and state and local laws of the United States, strict compliance with state and local laws with respect to cannabis may neither absolve the Company of liability under United States federal law nor provide a defense to any federal proceeding which may be brought against the Company. Any such proceedings brought against the Company may result in a material adverse effect on the Company. The Company derives 100% of its revenues from the cannabis industry in certain states, which industry is illegal under United States federal law. Even where the Company’s cannabis-related activities are compliant with applicable state and local law, such activities remain illegal under United States federal law. The enforcement of relevant federal laws is a significant risk.

United States Customs and Border Protection (“CBP”) enforces the laws of the United States. Crossing the border while in violation of the CSA and other related United States federal laws may result in denied admission, seizures, fines, and apprehension. CBP officers administer the United States Immigration and Nationality Act to determine the admissibility of travelers who are non-U.S. citizens into the United States. An investment in the Company, if it became known to CBP, could have an impact on a non-U.S. citizen’s admissibility into the United States and could lead to a lifetime ban on admission. Medical cannabis has been protected against enforcement by enacted legislation from the United States Congress in the form of the Rohrabacher-Farr Amendment, which prevents federal prosecutors from using federal funds to impede the implementation of medical cannabis laws enacted at the state level, subject to the United States Congress restoring such funding. This amendment has historically been passed as an amendment to omnibus appropriations bills, which by their nature expire at the end of a fiscal year or other defined term. Subsequent to the issuance of Sessions Memorandum, the United States Congress passed its omnibus appropriations bill, SJ 1662, which for the fourth consecutive year contained the Rohrabacher-Farr Amendment language (referred to in 2018 as the Leahy Amendment) and continued the protections for the medical cannabis marketplace and its lawful participants from interference by the Department of Justice. The Rohrabacher-Farr Amendment again was included in the Consolidated Appropriations Act of 2019, which was signed by former President Trump on February 14, 2019 and funds the departments of the federal government through the fiscal year ending September 30, 2019 and was similarly renewed again on November 21, 2019. Most recently, the Rohrabacher-Farr Amendment was included in the Consolidated Appropriations Act of 2021, which was signed by former President Trump on December 27, 2020 and funds the departments of the federal government through the fiscal year ended September 30, 2021. Notably, such amendments have always applied only to medical cannabis programs and have no effect on pursuit of recreational cannabis activities.

In addition to the above disclosure, please see “Risk Factors” for further risk factors associated with the operations of the Company and the Company.

RISK FACTORS

The Company’s results of operations, business prospects, financial position and achievement of strategic plans are subject to a number of risks and uncertainties and are affected by a number of factors which could have a material adverse effect on the Company’s business, financial condition or future prospects. These risks should be considered when evaluating an investment in the Company and may, among other things, cause a decline in the price of the shares. Other than as stated herein, the Company’s risks and uncertainties have not materially changed from those described in the ‘Risk Factors’ section of the Company’s annual management’s discussion and analysis for the year ended December 31, 2020 file on SEDAR on March 11, 2021 and the Company’s annual information form for the year ended December 31, 2020 filed on SEDAR on April 28, 2021.

Exhibit 99.3

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Joseph Bayern, the Chief Executive Officer of the issuer, certify the following:

1.	Review: I have reviewed the interim financial report and interim<br>MD&A (together, the “interim filings”) of Curaleaf Holdings, Inc. (the “issuer”) for the interim period<br>ended March 31, 2021.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain<br>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<br>not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
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3.	Fair presentation: Based on my knowledge, having exercised<br>reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly<br>present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for<br>the periods presented in the interim filings.

Date: May 11, 2021

“Joseph Bayern”

Joseph Bayern

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<br>its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized<br>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<br>for external purposes in accordance with the issuer’s GAAP.
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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.

Exhibit 99.4

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Christine Taylor, Senior Vice President of Finance of the issuer, certify the following:

1.	Review: I have reviewed the interim financial report and interim<br>MD&A (together, the “interim filings”) of Curaleaf Holdings, Inc. (the “issuer”) for the interim period<br>ended March 31, 2021.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain<br>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<br>not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
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3.	Fair presentation: Based on my knowledge, having exercised<br>reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly<br>present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for<br>the periods presented in the interim filings.

Date: May 11, 2021

“Christine Taylor”

Christine Taylor,

Senior Vice President of Finance

NOTE TO READER

i)	controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in<br>its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized<br>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<br>for external purposes in accordance with the issuer’s GAAP.
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Exhibit 99.5

Curaleaf Reports Record First Quarter 2021 Financial and Operational Results

Record First Quarter 2021 Revenue^(1)^of $260 Million, up 170% YoY and up 13% Sequentially

Record First Quarter 2021 Adjusted EBITDA^(1)^of $63 Million, up 213% YoY and Up 16% Sequentially, Achieving a Margin of 24%

Revenue Guidance for the Second Quarter 2021of $305 million to $315 million

WAKEFIELD, Mass., May 10, 2021 – CuraleafHoldings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading international provider of consumer products in cannabis, today reported its financial and operating results for the first quarter ended March 31, 2021. All financial information is provided in U.S. dollars unless otherwise indicated.

1Q 2021 Financial Highlights (Unaudited)

							% qoq						% yoy
($ thousands, except per share amounts)	Q1 2021			Q4 2020			Change			Q1 2020			Change
Total Revenue	$	260,320		$	230,253			13	%	$	96,496			170	%
Gross profit before impact of biological assets	$	128,467		$	110,595			16	%	$	52,483			145	%
Gross profit on cannabis sales ^(1)^	$	128,030		$	109,625			17	%	$	33,042			287	%
Gross margin on cannabis sales ^(1)^		49	%		48	%					43	%
Adjusted EBITDA^(1)^	$	62,625		$	53,784			16	%	$	20,006			213	%
Net income (loss) attributable to Curaleaf Holdings Inc.	$	(17,211	)	$	(35,274	)				$	(15,089	)
Net income (loss) per share – basic and diluted	$	(0.03	)	$	(0.05	)				$	(0.03	)
(1)	See "Non-IFRS Financial and Performance Measures" below for more information regarding Curaleaf's use of Non-IFRS financial<br>measures and other reconciliations.
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Earnings Call: Monday, May 10, 2021, at 5:00P.M. ET

Conference ID # is 6935525

Replay ID # is 10155488

U.S. Callers: 1 (888) 317 6003	U.S. Replay: 1 (877) 344 7529
International Callers: 1 (412) 317 6061	International Replay (Toll): 1 (412) 317 0088
Canadian Callers: 1 (866) 284 3684	Canadian Replay: 1 (855) 669 9658

The teleconference will be rebroadcasted starting at 7:00 P.M. ET

on May 10, 2021 and will end at 7:00 P.M. ET on May 17, 2021

Joe Bayern, Chief Executive Officer of Curaleaf stated, “Curaleaf delivered record first quarter 2021 financial results with total revenue exceeding the high-end of our guidance range as we extended our U.S. leadership, all while creating a new foundation for future international growth opportunities. The stronger than expected first quarter performance drove record adjusted EBITDA as well as approximately 640 basis points of improvement in gross margin year-over-year. These impressive results reflect the leverage of the strategic investments we have made across the organization in cultivation, product innovation as well as expanding our branded retail and wholesale distribution channels. Curaleaf launched a range of innovative new products to our retail and wholesale channels during the quarter, including our new Select Squeeze THC-infused beverage enhancer which marked our most successful product launch ever and represented one of the cannabis industry's widest national product launches to date. With our revenue projected to increase to $305 million to $315 million in the second quarter, we also expect to generate significant improvements in terms of achieving positive net income and positive operating cash flows in the back half of 2021.”

Boris Jordan, Executive Chairman of Curaleaf commented, “With the acceleration of cannabis liberalization momentum at the state and federal levels, Curaleaf’s prospects for growth in the United States have never been stronger. The recent approvals of adult-use cannabis in New Jersey and New York, which are states where Curaleaf has a leading market share, will unlock vast new markets, worth an estimated $2.1 billion and $5 billion in sales respectively. We raised approximately $300 million in new capital during the first quarter to help support our ability to scale for new adult-use markets while also allowing us to be opportunistic for highly attractive assets that further strengthen our position as the global cannabis market leader.”

First Quarter Highlights

·	Record revenue of $260 million, a growth of 170% YoY, above guidance of $250 million to $255 million.
·	Record adjusted EBITDA of $63 million, a growth of 213% YoY, and equivalent to a margin of 24%.
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·	Raised net proceeds of $240.6 million in a public offering and net proceeds of $49.9 million from a tack-on<br>to the existing secured credit facility.
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·	Closed the quarter with 102 retail locations and 1,992 wholesale partner accounts.
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·	Launched Select Squeeze, a THC-infused beverage enhancer, to date the widest cannabis product launch in<br>the nation, available in 14 states.
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·	Retail revenue grew by 14% sequentially, and 231% YoY, representing 72% of total revenue.
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·	Wholesale revenue grew by 12% sequentially, and 254% YoY, representing 28% of total revenue.
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Post First Quarter Highlights

·	Successfully closed the acquisition of EMMAC, Europe’s largest vertically integrated independent<br>cannabis company, while securing $80 million in new capital into the European business subsidiary from a strategic investor to support<br>future growth.
·	Opened four new stores since March 31, 2021 in Illinois and Pennsylvania, bringing total retail locations<br>to 106.
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Financial Results for the First Quarter EndedMarch 31, 2021

Total revenue increased by 170% to $260 million during the first quarter of 2021, compared to $96 million in the first quarter of 2020.

Revenue (Unaudited)

($ thousands)

	Q1 2021		Q4 2020		Q1 2020
Retail revenue	$	187,677	$	164,932	$	56,633
Wholesale revenue		72,206		64,351		20,422
Management fee income		437		970		19,441
Total Revenue	$	260,320	$	230,253	$	96,496

Retail revenue increased by 231% to $188 million during the first quarter of 2021, compared to $57 million in the first quarter of 2020, representing 72% of total revenue. Growth in retail revenue was primarily due to strong organic growth across Curaleaf’s footprint, the opening of six new stores across Florida, Maine, and Pennsylvania, and the rapid acceleration of revenue growth in Arizona after the introduction of adult-use sales in January of 2021.

Wholesale revenue increased 254% to $72 million during the first quarter of 2021, compared to $20 million in the first quarter of 2020, representing 28% of total revenue. Growth in wholesale revenue was due primarily to the continued national expansion of the Select brand in both the Central and Northeastern markets including Massachusetts, New York, New Jersey, Maryland, Illinois, and Pennsylvania, and the successful launch of new products such as Select Squeeze, Select Essentials, and Select Fresh. It also resulted from strength of the Select brand in core Western markets including Arizona, California, and Oregon.

Gross Profit on Cannabis Sales (Unaudited)

($ thousands)

	Q1<br> 2021		Q4<br> 2020		Q1<br> 2020
Retail<br> and wholesale revenues	$	259,883	$	229,283	$	77,055
Cost<br> of goods sold		131,853		119,658		44,013
Gross profit<br> on cannabis sales	$	128,030	$	109,625	$	33,042

Gross profit on cannabis sales was $128 million for the first quarter of 2021, compared to $33 million in the first quarter of 2020. Gross profit margin reached 49%, equivalent to a year-over-year increase of 636 basis points. The increase was primarily due to an expansion in operating capacity as well as improved efficiency in the Company’s cultivation and processing facilities.

Net Income (Loss)

($ thousands)

	Q1 2021			Q4 2020			Q1 2020
Total Revenues	$	260,320		$	230,253		$	96,496
Gross profit		140,814			125,462			68,039
Income (Loss) from operations		33,705			20,627			4,993
Total other income (expense), net		(20,208	)		(17,893	)		(7,196	)
Income tax benefit (expense)		(30,708	)		(37,843	)		(13,249	)
Net loss	$	(17,211	)	$	(35,109	)	$	(15,089	)

For the first quarter of 2021, net loss attributable to Curaleaf Holdings, Inc. was $17 million, compared to a net loss of $15 million in the first quarter of 2020. The net result was primarily impacted by an income tax provision of $31 million due to increased gross profit in certain of the Company’s subsidiaries that are subject to the restrictions of Section 280E of the Internal Revenue Code and, to a lesser degree, by an increase in the interest expense related to lease liabilities due to the expanded number of retail sites. Net loss for the quarter included approximately $6 million in one-time charges which mostly include expenses associated with the equity offering and debt raise. These effects were partially compensated by a significant increase in Income from Operations.

Adjusted EBITDA (Unaudited)

($ thousands)

	Q1 2021			Q4 2020			Q1 2020
Net income (loss)	$	(17,211	)	$	(35,109	)	$	(15,452	)
Interest expense, net		20,623			25,366			9,804
Income tax expense		30,708			37,843			13,249
Depreciation and amortization ^(1)^		30,155			29,034			14,906
Share-based compensation		4,907			16,114			4,501
Other (income) expense		(415	)		(7,473	)		(2,608	)
Change in fair value of biological assets		(12,347	)		(14,867	)		(15,556	)
One time charges^(2)^		6,206			2,876			11,162
Adjusted EBITDA	$	62,625		$	53,784		$	20,006

^(1)^	Depreciation and amortization expense in Q1 2021, Q4 2020, and Q1 2020 include amounts charged to cost of goods sold on the statement<br>of profits and losses.
^(2)^	One time charges in Q1 2021 mostly include expenses associated with the equity offering and debt raise.
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Adjusted EBITDA was a record $63 million for the first quarter of 2021, compared to $20 million for the first quarter of 2020. The year-over-year increase in adjusted EBITDA was primarily driven by solid revenue growth combined with strong operating leverage.

Balance Sheet and Liquidity

As of March 31, 2021, the Company had $315 million of cash and $340 million of outstanding debt net of unamortized debt discounts.

Capital Expenditures

During the first quarter of 2021, Curaleaf invested $31 million net in capital expenditures, mostly attributable to cultivation, processing, and retail sites development activities.

Shares Outstanding

As of March 31, 2021 and December 31, 2020, our weighted average shares outstanding amounted to 682,041,420 and 557,192,899 shares, respectively.

As of March 31, 2021 and December 31, 2020, our issued and outstanding SVS and MVS shares amounted to 686,409,852 and 663,801,845 shares, respectively.

Non-IFRS Financial and Performance Measures

In this press release Curaleaf refers to certain non-IFRS financial measures such as “Gross Profit on Cannabis Sales” and “Adjusted EBITDA”. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. The Company defines “Gross Profit on Cannabis Sales” as retail and wholesale revenues less cost of goods sold. “Adjusted EBITDA” is defined by Curaleaf as earnings before interest, taxes, depreciation and amortization less share-based compensation expense and one-time charges related to business development, acquisition, financing and reorganization costs. Curaleaf considers these measures to be an important indicator of the financial strength and performance of our business. We believe the adjusted results presented provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies and allow investors to review performance in the same way as our management. Since these measures are not calculated in accordance with IFRS, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies. The following tables provide a reconciliation of each of the non-IFRS measures to its closest IFRS measure.

Consolidated Statements of Financial Position (Unaudited)

($ thousands)

	March<br> 31,			December<br> 31,
	2021			2020
Assets
Current assets:
Cash	$	314,591		$	73,542
Accounts<br> receivable		33,750			28,830
Inventory,<br> net		237,254			197,991
Biological<br> assets		46,452			46,210
Assets<br> held for sale		60,922			58,504
Prepaid<br> expenses and other current assets		22,785			10,140
Current<br> portion of notes receivable		3,723			2,645
Total<br> current assets		719,477			417,862
Deferred<br> tax asset		5,528			5,528
Notes receivable		2,004			2,000
Property,<br> plant and equipment, net		259,109			242,855
Right-of-use<br> assets, net		265,078			267,168
Intangible<br> assets, net		781,111			797,401
Goodwill		469,837			470,144
Investments		16,264			16,264
Prepaid acquisition<br> consideration		132,234			132,234
Other<br> assets		30,726			35,135
Total<br> assets	$	2,681,368		$	2,386,591
Liabilities<br> and Shareholders’ Equity
Current liabilities:
Accounts<br> payable	$	38,651		$	47,043
Accrued<br> expenses		54,368			57,475
Income<br> tax payable		110,147			79,649
Current<br> portion of lease liability		16,382			15,710
Current<br> portion of notes payable		4,193			6,500
Liabilities<br> held for sale		12,775			7,181
Other<br> current liabilities		1,454			6,568
Total<br> current liabilities		237,970			220,126
Deferred<br> tax liability		222,566			226,465
Notes payable		335,320			285,001
Lease Liabilities		270,948			270,495
Non-controlling<br> interest redemption liability		2,694			2,694
Contingent<br> consideration liability		1,898			1,898
Other<br> long term liability		3,864			3,698
Total<br> liabilities		1,075,260			1,010,377
Shareholders’<br> equity:
Share capital		2,021,980			1,754,412
Treasury<br> shares		(5,208	)		(5,208	)
Reserves		(198,207	)		(177,744	)
Accumulated<br> deficit		(211,856	)		(194,645	)
Total<br> Curaleaf Holdings, Inc. shareholders' equity		1,606,709			1,376,815
Redeemable<br> non-controlling interest		(2,694	)		(2,694	)
Non-controlling<br> interest		2,093			2,093
Total<br> shareholders’ equity		1,606,108			1,376,214
Total<br> liabilities and shareholders’ equity	$	2,681,368		$	2,386,591

Consolidated Statements of Profits and Losses (Unaudited)

($ thousands, except for share and per share amounts)

	Three Months Ended
	March, 31
	2021			2020
Revenues:
Retail and wholesale revenues	$	259,883		$	77,055
Management fee income		437			19,441
Total revenues		260,320			96,496
Cost of goods sold		131,853			44,013
Gross profit before impact of biological assets		128,467			52,483
Realized fair value amounts included in inventory sold		(68,914	)		(21,191	)
Unrealized fair value gain on growth of biological assets		81,261			36,747
Gross profit		140,814			68,039
Operating expenses:
Selling, general and administrative		80,090			45,857
Share-based compensation		4,907			4,501
Depreciation and amortization		22,112			12,688
Total operating expenses		107,109			63,046
Income (Loss) from operations		33,705			4,993
Other income (expense):
Interest income		88			2,846
Interest expense		(12,151	)		(10,492	)
Interest expense related to lease liabilities		(8,560	)		(2,158	)
Other income (expense)		415			2,608
Total other income (expense), net		(20,208	)		(7,196	)
Income (Loss) before provision for income taxes		13,497			(2,203	)
Income tax benefit (expense)		(30,708	)		(13,249	)
Net loss		(17,211	)		(15,452	)
Less: Net income (loss) attributable to non-controlling interest		—			(363	)
Net loss attributable to Curaleaf Holdings, Inc.	$	(17,211	)	$	(15,089	)
Loss per share attributable to Curaleaf Holdings, Inc. – basic and diluted	$	(0.03	)	$	(0.03	)
Weighted average common shares outstanding – basic and diluted		682,041,420			507,700,498

About Curaleaf Holdings

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) ("Curaleaf") is a leading international provider of consumer products in cannabis with a mission to improve lives by providing clarity around cannabis and confidence around consumption. As a high-growth cannabis company known for quality, expertise and reliability, the Company and its brands, including Curaleaf, Select and Grassroots provide industry-leading service, product selection and accessibility across the medical and adult-use markets. In the United States, Curaleaf currently operates in 23 states with 106 dispensaries, 23 cultivation sites and more than 30 processing sites, employing over 4,800 team members. Curaleaf International is the largest vertically integrated cannabis company in Europe with a unique supply and distribution network throughout the European market, bringing together pioneering science and research with cutting-edge cultivation, extraction and production. Curaleaf is listed on the Canadian Securities Exchange under the symbol CURA and trades on the OTCQX market under the symbol CURLF. For more information, please visit https://ir.curaleaf.com.

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Contact Information

Investor Contact:

Curaleaf Holdings, Inc. Carlos Madrazo, SVP Head of IR & Capital Markets

[email protected]

Media Contact:

Curaleaf Holdings, Inc. Tracy Brady, VP of Corporate Communications

[email protected]

Disclaimer

This press release contains “forward-looking information” and “forward-looking statements” within the meaning of Canadian securities laws and United States securities laws (“forward-looking statements”). Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on management’s current beliefs, expectations or assumptions regarding the future of the business, plans and strategies, operational results and other future conditions of the Company. In addition, the Company may make or approve certain statements in future filings with Canadian securities regulatory authorities, in press releases, or in oral or written presentations by representatives of the Company that are not statements of historical fact and may also constitute forward-looking statements. All statements, other than statements of historical fact, made by the Company that address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements, including, but not limited to, statements preceded by, followed by or that include words such as “assumptions”, “assumes”, “guidance”, “outlook”, “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words and includes, among others, information regarding: its outlook for and expected operating margins, capital allocation, free flow cash and other financial results; growth of its operations via expansion, for the effects of any transactions; expectations for the potential benefits of any transactions; statements relating to the business and future activities of, and developments related to, the Company after the date of this press release, including such things as future business strategy, competitive strengths, goals, expansion and growth of the Company’s business, operations and plans; expectations that planned acquisitions will be completed; expectations regarding cultivation and manufacturing capacity; expectations regarding receipt of regulatory approvals; expectations that licenses applied for will be obtained; potential future legalization of adult-use and/or medical cannabis under U.S. federal law; expectations of market size and growth in the U.S. and the states in which the Company operates; expectations for other economic, business, regulatory and/or competitive factors related to the Company or the cannabis industry generally; and other events or conditions that may occur in the future. Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations. Holders of securities of the Company are cautioned that forward-looking statements are not based on historical facts but instead are based on reasonable assumptions and estimates of management of the Company at the time they were provided or made and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties related to: the available funds of the Company and the anticipated use of such funds; the availability of financing opportunities; legal and regulatory risks inherent in the cannabis industry; risks associated with economic conditions, dependence on management and currency risk; risks relating to U.S. regulatory landscape and enforcement related to cannabis, including political risks; risks relating to anti-money laundering laws and regulation; other governmental and environmental regulation; public opinion and perception of the cannabis industry; risks related to contracts with third-party service providers; risks related to the enforceability of contracts; reliance on the expertise and judgment of senior management of the Company, and ability to retain such senior management; risks related to proprietary intellectual property and potential infringement by third-parties; the concentrated voting control of the Company’s Chairman and the unpredictability caused by the capital structure; risks relating to the management of growth; increasing competition in the industry; risks inherent in an agricultural business; risks relating to energy costs; risks associated to cannabis products manufactured for human consumption including potential product recalls; reliance on key inputs, suppliers and skilled labor; cybersecurity risks; ability and constraints on marketing products; fraudulent activity by employees, contractors and consultants; tax and insurance related risks; risks related to the economy generally; risk of litigation; conflicts of interest; risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service outside of Canada; risks related to future acquisitions or dispositions; sales by existing shareholders; limited research and data relating to cannabis; as well as those risk factors discussed under “Risk Factors” in the Company’s Annual Management, Discussion and Analysis dated March 11, 2021, and in the Company’s Annual Information Form dated April 28, 2021, and as described from time to time in documents filed by the Company with Canadian securities regulatory authorities. The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose. In particular, but without limiting the foregoing, disclosure in this press release as well as statements regarding the Company’s objectives, plans and goals, including future operating results and economic performance may make reference to or involve forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. You should not place undue reliance on forward-looking statements contained in this press release. Such forward-looking statements are made as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The Company’s forward-looking statements are expressly qualified in their entirety by this cautionary statement.

This news release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about the Company’s prospective results of operations, production and production efficiency, commercialization, revenue and cash on hand, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set second in the above paragraph. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about the Company’s future business operations. The Company disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. The financial information reported in this news release is based on unaudited management prepared financial statements for the quarter ended March 31, 2021. Accordingly, such financial information may be subject to change. Financial statements for the period will be released and filed under the Company’s profiles on SEDAR at www.sedar.com no later than May 12, 2021. All financial information contained in this news release is qualified in its entirety with reference to such unaudited financial statements. While the Company does not expect there to be any material changes, to the extent that the financial information contained in this news release is inconsistent with the information contained in the Company’s unaudited financial statements, the financial information contained in this news release shall be deemed to be modified or superseded by the Company’s unaudited financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws.

Neither the Canadian Securities Exchange nor its Regulation Service Provider has reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.