6-K - CURLF - Equibles

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

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

For the month of September, 2021.

Commission File Number: 333-249081

CURALEAF HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

666 Burrard Street, 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.

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:	September 14, 2021	By:	/s/ Peter Clateman
		Name:	Peter<br> Clateman
		Title:	Chief Legal Officer

EXHIBIT INDEX

99.1	Form 5 dated August 30, 2021
99.2	Form 7 dated September 9, 2021
99.3	Press Release dated September 9, 2021
99.4	Notice of Articles and Consolidated Articles dated September 20, 2021

Exhibit 99.1

FORM 5

QUARTERLY LISTING STATEMENT

Name of Listed<br> Issuer:	Curaleaf Holdings,<br> Inc.	(the “Issuer”).
Trading Symbol:	CURA
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This Quarterly Listing Statement must be posted on or before the day on which the Issuer’s unaudited interim financial statements are to be filed under the Securities Act, or, if no interim statements are required to be filed for the quarter, within 60 days of the end of the Issuer’s first, second and third fiscal quarters. This statement is not intended to replace the Issuer’s obligation to separately report material information forthwith upon the information becoming known to management or to post the forms required by the Exchange Policies. If material information became known and was reported during the preceding quarter to which this statement relates, management is encouraged to also make reference in this statement to the material information, the news release date and the posting date on the Exchange website.

General Instructions

(a)	Prepare this Quarterly Listing Statement using the format set out below. The sequence of questions must<br>not be altered nor should questions be omitted or left unanswered. The answers to the following items must be in narrative form. When<br>the answer to any item is negative or not applicable to the Issuer, state it in a sentence. The title to each item must precede the answer.
(b)	The term “Issuer” includes the Listed Issuer and any of its subsidiaries.
---	---
(c)	Terms used and not defined in this form are defined or interpreted in Policy 1 – Interpretation<br>and General Provisions.
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There are three schedules which must be attached to this report as follows:

SCHEDULE A: FINANCIAL STATEMENTS

Financial statements are required as follows:

For the first, second and third financial quarters interim financial statements prepared in accordance with the requirements under Ontario securities law must be attached.

FORM 5 – QUARTERLY LISTING STATEMENT

January 2015

Page 1

If the Issuer is exempt from filing certain interim financial statements, give the date of the exempting order.

Refer to the attached Condensed Interim Consolidated Financial Statementsfor the period ended June 30, 2021.

SCHEDULE B: SUPPLEMENTARY INFORMATION

The supplementary information set out below must be provided when not included in Schedule A.

1.	Related party transactions

Provide disclosure of all transactions with a Related Person, including those previously disclosed on Form 10. Include in the disclosure the following information about the transactions with Related Persons:

(a)	A description of the relationship between the transacting parties. Be as precise as possible in this description<br>of the relationship. Terms such as affiliate, associate or related company without further clarifying details are not sufficient.
(b)	A description of the transaction(s), including those for which no amount has been recorded.
---	---
(c)	The recorded amount of the transactions classified by financial statement category.
---	---
(d)	The amounts due to or from Related Persons and the terms and conditions relating thereto.
---	---
(e)	Contractual obligations with Related Persons, separate from other contractual obligations.
---	---
(f)	Contingencies involving Related Persons, separate from other contingencies.
---	---

Refer to the attached Condensed Interim Consolidated Financial Statementsfor the period ended June 30, 2021 – Note 19.

2.	Summary of securities issued and options granted during the period.

Provide the following information for the period beginning on the date of the last Listing Statement (Form 2A):

(a)	summary of securities issued during the period,

FORM 5 – QUARTERLY LISTING STATEMENT

January 2015

Page 2

<br><br> <br><br><br> <br><br><br> <br><br><br> <br><br><br> <br><br><br> <br>Date of Issue	**<br><br> <br>Type of Security (common shares, convertible debentures, etc.)**	Type of Issue (private placement, public offering, exercise of warrants, etc.)	Number	<br><br> <br><br><br> <br><br><br> <br><br><br> <br><br><br> <br><br><br> <br>**<br><br> <br>Price**	<br><br> <br><br><br> <br><br><br> <br><br><br> <br><br><br> <br><br><br> <br>Total Proceeds	<br><br> <br><br><br> <br><br><br> <br><br><br> <br>Type of Consideration (cash, property, etc.)
(b)	summary of options granted during the period,
---	---
Date	<br><br> <br><br><br> <br>Number	**<br><br> <br>Name of Optionee<br><br> <br>if Related Person<br><br> <br>and relationship**	**<br><br> <br>Generic description of other Optionees**	<br><br> <br><br><br> <br>Exercise Price	<br><br> <br><br><br> <br>Expiry Date	**<br><br> <br>Market Price on date of Grant**
---	---	---	---	---	---	---

Refer to the attached condensed Interim Consolidated Financial Statementsfor the period ended June 30, 2021 – Notes 12 and 13 and Annual Consolidated Financial Statements for the period ended December31, 2020 – Note 12 and 13.

3.	Summary of securities as at the end of the reporting period.

Provide the following information in tabular format as at the end of the reporting period:

(a)	description of authorized share capital including number of shares for each class, dividend rates on preferred<br>shares and whether or not cumulative, redemption and conversion provisions,
Authorized Share Capital	Number of Authorized Shares
---	---
Multiple Voting Shares	No Maximum
Subordinate Voting Shares	No Maximum

FORM 5 – QUARTERLY LISTING STATEMENT

January 2015

Page 3

(b)	number and recorded value for shares issued and outstanding,
Class of Share	Number of Issued and<br><br> Outstanding Shares
---	---	---
Multiple Voting Shares		93,970,705
Subordinate Voting Shares		609,289,821
(c)	description of options, warrants and convertible securities outstanding, including number or amount, exercise<br>or conversion price and expiry date, and any recorded value, and
---	---
Securities	Number of Outstanding Shares
---	---	---
Options		25,804,447
RSU		3,307,054
(d)	number of shares in each class of shares subject to escrow or pooling agreements or any other restriction<br>on transfer.
---	---
Class of Share	Number of Issued and<br><br> Outstanding Shares
---	---	---
Multiple Voting Shares		64,841,444
Subordinate Voting Shares		238,813,050
4.	List the names of the directors and officers, with an indication of the position(s) held, as at thedate this report is signed and filed.
---	---
·	Boris Jordan, Executive Chairman
---	---
·	Joseph Lusardi, Executive Vice Chairman
---	---
·	Jaswinder Grover, Director
---	---
·	Karl Johansson, Director
---	---
·	Peter Derby, Director
---	---
·	Mitch Kahn, Director
---	---
·	Joe Bayern, Chief Executive Officer
---	---
·	Ranjan Kalia, Chief Financial Officer
---	---
·	Neil Davidson, Chief Operating Officer
---	---
·	Peter Clateman, Chief Legal Officer
---	---
·	Jim Shorris, Chief Compliance Officer
---	---

SCHEDULE C: MANAGEMENT DISCUSSION AND ANALYSIS

Provide Interim MD&A if required by applicable securities legislation.

Refer to the attached MD&A for the period ended June30, 2021.

FORM 5 – QUARTERLY LISTING STATEMENT

January 2015

Page 4

Certificate Of Compliance

The undersigned hereby certifies that:

1.	The undersigned is a director and/or senior officer of the Issuer and has been duly authorized by a resolution<br>of the board of directors of the Issuer to sign this Quarterly Listing Statement.
2.	As of the date hereof there is no material information concerning the Issuer which has not been publicly<br>disclosed.
---	---
3.	The undersigned hereby certifies to the Exchange that the Issuer is in compliance with the requirements<br>of applicable securities legislation (as such term is defined in National Instrument 14-101) and all Exchange Requirements (as defined<br>in CNSX Policy 1).
---	---
4.	All of the information in this Form 5 Quarterly Listing Statement is true.
---	---
Dated August 30, 2021.
---	---
	Christine Taylor
	Name of Director or Senior Officer
	(Signed) Christine Taylor
	Signature
	Senior Vice President, Finance
	Official Capacity
Issuer Details<br><br> <br>Name of Issuer<br><br> <br>Curaleaf Holdings, Inc.	For Quarter Ended<br><br> <br><br><br> <br>June 30, 2021	Date of Report<br><br> <br>YY/MM/D<br><br> <br><br><br> <br>21/08/30
---	---	---
Issuer Address<br><br> <br><br><br> <br>666 Burrard Street Suite 1700
City/Province/Postal Code<br><br> <br><br><br> <br>Vancouver / BC / V6C 2X8	Issuer Fax No. ( )	Issuer Telephone No.<br><br> <br>(781) 451-0150
Contact Name<br><br> <br><br><br> <br>Carlos Madrazo	Contact Position<br><br> <br>Senior VP Investor Relations & Capital Markets	Contact Telephone No.<br><br> <br><br><br> <br>(781) 486-1337
Contact Email Address<br><br> <br><br><br> <br>[email protected]	Web Site Address<br><br> <br><br><br> <br>www.curaleaf.com

FORM 5 – QUARTERLY LISTING STATEMENT

January 2015

Page 5

CURALEAF HOLDINGS, INC.

Unaudited Condensed Interim Consolidated Financial Statements

As of and for the Three and Six Months Ended

June 30, 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 and Other Comprehensive Income (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	5-37

Curaleaf Holdings, Inc.

Condensed Interim Consolidated Statements of Financial Position

Unaudited

(in thousands)

			June 30,			December 31,
	Note		2021			2020
Assets				Unaudited			Audited
Current assets:
Cash and cash equivalents			$	333,791		$	73,542
Accounts receivable, net		3		49,672			28,830
Inventories, net		5		304,648			197,991
Biological assets		6, 20		64,263			46,210
Assets held for sale		7		31,877			58,504
Prepaid expenses and other current assets				21,282			10,140
Current portion of notes receivable		8		—			2,645
Total current assets				805,533			417,862
Deferred tax asset				6,266			5,528
Notes receivable		8		2,602			2,000
Property, plant and equipment, net		9		306,573			242,855
Right-of-use assets, net		18		285,549			267,168
Intangible assets, net		10		1,116,716			797,401
Goodwill		10		583,250			470,144
Investments		4		23,493			16,264
Prepaid acquisition consideration		4		—			132,234
Other assets				24,711			35,135
Total assets			$	3,154,693		$	2,386,591
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable			$	42,957		$	47,043
Accrued expenses				59,672			57,475
Income tax payable				63,384			79,649
Current portion of lease liability		18		18,312			15,710
Current portion of notes payable		11		1,706			6,500
Current contingent consideration liability		4, 18		9,155			—
Liabilities held for sale		7		7,077			7,181
Other current liabilities		20		13,083			6,568
Total current liabilities				215,346			220,126
Deferred tax liability				340,358			226,465
Notes payable		11		336,452			285,001
Lease liability		18		293,190			270,495
Non-controlling interest redemption liability		20		129,066			2,694
Contingent consideration liability		4, 20		29,106			1,898
Other long term liability				4,098			3,698
Total liabilities				1,347,616			1,010,377
Shareholders’ equity:
Share capital				2,267,167			1,754,412
Treasury shares				(5,208	)		(5,208	)
Reserves				(239,265	)		(177,744	)
Accumulated other comprehensive income				2,180			—
Accumulated deficit				(219,098	)		(194,645	)
Total Curaleaf Holdings, Inc. shareholders' equity		12		1,805,776			1,376,815
Redeemable non-controlling interest contingency		20		(129,066	)		(2,694	)
Non-controlling interest		21		130,367			2,093
Total shareholders’ equity				1,807,077			1,376,214
Total liabilities and shareholders’ equity			$	3,154,693		$	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 and Other Comprehensive Income

Unaudited

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

			Three months ended						Six months ended
			June 30,						June 30,
	Note		2021			2020			2021			2020
Revenues:
Retail and wholesale revenues			$	311,494		$	99,579		$	571,377		$	176,635
Management fee income				711			17,901			1,148			37,342
Total revenues				312,205			117,480			572,525			213,977
Cost of goods sold				156,967			56,844			288,820			100,856
Gross profit before impact of biological assets				155,238			60,636			283,705			113,121
Realized fair value amounts included in inventory sold				(81,803	)		(22,423	)		(150,717	)		(43,613	)
Unrealized fair value gain on growth of biological assets		6		111,060			43,014			192,321			79,761
Gross profit				184,495			81,227			325,309			149,269
Operating expenses:
Selling, general and administrative		14		87,959			40,466			168,052			86,324
Share-based compensation		13		18,370			4,833			23,277			9,334
Depreciation and amortization		9, 10, 18		26,280			14,237			48,392			26,924
Total operating expenses				132,609			59,536			239,721			122,582
Income from operations				51,886			21,691			85,588			26,687
Other income (expense):
Interest income				278			3,573			366			6,419
Interest expense		11		(12,269	)		(11,357	)		(24,420	)		(21,849	)
Interest expense related to lease liabilities		18		(9,339	)		(2,132	)		(17,899	)		(4,290	)
Other income		7, 11, 15		2,304			(77	)		2,719			2,529
Total other expense				(19,026	)		(9,993	)		(39,234	)		(17,191	)
Income (loss) before provision for income taxes				32,860			11,698			46,354			9,496
Income tax expense				(42,624	)		(13,534	)		(73,332	)		(26,783	)
Net loss				(9,764	)		(1,836	)		(26,978	)		(17,287	)
Less: Net income (loss) attributable to non-controlling interest		21		(2,524	)		193			(2,524	)		(170	)
Net loss attributable to Curaleaf Holdings, Inc.			$	(7,240	)	$	(2,029	)	$	(24,454	)	$	(17,117	)
Loss per share attributable to Curaleaf Holdings, Inc. – basic and diluted		16	$	(0.01	)	$	(0.00	)	$	(0.04	)	$	(0.03	)
Weighted average common shares outstanding – basic and diluted		16		701,668,932			533,192,806			691,909,375			520,446,921
Net loss			$	(9,764	)	$	(1,836	)	$	(26,978	)	$	(17,287	)
Foreign currency translation differences				2,180			—			2,180			—
Total comprehensive loss			$	(7,584	)	$	(1,836	)	$	(24,798	)	$	(17,287	)

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						Accumulated<br> Other					Total Curaleaf<br><br> Holdings, Inc.			Redeemable<br> Non - <br> Controlling Interest			Non-Controlling			Redeemable<br><br> Non-Controlling			Total
	#<br> of Shares							Shares			Reserves			Reserves			Total			Comprehensive		Accumulated			Shareholders'			Contingency			Interest			Interest			Shareholders’
	SVS		MVS			Amount		(Note 12)			(Note 13)			(Note 4)			Reserves			Income		Deficit			Equity			(Note 4)			(Note 4)			(Note 4)			Equity
Balances<br> 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<br> of shares in connection with acquisitions		55,790,122		—			268,799		—			—			—			—			—		—			268,799			—			—			—			268,799
Minority<br> buyouts		3,788,920		—			25,752		—			—			(16,490	)		(16,490	)		—		—			9,262			—			—			1,710			10,972
Exercise of stock options		4,221,843		—			3,891		—			(3,012	)		—			(3,012	)		—		—			879			—			—			—			879
Share-based<br> compensation		—		—			—		—			9,334			—			9,334			—		—			9,334			—			—			—			9,334
Non cash<br> bonus		—		—			—		—			1,518			—			1,518			—		—			1,518			—			—			—			1,518
Conversion<br> of MVS to SVS		10,000,000		(10,000,000	)		—		—			—			—			—			—		—			—			—			—			—			—
Net<br> income (loss)		—		—			—		—			—			—			—			—		(17,117	)		(17,117	)		—			(640	)		470			(17,287	)
Balances<br> as of June 30, 2020		439,915,251		93,970,705		$	992,141	$	(5,208	)	$	28,357		$	(183,826	)	$	(155,469	)	$	—	$	(150,027	)	$	681,437		$	(2,694	)	$	1,516		$	(2,598	)	$	677,661
Balances<br> 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<br> of shares in connection with public offering		18,975,000		—			261,597		—			—			(22,286	)		(22,286	)		—		—			239,311			—			—			—			239,311
Issuance<br> of shares in connection with acquisitions		16,426,167		—			242,366		—			—			(56,387	)		(56,387	)		—		—			185,980			—			—			—			185,980
Initial NCI<br> - Curaleaf International		—		—			—		—			—			—			—			—		—			—			(126,372	)		130,798			—			4,426
Exercise<br> of stock options		4,057,514		—			8,792		—			(6,125	)		—			(6,125	)		—		—			2,667			—			—			—			2,667
Share-based<br> compensation		—		—			—		—			23,277			—			23,277			—		—			23,277			—			—			—			23,277
Foreign currency<br> exchange variance		—		—			—		—			—			—			—			2,180		—			2,180			—			—			—			2,180
Net<br> loss		—		—			—		—			—			—			—			—		(24,454	)		(24,454	)		—			(2,524	)		—			(26,978	)
Balances<br> as of June 30, 2021		609,289,821		93,970,705		$	2,267,167	$	(5,208	)	$	51,682		$	(290,947	)	$	(239,265	)	$	2,180	$	(219,098	)	$	1,805,776		$	(129,066	)	$	130,367		$	—		$	1,807,077

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)

			Six months ended
			June 30,
	Note		2021			2020
Cash flows from operating activities:
Net loss			$	(26,978	)	$	(17,287	)
Adjustments to reconcile loss to net cash provided (used) in operating activities:
Depreciation and amortization				65,037			34,983
Share-based compensation				23,277			10,852
Non-cash interest expense				19,477			5,633
Unrealized gain on changes in fair value of biological assets				(192,349	)		(79,761	)
Realized fair value amounts included in inventory sold		18		150,717			43,613
(Gain)/loss on sale of property, plant and equipment				(740	)		—
Deferred taxes				8,250			6,503
Changes in operating assets and liabilities
Accounts receivable				(12,046	)		8,522
Biological assets				29,294			26,852
Inventories				(100,800	)		(46,197	)
Prepaid expenses and other current assets				(13,240	)		1,299
Other assets				(1,137	)		(1,442	)
Accounts payable				(4,516	)		4,614
Income taxes payable				(15,377	)		21,803
Accrued expenses				(7,996	)		1,827
Net cash provided by (used in) operating activities				(79,127	)		21,814
Cash flows from investing activities:
Purchases of property, plant and equipment, net				(73,342	)		(51,511	)
Proceeds from sale of entity		8		24,884			—
Payments made on completion on acquisitions				—			(51,188	)
Cash acquired from acquisitions				12,891			—
Amounts advanced for notes receivable, net of payments received				2,038			(14,100	)
Net cash used in investing activities				(33,529	)		(116,799	)
Cash flows from financing activities:
Cash received from financing agreement		11		54,599			185,723
Proceeds from sale leaseback				19,947			—
Debt issuance costs				(681	)		—
Lease liability payments		18		(25,130	)		(11,164	)
Proceeds from minority interest investment in Curaleaf International				86,957			—
Principal payments on notes payable				(6,093	)		—
Exercise of stock options				2,667			879
Issuance of common shares, net of issuance costs				240,569			—
Net cash provided by financing activities				372,835			175,438
Net change in cash				260,179			80,453
Cash at beginning of period				73,542			42,310
Effect of exchange rate on cash				70			—
Cash at end of period				333,791			122,763
Supplemental disclosure of cash flow information:
Cash paid for interest				1,269			18,092
Cash paid for income tax				82,593			—
Supplemental disclosure of non-cash investing and financing activities:
Issuance of shares in connection with minority buyouts				—			10,972
Issuance of shares in connection with acquisitions				185,979			268,799
Non-cash acquisition consideration				45,211			—
Contingent consideration incurred in connection with acquisitions				9,155			68,012
Forgiveness of note receivable in connection with acquisition				—			751
Loss on sale of entities				(582	)		—
Equity issuance				1,262			—

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

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 quoted on the OTCQX ® Best Market under the symbol “CURLF”.

On April 7, 2021, the Company established an overseas subsidiary named Curaleaf International Holdings Limited (“Curaleaf International”) together with a strategic investor who provided initial capital of $130,798 for 31.5% equity stake in Curaleaf International (the “Curaleaf International Transaction”). Curaleaf International was used for the acquisition of EMMAC Life Sciences Limited (“EMMAC”), the largest vertically integrated independent cannabis company in Europe. 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 (as defined below) 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 has 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 the earlier of change of control or in 2025.

The head office of the Company is located at 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 of the Company as at and for the years ended December 31, 2020 and 2019 (the “Annual Financial Statements”), which are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. 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 (“IASB”).

These Interim Financial Statements were approved by the Board of Directors of the Company and authorized for issue by the Board of Directors on August 6, 2021.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Functional currency

The Company and its United States (“U.S.”) subsidiaries’ functional currency, as determined by management, is the U.S. dollar (“USD”). These Interim Financial Statements are presented in thousands USD unless otherwise stated. The Company’s international subsidiary’s functional currency, as determined by management, are the Great Britain Pound (“GBP”), the Euro, and the Swiss Franc (“CHF”). The international financial statements are converted from GBP, Euro, and CHF to USD using the period’s average rate for profit and loss amounts and the period end rate for balance sheet items. Conversion adjustments are recognized with accumulated other comprehensive income, which is a component of equity.

Changes in presentation

Where necessary, corresponding figures have been adjusted to conform to the presentation of the current year amounts.

The International Accounting Standard 1 - Presentation of Financial Statements, requires an entity to present a statement of financial position at the beginning of the earliest comparative period (“opening statement of financial position”), when the Company applies an accounting policy retrospectively or makes a retrospective restatement or when it reclassifies items in its financial statements.

The requirement to present the additional opening statement of financial position, when the Company has made a restatement or reclassification, extends to the information in the related notes. The Company has determined it more relevant to disclose Know-How separately from Service agreements within intangible assets (Note 10). The Company has recorded a retrospective measurement period adjustment to goodwill and prepaid acquisition consideration (Notes 4 and 10). However, the Company considered materiality and concluded that it is sufficient to present such information only in those notes that have been impacted by a reclassification, as other notes of the financial statements have not been impacted by the reclassification. The omission of the notes to the additional opening statement of financial position is therefore, in the Company’s view, not material.

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.

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:

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

			June 30,			December 31,
	Operations		2021			2020
Business name	Location		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	%
Curaleaf International Holdings, Limited		Guernsey, UK		68.5	%		0	%
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		—			—

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 and six months ended June 30, 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 (“IFRS 5”). 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 filed on April 28, 2021, which is available on the Company’s profile on SEDAR 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 Amendmentsto IAS 1: Classification of 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 Amendments toIAS 37: 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Note 3 – Accounts receivable

Accounts receivable consist of the following:

	June 30,		December 31,
	2021		2020
Trade accounts receivable, net	$	46,915	$	30,919
Other receivables		2,757		2,447
Transferred to assets held for sale		—		(4,536	)
Total trade and other receivables	$	49,672	$	28,830

As of June 30, 2021, the Company had reserved $3,904 compared to $5,530 as of December 31, 2020 for potential credit losses.

Note 4 – Acquisitions

A summary of acquisitions completed during the six months ended June 30, 2021 and the year ended December 31, 2020 is provided below:

	Three and Six months ended June 30, 2021
Purchase price allocation	EMMAC (2) ()		Grassroots Maryland (2)
Assets acquired:
Cash			$	11,976
Accounts receivable, net				6,219
Prepaid expenses and other current assets				452
Inventory				4,550
Biological assets				1,164
Property, plant and equipment, net				19,448
Right-of-use assets				726
Other assets				—
Intangible assets :
Licenses				112,460
Trade name				—
Non-compete agreements				—
Intellectual Property				—
Goodwill				33,847
Deferred tax liabilities		)		(33,235	)
Liabilities assumed		)		(11,808	)
Consideration transferred			$	145,799

All values are in US Dollars.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

	2020 Acquisitions
Purchase price allocation	Cura (2)			Remedy (2)			Arrow (1)			MEOT (2)			Curaleaf NJ (2)			Blue Kudu (1)			Grassroots (2)			ATG (2)
Assets acquired:
Cash	$	12,755		$	172		$	711		$	395		$	3,667		$	276		$	28,690		$	7,253
Accounts receivable, net		11,027			15			—			129			1,995			350			5,511			—
Prepaid expenses 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 assets		—			79			—			705			2,340			—			4,571			379
Property, plant and equipment, net		7,465			319			1,854			1,081			6,187			56			37,128			4,397
Right-of-use assets		9,047			108			2,058			1,812			41,518			812			103,055			1,555
Other assets		832			—			—			1,034			46			—			91			—
Intangible assets :
Licenses		135,060			—			38,435			—			57,580			3,845			300,140			24,690
Trade name		28,340			160			—			170			8,260			—			12,130			120
Service agreements		—			1,430			—			5,830			—			—			3,080			—
Know-how		59,030			—			—			—			—			—			—			—
Non-compete agreements		4,950			—			—			—			—			—			19,290			—
Goodwill		113,252			909			—			561			22,863			—			243,458			19,072
Deferred tax liabilities		(58,971	)		(480	)		—			(1,680	)		(20,525	)		—			(102,329	)		(9,397	)
Liabilities assumed		(22,652	)		(573	)		(5,885	)		(3,426	)		(46,065	)		(1,469	)		(159,368	)		(9,811	)
Consideration transferred	$	324,441		$	2,369		$	37,681		$	8,044		$	83,233		$	3,993		$	513,383		$	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 acquisitions

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

On April 7, 2021, Curaleaf International completed the acquisition of EMMAC (the “EMMAC Transaction”), the largest vertically integrated independent cannabis company in Europe, for base consideration of (i) approximately $45,211 in cash, (ii) the issuance of 15,714,390 SVS to benefit the former holders of ordinary shares of EMMAC with a fair value, based on a third party valuation that takes into account transfer restrictions and the time value of money, of approximately $178,578 and (iii) 706,105 SVS to be held in escrow in accordance with the terms of the EMMAC Share Purchase Agreement with a fair value of approximately $7,401. The portion of the consideration paid through the issuance of SVS was subject to a statutory four-month hold period as well as a lock-up agreement with each recipient restricting trading of the SVS received, with an initial release of 5% of SVS from such restrictions at closing, and subsequent release of 5% of SVS from such restrictions at the end of each calendar quarter following the closing of the EMMAC Transaction. Additional consideration is to be paid based upon the successful achievement of certain performance milestones including being permitted by a governmental entity in Europe to sell, produce, market, or distribute cannabis for recreational purposes on a temporary, trial, experimental, interim, study, or pilot basis, achieving revenue targets in 2022 in the UK and Germany markets, and dry flower production at the Terra Verde cultivation facilities of at least 10 tons during 2022. The total contingent consideration related to EMMAC had a fair value of $27,207. The Company also assumed a contingent consideration liability related to the EMMAC acquisition of Terra Verde in 2020, which had a fair value of $9,154. After working capital adjustments at closing, the total consideration paid for EMMAC was $267,551. The Company incurred and expensed transaction costs of approximately $2,615 related to the EMMAC Transaction.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

The Company calculated, on a pro forma basis, the combined results of the acquired entity as if the EMMAC Transaction had occurred as of January 1, 2021. These unaudited pro forma results are not necessarily indicative of either the actual consolidated results had the acquisition occurred as of January 1, 2021 or of the future consolidated operating results. For the EMMAC Transaction, total unaudited pro-forma revenue and net loss for the six months ended June 30, 2021 was $577,390 and $33,202, respectively.

Revenue and net loss from EMMAC included in the consolidated statement of profits and losses for the six months ended June 30, 2021 was $5,308 and $8,007, respectively.

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

Through its acquisition of Grassroots (as defined below), the Company acquired an option to purchase 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. MCCW is the sole owner of each of GR Vending MD Management, LLC and GR Vending MD, LLC. Mr. Mitchell 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. Total consideration paid for MCCW was an allocation of $145,799 of the total Grassroots consideration from prepaid acquisition consideration. See further detail under the heading “2020 Acquisitions – GR Companies, Inc. a Delaware company (“Grassroots”) below. The Company did not incur any additional expenses in relation to this acquisition.

2020 acquisitions

For more detail regarding completed 2020 acquisitions, please see the 2020 Audited Annual Financial Statements, filed under the Company’s profile on SEDAR on March 11, 2021.

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

In July 2019, the Company entered into an Agreement and Plan of Merger to acquire Grassroots (the “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 Acquisition, which included reimbursements of permitted capital expenditures and acquisitions that occurred between signing and closing, transaction related expenses, and replenishment of working capital. 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 Acquisition. At closing, the parties resolved that certain Grassroots assets in Illinois, Ohio, and a dispensary in Maryland, were designated for sale to comply with local limitations on license ownership- see further detail related to the reorganization of the Maryland and Illinois entities and the sale of the Ohio assets subsequent to Q2 in Note 7- Assets and liabilities held for sale. Due to the limitations on license ownership, the Company recognized $132,234 for prepayment of acquisition consideration in July 2020. In May 2021, the Company received regulatory approval to own and operate MCCW, and has accordingly recorded a retrospective measurement period adjustment of $13,565 to Goodwill, resulting in a Goodwill fair value of $243,458 as of the date of acquisition. The transaction price remains subject to post-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 Q2 2021, the Company completed the reorganization of the Maryland and Illinois entities and the sale of the Ohio assets. See further details in Note 7 – Assets and liabilities held for sale.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Pending acquisitions

The following acquisition was completed subsequent to June 30, 2021. In accordance with IFRS 10 – Consolidated Financial Statements, prior to acquisition, the Company had concluded that it does control the operations of the acquiree, and has therefore consolidated the results of the entity in the Interim Financial Statements. Due to the timing of the transaction closing, sufficient information was not available to complete the Purchase Price accounting at the time of filing.

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 in order to expand the Company’s cultivation and processing capacity in Ohio. Regulatory approval to complete the transaction was received in July 2021. In accordance with the purchase agreement, the Company paid $5,000 cash in May 2019, $7,500 in cash in July 2020, and the final $7,500 in cash in July 2021 at closing. The Company incurred transaction costs to date of approximately $91.

The following acquisition had been signed but was not yet completed as of June 30, 2021. The Company has concluded that it does not control the operations of the acquiree in accordance with IFRS 10 – Consolidated Financial Statements, and accordingly, the results of the following entity are not included in the Interim Financial Statements:

Los Sueños Farms, LLC and its relatedentities

In May 2021, the Company signed definitive documents to acquire Los Sueños Farms, LLC and its related entities (“Los Sueños”) which will significantly expand the Company’s Colorado presence, vertically integrating in the state with large scale outdoor cannabis cultivation and two retail dispensaries. The proposed transaction includes three Pueblo, Colorado outdoor cannabis grow facilities covering 66 acres of cultivation capacity (once fully expanded), an 1,800-plant indoor grow, equipment, licensed operating entities, and two retail cannabis dispensary locations, called “The Spot 420” (in Trinidad and Pueblo West) serving medical as well as adult use customers. Total base consideration for the proposed acquisition of Los Sueños will be approximately $67,000 payable in cash, plus a potential earnout of up to $4,000, to be paid in 2023 based on operating cash-flow based targets for 2022. The transaction is expected to close in late 2021.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Note 5 – Inventories

Inventories consist of the following:

	June 30,			December 31,
	2021			2020
Raw materials
Harvested cannabis	$	29,728		$	5,036
Harvested trim		18,760			8,450
Total raw materials		48,488			13,486
Work-in-process
Processing		75,165			67,955
Finished goods
Consumables		15,586			10,403
Flower		16,775			14,231
Extracts		59,197			31,269
Total finished goods		91,558			55,903
Fair value adjustment to inventory related to biological assets		92,084			63,828
Transferred to assets held for sale		(2,647	)		(3,181	)
	$	304,648		$	197,991

During the six months ended June 30, 2021, the Company recognized cost of goods sold of $439,537 of which $288,820 was included in costs before the impact of biological assets adjustments in the amount of $150,717, a non-cash expense relating to the realized change in fair value of inventory sold.

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
Assets obtained in the acquisition of EMMAC		3,993
Grassroots Maryland adjustment		1,164
Unrealized fair value gain on growth of biological assets		192,725
Increase in biological assets due to capitalized costs		60,618
Transferred to inventories upon harvest		(240,781	)
Transferred to assets held for sale		334
Balance at June 30, 2021	$	64,263
Balance at December 31, 2019	$	19,197
Unrealized fair value gain on growth of biological assets		79,761
Increase in biological assets due to capitalized costs		38,884
Transferred to inventories upon harvest		(109,349	)
Transferred to assets held for sale		(1,468	)
Balance at June 30, 2020	$	27,025

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

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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 June 30, 2021, and December 31, 2020, it was expected that the Company’s biological assets would yield 21,792,142 and 16,905,180 grams of cannabis when harvested, respectively. See Note 20 – Fair value measurements, 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)		(30,397	)		(2,274	)		6,044		(26,627	)
Total assets held for sale at June 30, 2021	$	—			—			31,877	$	31,877
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)		(3,145	)		(797	)		3,838		(104	)
Total liabilities associated with assets held for sale at June 30, 2021	$	—			—			7,077	$	7,077

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 on 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.

In November 2020, the Company signed a definitive agreement to sell 100% of Town Center Wellness, LLC, (Elevate Takoma) 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 on May 1, 2021 after receipt of regulatory approval by the Maryland Medical Cannabis Commission. After working capital adjustments, the total consideration was $3,613. 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, the “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. In July 2021, the transaction closed following receipt of regulatory approval by the Ohio Department of Commerce and the Company received $4,949 in proceeds.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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 (collectively, 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 a $10,000 deposit from Parallel, 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 for certain real estate assets associated with the Grassroots Acquisition.

Note 8 – Notes receivable

Notes receivable consist of the following:

	June 30,		December 31,
	2021		2020
Notes receivable - Misc.	$	362	$	—
Notes receivable HMS (Note 7)		2,240		—
Notes receivable RJB Enterprises, LLC.		—		1,645
Notes receivable Curaleaf Maryland, Inc.		—		3,000
Total notes receivable	$	2,602	$	4,645
Current portion of notes receivable	$	—	$	2,645
Long term notes receivable		2,602		2,000
Total notes receivable	$	2,602	$	4,645

Note 9 – Property, plant and equipment

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

	June 30,			December 31,
	2021			2020
Land	$	2,803		$	6,871
Building and improvements		182,368			139,044
Furniture and fixtures		88,108			70,486
Information technology		3,593			3,025
Construction in progress		85,446			73,728
Transferred to assets held for sale		(9,207	)		(6,326	)
Total property, plant and equipment		353,111			286,828
Less: Accumulated depreciation		(46,538	)		(43,973	)
Property, plant and equipment, net	$	306,573		$	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 and six months ended June 30, 2021 totaled $6,813 and $12,953, respectively, of which $4,355 and $8,523, 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															Balance
	at				PPA			Intangible			Year-to-date			Currency		at
	December<br> 31,		Acquisitions		Adjustment			Reclass			amortization			exchange		June 30,
Licenses	$	662,492	$	339,634	$	(197	)	$	—		$	(28,588	)	$	353	$973,694
Trade names		47,820		12,377		—			—			(2,376	)		13	57,834
Service agreements		63,595		—		—			(53,659	)		(326	)		—	9,610
Intellectual property and know-how		—		65		—			53,659			(2,938	)		5	50,791
Non-compete agreements		23,494		3,294		—			—			(2,004	)		3	24,787
Total<br> intangible assets, net	$	797,401	$	355,370	$	(197	)	$	—		$	(36,232	)	$	374	$1,116,716

Amortization of intangible assets was $19,936 and $36,232 for the three and six months ended June 30, 2021, respectively. Purchase price adjustments relate to remeasurement period adjustments, which were retrospectively reflected in the acquisition tables in Note 4.

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 June 30, 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		(13,605	)
Acquisition of EMMAC (Note 4)		126,504
Change in assets held for sale (Note 7)		207
Balance at June 30, 2021	$	583,250

Purchase price adjustments relate to remeasurement period adjustments, which were retrospectively reflected in the acquisition tables in Note 4. There were no indications of goodwill impairment for any CGUs for the three months ended June 30, 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:

	June 30,			December 31,
	2021			2020
Term Loan Facility
Principal amount	$	300,000		$	300,000
Unamortized debt discount		(24,341	)		(25,126	)
Net carrying amount	$	275,659		$	274,874
Promissory Note – 2024
Principal amount	$	10,000		$	10,000
Interest accrued/Unamortized debt discount		(300	)		(300	)
Net carrying amount	$	9,700		$	9,700
Credit Facility – 2024
Principle Amount	$	50,000		$	—
Unamortized Debt Discount		(132	)		—
Net carrying amount	$	49,868		$	—
Seller note payable	$	1,706		$	6,500
Other notes payable		1,225			427
Total other notes payable	$	2,931		$	6,927
Current portion of notes payable	$	1,706		$	6,500
Long term notes payable		336,452			285,001
Total notes payable	$	338,158		$	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.

In August 2018, the Company had issued $85,000 of senior secured debt under a financing agreement referred to as the Financing Agreement – 2021. 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 ended on 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 June 30, 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 $11,507 and $22,867 for the three and six months ended June 30, 2021, respectively, including interest expense related to the amortization of the debt discount of $353 and $796, respectively.

Promissory Note – 2024

In October 2020, the Company entered into a promissory note with a principal sum of $10,000 with Baldwin Holdings, LLC (the “Promissory Note – 2024”) 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 (“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 on 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 Term Loan Facility, 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 $329 and $654 for the three and six months ended June 30, 2021, respectively. There was no interest expense recognized for the three and six months ended June 30, 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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%.

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 June 30, 2021, future principal payments due under Notes payable were as follows:

Period	Amount
2021 (remaining six months)	$	1,706
2022		—
2023		300,000
2024		60,000
2025		—
2026 and thereafter		1,225
	$	362,931

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

Note 12 – Shareholders’ equity

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

Authorized

As of June 30, 2021, the authorized share capital consists of an unlimited number of multiple voting shares (“MVS”) without par value and an unlimited number of SVS without par value.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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 June 30, 2021 and December 31, 2020, the MVS represented approximately 13.4% and 14.2%, respectively, of the total issued and outstanding shares and 69.8% 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 articles of the Company currently provide that the MVS will automatically convert into SVS upon the earlier occurrence of the following events (i) on October 25, 2021, (ii) the 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 (iii) Mr. Jordan or his permitted holders no longer beneficially owning, directly or indirectly and in the aggregate, at least 5% of the issued and outstanding SVS and MVS on a non-diluted basis. At the annual and special meeting of the shareholders of the Company to be held on September 9, 2021, the shareholders of the Company will be asked to consider and, if deemed appropriate, approve, an amendment to the articles of the Company (the “Proposed Amendment”) in order to extend the automatic termination of the dual-class structure of the Company and to maintain such dual-class structure until the earlier to occur of (i) the transfer or disposition of the MVS by Mr. Boris Jordan to one or more third parties which are not permitted holders; (ii) Mr. Jordan or his permitted holders no longer beneficially owning, directly or indirectly and in the aggregate, at least 5% of the issued and outstanding SVS and MVS on a non-diluted basis; and (iii) the first business day following the first annual meeting of shareholders of the Company following the SVS being listed and posted for trading on a United States national securities exchange such as The Nasdaq Stock Market or The New York Stock Exchange. Refer to the management information circular dated July 30, 2021 and available on SEDAR under the Company’s profile at www.sedar.com for more information on the Proposed Amendment.

As of June 30, 2021, the Company had 93,970,705 MVS issued and outstanding that were held indirectly by Boris Jordan.

On January 12, 2021, the Company closed 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.

Holders of the SVS are entitled to one vote per share. As of June 30, 2021, the Company had 609,289,821 SVS issued and outstanding.

The Company had reserved 70,326,053 SVS and 66,380,185 SVS, as of June 30, 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).

Treasury shares

There were no shares repurchased into treasury for the three and six months ended June 30, 2021 and 2020.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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.

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:

	June 30,
	2021			2020
Fair value at grant date	$	10.14		$	3.40
Share price at grant date	$	14.73		$	5.69
Exercise price	$	15.77		$	4.54
Expected volatility		76.6	%		90.8	%
Expected life		6.1	years		5.9	years
Expected dividends		—	%		—	%
Risk-free interest rate (based on government bonds)		1.02	%		0.50	%

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 and six months ended June 30, 2021, the Company recorded share-based compensation in the amount of $18,370 and $23,277, respectively compared to $4,833 and $9,334 in the three and six months ended June 30, 2020.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Reconciliation of outstandingstock 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		$	1.78
Forfeited during the six month<br> period		(40,389	)		10.57		(487,570	)		7.13
Expired during the six month<br> period		(42,712	)		7.48
Exercised during the six month<br> period		(4,119,407	)		0.73		(3,970,996	)		0.22
Granted during the six month<br> period		4,070,297			15.77		1,865,124			4.54
Rollover<br> grants in connection with acquisition		—			—		4,820,663			9.98
Outstanding at June 30		25,804,447		$	6.65		29,146,736		$	2.12
Options<br> exercisable at June 30		15,274,210		$	4.79		18,578,714		$	0.58

Restrictedstock units (“RSUs”)

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

	Number of<br> RSUs
	2021			2020
Outstanding at January 1		2,452,338			2,170,064
Forfeited during the six month<br> period		15,460			(180,526	)
Released during the six month<br> period		(455,069	)		(250,847	)
Granted<br> during the six month period		1,294,325			1,507,414
Outstanding at June 30		3,307,054			3,246,105
RSUs<br> vested at June 30		—			414,119

Note 14 – Selling,general and administrative expense

Selling, general and administrative expenses consist of the following:

	Three months<br> ended				Six months<br> ended
	June 30,				June 30,
	2021		2020		2021		2020
Selling, general and administrative<br> expenses:
Salaries<br> and benefits	$	47,265	$	22,131	$	88,333	$	40,900
Sales and<br> marketing		10,140		5,010		20,629		8,618
Rent and<br> occupancy		6,897		1,338		13,801		2,162
Travel		1,846		930		2,627		2,593
Professional<br> fees		7,824		4,862		14,520		18,948
Office supplies<br> and services		7,119		3,802		14,456		6,587
Other		6,868		2,393		13,686		6,516
Total<br> selling, general and administrative expense	$	87,959	$	40,466	$	168,052	$	86,324

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Note 15 – Other income

Other income consists of the following:

	Three months<br> ended						Six months<br> ended
	June 30,						June 30,
	2021			2020			2021			2020
Gain (loss) on disposal<br> of assets	$	54		$	—		$	66		$	345
Gain (loss) on foreign currency<br> exchange		(56	)		—			(56	)		18
Gain (loss) on investment		2,148			(55	)		2,148			—
Gain (loss) on non-substantial<br> debt modification		4			—			4			—
Other income<br> (expense)		154			(22	)		557			2,166
Total<br> other income, net	$	2,304		$	(77	)	$	2,719		$	2,529

Note 16 – Earningsper share

Basic and diluted loss per share attributable to the Company was calculated as follows:

	Three months ended						Six months ended
	June 30,						June 30,
	2021			2020			2021			2020
Numerator:
Net loss	$	(9,764	)	$	(1,836	)	$	(26,978	)	$	(17,287	)
Less: Net income (loss) attributable to redeemable non-controlling interest		(2,524	)		193			(2,524	)		(170	)
Net loss attributable to Curaleaf Holdings, Inc. — basic and diluted	$	(7,240	)	$	(2,029	)	$	(24,454	)	$	(17,117	)
Denominator:
Weighted average SVS outstanding — basic and diluted		701,668,932			533,192,806			691,909,375			520,446,921
Loss per share — basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.04	)	$	(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 SVS 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 the Company for the periods indicated because including them would have had an anti-dilutive effect:

	Six months<br> ended
	June 30,
	2021		2020
Options to purchase<br> SVS		25,804,447		29,146,736

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Note 17 – Segmentreporting

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 six months ended June 30, 2021:
Revenues	$	571,377	$	1,148		$	572,525
Gross profit		324,161		1,148			325,309
Income (loss)<br> from operations		129,743		(44,155	)		85,588
Net income<br> (loss)	$	101,867	$	(128,845	)	$	(26,978	)
	Cannabis		Non-Cannabis			Total
---	---	---	---	---	---	---	---	---
For the six months ended June 30, 2020:
Revenues	$	176,635	$	37,342		$	213,977
Gross profit		111,927		37,342			149,269
Income (loss)<br> from operations		31,373		(4,686	)		26,687
Net income<br> (loss)	$	23,721	$	(41,008	)	$	(17,287	)
	Cannabis		Non-Cannabis		Held<br> for sale		Total
---	---	---	---	---	---	---	---	---
As of June 30, 2021:
Total<br> assets	$	2,370,091	$	752,725	$	31,877	$	3,154,693
Total liabilities	$	775,009	$	565,530	$	7,077	$	1,347,616
	Cannabis		Non-Cannabis		Held<br> for sale		Total
---	---	---	---	---	---	---	---	---
As of December 31, 2020:
Total<br> 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

At June 30, 2021, approximate future minimum payments due under non-cancellable operating leases were as follows:

Period	Scheduled payments
2021 (remaining<br> six months)	$	73,033
2022		52,223
2023		50,691
2024		49,132
2025 and<br> thereafter		422,965
Total undiscounted lease liability		648,044
Impact<br> of discount		(336,007	)
Lease liability at June 30, 2021		312,037
Less current portion of lease<br> liability		(18,312	)
Less long-term<br> lease liabilities transferred to liabilities associated with assets held for sale		(535	)
Long-term<br> portion of lease liability	$	293,190

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 and six months ended June 30, 2021 and 2020 were immaterial.

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
ROU assets acquired (Note 4)		4,219
Additions to leased assets		27,727
Depreciation charges		(15,663	)
Changes<br> in assets held for sale		2,098
Carrying amount, June 30, 2021	$	285,549

The total interest expense on lease liabilities for the three and six months ended June 30, 2021 was $9,339 and $17,899, respectively.

The total depreciation expense on right-of-use assets for the three and six months ended June 30, 2021 was $8,282 and $15,999, respectively, of which $4,395 and $8,270, respectively, was included in cost of goods sold.

The total cash outflow for lease liability payments for the three and six months ended June 30, 2021 was $12,059 and $25,130, respectively.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Indemnificationagreements

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 of the Company. 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.

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 (the “Put Right”) to require that PalliaTech CT, LLC or any of its affiliates 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; and (3) the potential for additional equity in the Company 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 hearing has been scheduled for January 2022.

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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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.

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 foreign 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 foreign 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 June 30, 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 June 30, 2021, the Company also accrued interest and penalties of $866 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Note 19 – Relatedparty 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 EMMAC Transaction discussed in Note 4 – Acquisitions 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 MarketCapitalization 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 and Curaleaf International 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 EMMAC Transaction and Curaleaf International Transaction (the “Special Committee”), all of which were independent members of the Board of Directors within the meaning of National Instrument 52-110 – AuditCommittees. The Special Committee has received a fairness opinion from the independent investment bank 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.

The Company incurred the following transactions with related parties during the three and six months ended June 30, 2021 and 2020:

	Three months ended						Period ended						Balances as of
	June 30,						June 30,						June 30,			December 31,
	2021			2020			2021			2020			2021			2020
Transaction	Related party transactions						Related party transactions						Balance receivable (payable)
Processing fees ^(1)^	$	—		$	535		$	—		$	1,194		$	—		$	—
Consulting fees ^(2)^		362			—			456			74			—			—
Travel and reimbursement ^(2)^		22			60			1,277			151			—			—
Rent expense, net ^(3)^		(42	)		(60	)		(54	)		(119	)		—			—
Equipment purchases ^(4)^		—			—			1,426			—			—			—
Promissory Note - 2024 ^(5)^		329			—			654			—			(9,700	)		(9,700	)
Non-consolidated GR Companies ^(6)^		—			—			—			—			—			5,947
	$	671		$	535		$	3,759		$	1,300		$	(9,700	)	$	(3,753	)

(1) For the three and six months ended June 30, 2020, the Company recognized direct expenses of $535 and $1,195 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 and six months ended June 30, 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

(2) For the three and six months ended June 30, 2021, the Company recognized $22 and $1,277 in travel and other business development costs as expense to Measure 8 Venture Partners, a company controlled by Boris Jordan, Executive Chairman and control person of the Company. For the three and six months ended June 30, 2021, the Company recognized consulting expense of $92 and $186 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 and six months ended June 30, 2021, the Company recognized a rent expense credit of $60 and $119 for a sublease between Curaleaf NY, Inc. and Measure 8 Venture Partners, a company controlled by Boris Jordan, Executive Chairman and control person of the Company. For the three and six months ended June 30, 2021, the Company recognized a rent expense of $18 and $65 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 and six months ended June 30, 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 control person of the Company, and Cameron Forni, Select President, have interests in Sentia Wellness.

(5) For the period ended June 30, 2021, the Company had an outstanding notes payable balance of $9,700 and recognized a related interest expense of $329 and $654 for the three and six months ended June 30, 2021 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 – Notes payable). 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 MCCW from its sole owner, KDW, subject to regulatory approval, which was received May 1, 2021. MCCW is the holder of cultivation, processing, and dispensary licenses in Maryland. 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 and six months ended June 30, 2021 and 2020 are as follows:

	Three months ended June 30,				Six months ended June 30,
Key management personnel compensation	2021		2020		2021		2020
Short-term employee benefits	$	3,194	$	1,251	$	4,094	$	2,287
Other long-term benefits		11		12		21		19
Share-based payments		4,323		4,598		6,741		8,152
	$	7,528	$	5,861	$	10,856	$	10,458

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 and six months ended June 30, 2021 and 2020.

	Fair value measurements
	as of June 30, 2021 using:
	Level 1		Level 2		Level 3		Total
Assets:
Biological assets	$	—	$	—	$	64,263	$	64,263
	$	—	$	—	$	64,263	$	64,263
Liabilities:
Non-controlling interest redemption and contingent consideration liabilities	$	—	$	—	$	167,327	$	167,327
	$	—	$	—	$	167,327	$	167,327

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

	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

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 June 30, 2021 and December 31, 2021, on average, were 52% 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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

Significant inputs & assumptions	Sensitivity Inputs ('000s)				Sensitivity	(+/-) Impact on Fair Value ('000s)
	June 30,<br><br> 2021		December 31,<br><br> 2020			June 30, <br><br>2021		December 31, <br><br>2020
Total expected grams yielded		11,383		9,776	(+/-) 10% grams yield	$	4,596	$	3,017
Average cost per gram to complete production	$	1.20	$	1.78	(+/-) $1.00 per gram	$	11,383	$	9,734
Average selling price per gram, less cost	$	4.04	$	3.09	(+/-) $1.00 per gram	$	22,765	$	9,713

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 SVS and the DRH acquisition consideration was for $40,142 in cash as well as SVS. 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 purchase 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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 payable to the DRH Minority Members for the DRH Minority Membership Units was subject to adjustment based upon an independent valuation to be conducted following the completion of the Business Combination. The purpose of 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 closing of the Business Combination, not taking into account shares to be issued in connection with the related private placement (the “Diluted Share Count”). Upon completion of this valuation, the number of additional SVS issuable 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 June 30, 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 would result in an insignificant change in the fair value of the non-controlling interest contingency.

Curaleaf International put/call rights

On April 7, 2021, the Company established Curaleaf International together with a strategic investor who provided initial capital of $130,798 for 31.5% equity stake in Curaleaf International. Curaleaf and the strategic investor have entered into a shareholders' agreement regarding the governance of Curaleaf International pursuant to which Curaleaf has 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 the earlier of change of control or in 2025.

The Curaleaf International put/call rights represent a financial liability that is recorded at the present value of the redemption amount, with subsequent changes in fair value recognized in other comprehensive income . The redemption amount of the puttable option approximates the contribution amount by the strategic investor and represents a level 3 financial instrument, that is valued at each reporting period utilizing a Monte Carlo simulation valuation model. The fair value determination includes a high degree of subjectivity and judgement, which results in significant estimation uncertainty. As of June 30, 2021, the Curaleaf International put/call rights represent a financial liability of $126,372, with the offset being recognized separately from non-controlling interest in redeemable non-controlling interest within equity.

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 June 30, 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 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.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

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 six months ended June 30, 2021:
Accounts payable	$	42,957	$	—	$	42,957
Accrued expenses		59,672		—		59,672
Other current liabilities		13,083		—		13,083
Non-controlling interest redemption liability		—		129,066		129,066
Contingent consideration liability		9,155		29,106		38,261
	$	124,867	$	158,172	$	283,039

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. For more information, see Note 2 – COVID-19 Estimation Uncertainty and the heading “Risk Factors – Risks Related to the COVID-19 Pandemic” in the Company’s annual information form for the year ended December 31, 2020, which is available under the Company’s profile on SEDAR.

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 – Notes payable, 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 June 30, 2021 and December 31, 2020, the Company was not subject to externally imposed capital requirements.

Curaleaf Holdings, Inc.

Notes to Condensed Interim Consolidated Financial Statements

Unaudited

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

Note 21 – Non-Controlling Interest

On April 7, 2021, the Company established an overseas subsidiary named Curaleaf International Holdings Limited (“Curaleaf International”) together with a strategic investor who provided initial capital of $130,798 for 31.5% equity stake in Curaleaf International. Curaleaf International was used for the acquisition of EMMAC Life Sciences Limited (“EMMAC”), the largest vertically integrated independent cannabis company in Europe. 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 (as defined below) 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.

The following table presents the Company’s investment in Curaleaf International as of June 30, 2021 and 2020:

	June 30,
	2021		2020
Investment in Curaleaf International	$	184,346	$	—

The following table presents the current and non-current assets, current and non-current liabilities, as well as revenues and net loss of the Company’s investment in Curaleaf International for the six months ended June 30, 2021:

	June 30,
	2021
Current assets	$	79,703
Non-current assets	$	345,465
Current liabilities	$	11,408
Non-current liabilities	$	104,200
Revenue	$	4,102
Net Loss	$	(8,007)

Note 22 – Subsequent events

See Note 4 – Acquisitions, for information regarding additional acquisitions that were signed after June 30, 2021.

See Note 7 – Assets and liabilities held for sale, for information regarding transactions that were completed after June 30, 2021.

MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 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 and six months ended June 30, 2021 and 2020 prepared as ofAugust 9, 2021. It is supplemental to, and should be read in conjunction with, the Company’s unaudited condensed interim consolidatedfinancial statements and the accompanying notes for the three and six months ended June 30, 2021 and 2020. For the purposes of thisMD&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.comor through the SEDAR website at www.sedar.com. The Company’s interim financial statements have been prepared in compliance withInternational Accounting Standard 34 - Interim Financial Reporting. The Company followed the same accounting policies and methods of applicationas those disclosed in the annual audited consolidated financial statements of the Company for the year ended December 31, 2020. The Company’sinterim financial statements should be read in conjunction with the annual audited consolidated financial statements of the Company forthe year ended December 31, 2020, which have been prepared in accordance with International Financial Reporting Standards ("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 Obligationsof the 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 ofCanadian securities laws and United States securities laws (“forward-looking statements”). Forward-looking statementsare 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, future plans and strategies, operational results and other futureconditions of the Company. In addition, the Company may make or approve certain statements in future filings with Canadiansecurities regulatory authorities, in press releases, or in oral or written presentations by representatives of the Company that arenot statements of historical fact and may also constitute forward-looking statements. All statements, other than statements ofhistorical fact, made by the Company that address activities, events or developments that the Company expects or anticipates will ormay occur in the future are forward-looking statements, including, but not limited to, statements preceded by, followed by or thatinclude 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 comparablewords and includes, among others, information regarding: expectations for the effects and potential benefits of any transactions;expectations for the effects of COVID-19 on the business’ operations and financial condition; statements relating to thebusiness and future activities of, and developments related to, the Company after the date of this MD&A, including such thingsas future business strategy, competitive strengths, goals, expansion and growth of the Company’s business, operations andplans; expectations that planned acquisitions will be completed; expectations that licenses applied for will be obtained; potentialfuture 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 factorsrelated to the Company or the cannabis industry generally; the ability for U.S. holders of securities of the Company to sell them onthe Canadian Securities Exchange (“CSE”); and other events or conditions that may occur in the future.

Forward-lookingstatements may relate to future financial conditions, results of operations, plans, objectives, performance or businessdevelopments. These statements speak only as of and at the date they are made and are based on information currently available andon the then current expectations. Holders of securities of the Company are cautioned that forward-looking statements are not basedon historical facts but instead are based on reasonable assumptions, estimates, analysis and opinions of management of the Companyat the time they were provided or made, i**n light of itsexperience 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 otherfactors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially differentfrom any future results, performance or achievements expressed or implied by such forward-looking statements, including, but notlimited to, risks and uncertainties related to: business structure risks; the Company’s status as a holding company; theabsence of a dividend record; the concentrated voting control of the Company; market volatility; liquidity risks; legal andregulatory 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 lawsand regulations; risks relating to the lack of access to U.S. bankruptcy protections; the risk of heightened scrutiny by regulatoryauthorities; risk of legal, regulatory or political change; general regulatory and licensing risks; risks relating to limitations onownership of licenses; risks relating to regulatory actions and approvals from the Food and Drug Administration and risks oflitigation; increased costs as a result of being a public company; newly established legal regimes; the risk relating to enforcementof judgements outside Canada; environmental risks including environmental regulation and unknown environmental risks; generalbusiness risks including risks related to the COVID-19 pandemic; 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 theenforceability of contracts; risks relating to the resale of the Company’s subordinate voting shares (“SVS”) onthe CSE; risks relating to sales of substantial amounts of SVS; the Company’s reliance on the expertise and judgment of seniormanagement of the Company, and its ability to retain such senior management; risk relating to the concentrated voting control of theCompany’s Executive Chairman, Boris Jordan; risks inherent in an agricultural business; risks relating to unfavorablepublicity or consumer perception; product liability risks; risks relating to product recalls; risks relating to the results offuture clinical research; risks relating to the difficulty of attracting and retaining personnel; the Company’s dependence onsuppliers; the Company’s reliance on inputs; risks relating to the limited market data and difficulty to forecast results;intellectual property risk; constraints on marketing products; risks relating to fraudulent or illegal activity by employees,contractors and consultants; risks relating to information technology systems and cyber-attacks; risks relating to securitybreaches; the Company’s reliance on management services agreements with subsidiaries and affiliates; risks relating to websiteaccessibility; high bonding and insurance coverage risk; risks of leverage; risks relating to expansion into foreign jurisdictions;risks relating to future acquisitions or dispositions; the Company’s management of growth; the fact that past performance isnot indicative of future results and that financial projections may prove materially inaccurate or incorrect; risks relating toconflicts of interest; global economic conditions; tax risks; as well as those risk factors discussed under the “RiskFactors” section of the Company’s annual information form for the year ended December 31, 2020. The Company’sannual information 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 actualevents, performance or results to differ materially from what is projected in the forward-looking statements. You should not placeundue reliance on forward-looking statements contained in this MD&A. Such forward-looking statements are made as of the date ofthis MD&A. We undertake no obligation to update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as required by applicable law. The Company’s forward-looking statements areexpressly qualified in their entirety by this cautionary 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. The new Curaleaf International platform includes cultivation, EU GMP-certified processing, distribution, and R&D operations in Europe. Headquartered in Wakefield, Massachusetts, in the U.S., the Company has operations in 23 states and, as of June 30, 2021, operated 107 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. In Europe, the Company has 1 cultivation site in Portugal, 2 pharma grade cannabis processing and manufacturing facilities in Spain and the UK, 3 medical cannabis distribution licenses in UK, Germany and Switzerland and a medical cannabis pharmacy license (direct to patient) in the UK as well as pan-European CBD wellness and wholesale business with manufacturing centered in the UK. The Company also supplies medical cannabis wholesale to several jurisdictions, primarily Israel and Germany, from the cultivation and manufacturing facilities in Portugal and Spain. 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. 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 28, 2020, the Company filed a short form base shelf prospectus in Canada (the “Base Shelf Prospectus”) and a shelf registration statement on Form F-10, as amended (File No 333-249081) (the “Registration Statement”), with the United States Securities and Exchange Commission (“SEC”) under the U.S./Canada Multijurisdictional Disclosure System (“MJDS”). The Base Shelf Prospectus and Registration Statement allow the Company to offer up to $1,000,000 worth of 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 Base Shelf Prospectus and/or 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:

			June 30,			December 31,
	Operations		2021			2020
Business name	Location		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	%
Curaleaf International Holdings, Limited		Guernsey, UK		68.5	%		0	%
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		—			—

Company Performance and Objectives

The Company is currently active in numerous cannabis programs across the U.S. In the U.S., 41 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., 19 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. In Europe, only medical cannabis sales are allowed and product can be sold between jurisdictions.

A key aspect of the Company’s U.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 U.S. 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 in the U.S. 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 June 30, 2021, the Company operated 107 retail dispensaries in 18 states, 23 cultivation sites in 16 states and 30 processing sites in 22 states which sell cannabis through wholesale channels in the U.S. and in Europe, the Company operates 1 cultivation site in Portugal, 2 pharma grade cannabis processing and manufacturing facilities in Spain and the UK, 3 medical cannabis distribution licenses in UK, Germany and Switzerland and a medical cannabis pharmacy license (direct to patient) in the UK as well as pan-European CBD wellness and wholesale business with manufacturing centered in the UK. The Company also supplies medical cannabis wholesale to several jurisdictions, primarily Israel and Germany, from the cultivation and manufacturing facilities in Portugal and Spain.

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 as part of the U.S. operations. 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 U.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 U.S. and Europe 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 U.S. 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 U.S. 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 U.S. 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 U.S. cultivation facilities have grown over 266 strains of cannabis,<br>which have been tested and characterized for yield, cannabinoid content and other properties. Additionally, the Company’s U.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 U.S. extraction facilities use proprietary processes<br>for cannabis and terpene purification. The Company believes its manufacturers are industry leaders in achieving the desired composition<br>of cannabinoids and terpenes in finished products through processing and purification, thereby enabling timely response to trends in medical<br>product formulation.
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•	Formulation and Quality Control: The Company's U.S. processing facilities produce across the range of<br>solid, liquid and inhaled products utilizing its vast in-house knowledge and experience. By combining expert cultivation, manufacturing<br>and analytical laboratory operations, our processors have developed a complete in-house quality assurance and quality control program.<br>In-house quality 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 focus on optimizing cultivation and manufacturing techniques, developing new manufactured products, and on the medical benefits of cannabis.

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 June 30, 2021, the Company has 24 U.S. cultivation facilities totaling approximately 1.4 million square feet. Current annual production capacity in these facilities is estimated close to 346,000 pounds of dry flower. As of June 30, 2021, the Company has 32 U.S. 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 in the U.S. 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. In Europe, the method of sales occurs from medical cannabis distribution in UK, Germany and Switzerland, a medical cannabis pharmacy (direct to patient) in the UK, supplying medical cannabis wholesale to several jurisdictions, primarily to Israel and Germany as well as selling CBD wholesale throughout Europe.

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, processes, and know-how 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 U.S. cannabis industry. The Company has two federally registered patents with the United States Patent and Trademark Office (“USPTO”). Additionally, as of June 30, 2021, the Company has three registered trademarks and 44 trademarks that have been filed and are pending approval with the USPTO, and we are actively pursuing the filing of additional trademarks. The Company also has 50 trademarks filed in various international jurisdictions.

In addition to its patents and pending trademarks, Curaleaf owned, as of June 30, 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 U.S. 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. The Company also faces competition from a number of companies operating in the European medical cannabis sector and in each specific country where the Company operates (and intends to operate). For additional details on the competition faced by the Company, refer to the “Risk Factors – European Operations – EMMAC will face competition from other participants in the European medical cannabis sector” section of the Company’s annual information form for the year ended December 31, 2020.

International Operations

In April 2021, the Company completed the acquisition of EMMAC (as defined below), the largest vertically integrated independent cannabis company in Europe, and entered key European medical cannabis markets, including in the United Kingdom, Germany, Italy, Spain and Malta. See the “Recent Acquisitions” section of this MD&A for additional details.

Refer to the “Risk Factors – European Operations” section of the Company’s annual information form for the year ended December 31, 2020 for additional details regarding the risks associated with the Company’s international operations.

The States We Operate In, Their Legal Framework,and 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, 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. With the adoption of Proposition 207, both medical and adult-use licenses may be held by for-profit entities. Extracted oils, edibles, flower products, and 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, the AZDHS issued 10 dispensary certificates in rural counties that were home to one or no dispensaries in April 2021.

As of June 30, 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 90,000 square foot indoor cultivation facility in Holbrook, Arizona, 40,000 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 90,000 square feet of indoor cultivation in the Holbrook facility, which was completed in the second quarter of 2021. The Company also operates a separate 14,000 square foot 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 June 30, 2021, there were 33 operational dispensaries. A large variety of medical cannabis products are allowed in the state, including the smoking of cannabis flower. The Company 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, 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, which 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”), into law. 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 June 30, 2021, the Company operated two processing facilities, one in Davis, CA, and one in Sacramento, CA, and one cultivation facility in the Salinas Valley.

Colorado Operations

Colorado’s medical cannabis program was introduced in November 2000 via voter approval of “Amendment 20”. Colorado became the first state in the nation to legalize adult-use cannabis when “Amendment 64” was passed 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 June 30, 2021, the Company operated one processing facility, located in Denver, CO, and is in process of acquiring the Los Sueños Farms and its related entities (“Los Sueños”) which will significantly expand the Company’s Colorado presence, vertically integrating in the state with three large scale outdoor cannabis cultivation facilities, a 36,000 square foot greenhouse, and two retail dispensaries serving medical as well as adult use customers.

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 June 30, 2021, the CTDCP issued 18 dispensary licenses and four producer licenses, all of which are operational.

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

As of June 30, 2021, the Company operated four dispensaries across the state. 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.

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 program was expanded in November 2016, when Florida voters approved the Amendment 2 “Expand Medical Marijuana” ballot measure. 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 June 25, 2021, 22 approved MMTCs and 347 approved retail dispensing locations.

Permitted products include oil-based formulations, flower, and edibles. 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 June 30, 2021, Curaleaf operated a 40,000 square foot indoor growing facility and a 130,000 square foot hoophouse facility in Homestead, a 194,000 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.

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, and 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 June 20, 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 5 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 June 30, 2021, all 10 dispensaries permitted under these licenses were in operation.

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 Illinois, LLC(“Parallel”). 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 merger agreement governing the acquisition of Grassroots, 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 acquisition of Grassroots.

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” and 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 June 30, 2021, 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.” 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,” 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. The requirement that dispensaries be not-for-profit was removed and the ability for registered caregivers to open medical dispensary storefronts was approved by the legislature in July 2018.

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. As of June 30, 2021, there were six 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 June 30, 2021, the Company managed two of the six integrated medical cannabis licensees in the state: Maine Organic Therapy (“MEOT”) and Remedy Compassion Center (“RCC”). MEOT operates a more than 9,000 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 additional 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; these license limits were expanded to 22 cultivators, and 28 processors in April 2018. The first dispensaries opened to patients in December 2018. As of June 30, 2021, there were approximately 102 operational dispensaries, 17 operational cultivators, and 18 operational processors.

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.

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 on May 1, 2021.

In January 2019, the Company entered into an option purchase agreement to sell, , subject to regulatory approval, all of Town Center Wellness, LLC, which operates the Elevate Takoma dispensary located in Takoma Park, Maryland, which was subsequently rebranded as Curaleaf Takoma. In November 2020, the Company signed a definitive agreement to sell 100% of Town Center Wellness, LLC to PharmaCann LLC for total consideration of $2,000, all payable in cash upon closing. The transaction closed upon receipt of regulatory approval by the Maryland Medical Cannabis Commission on May 1, 2021. This sale, along with the HMS Assets sale described below, enabled 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 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 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.

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 $3,613.

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” and the first dispensary opened in June 2015.

In November 2016, Massachusetts voters legalized adult-use cannabis by passing Ballot Question 4 “Legalize Marijuana” and the legislation was signed in July 2017. 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 governing 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. As of June 30, 2021, there were approximately 147 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 91,000 square foot indoor grow and processing facility in Webster, MA, a 45,000 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.

Michigan Operations

Michigan’s medical cannabis program was introduced in November 2008, via approval of the “Michigan Compassionate Care Initiative.” In November 2018, the “Michigan Regulation and Taxation of Marijuana Act,” 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.

As of June 30, 2021, the Company operated 4 dispensaries across Michigan.

Missouri Operations

Missouri’s medical cannabis program was introduced in November 2018 when Amendment 2, the “Medical Marijuana and Veteran Healthcare Services Initiative,” which legalized medical cannabis for patients with certain qualifying conditions, was approved. 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 June 30, 2021, there were approximately 126 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 scheduled to commence operations in August 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, 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 June 30, 2021, there were approximately 83 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 and the transaction was granted final approval in July 2021. The Company also operates an additional Las Vegas dispensary, a dispensary in Ely, NV, and a 50,000 square foot cultivation facility in Amargosa Valley, NV.

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 June 30, 2021, there were 10 operational ATCs dispensing medical cannabis to patients from a total of 20 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 July 1, 2021, 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,” 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 103,000 square foot cultivation facility in the township of Winslow, NJ. The Company plans to open one more dispensary location 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 (“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.

North Dakota Operations

North Dakota’s medical cannabis program was introduced in November 2016 via approval of 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 June 30, 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 June 30, 2021, the state has issued 57 dispensary licenses, 50 processing licenses, 20 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 20 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 received regulatory approval in July 2021.

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 owned and operated the dispensaries upon receipt of regulatory approval in July 2021. 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 upon approval of 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 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. However, the Company still maintains a presence in the state with Select products being sold through wholesale channels.

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.

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 June 30, 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 opened a 42,000 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 June 30, 2021, operate a 75,000 square foot cultivation and processing facility and 12 dispensaries.

Utah Operations

Utah’s medical cannabis program was introduced in November 2018, via approval of “Proposition 2, Medical Marijuana Initiative.” In December 2018, the state legislature passed a bill that legalized medical cannabis, and 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 13 companies as of June 30, 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 and completed building the processing facility in 2020. 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. This legislation permitted state-qualified patients to grow and possess marijuana for medicinal purposes. Senate Bill 7 was approved by the Vermont House and Senate in June 2007 and 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 June 30, 2021, there were seven 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

U.S. 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 and six months ended June 30, 2021 , our wholesale revenue represented approximately 29% and 28% 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 BiologicalAssets

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 and six months ended June 30, 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.

Incometaxes

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.

European Operations

Revenue

Retail and Wholesale Revenue

The Company derives its retail cannabis revenues in the UK, where it holds a pharmacy license which enables it to fulfil cannabis prescriptions directly to the patient through its online pharmacy. In Germany the Company supplies cannabis on a wholesale basis to pharmacies and to other distributors. In Israel, all product is supplied to a wholesaler who imports the Company’s flower into Israel. Non cannabis revenues are all derived from wholesale operations in Spain, UK, Switzerland, and Germany.

Cost of Goods Sold

Change in Fair Value of BiologicalAssets

Gross Profit

Gross profit is revenue less cost of goods sold. During the three and six months ended June 30, 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 European market and corporate labor expenses.

Sales and marketing expenses consist of marketing expenses to support patient and doctor awareness of Curaleaf International medical cannabis products and are focused on the UK and Germany, our two key markets. The Company expects selling costs to increase as more markets come on stream and patient numbers increase in existing markets.

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)

Other income (expense)

Other income (expense) primarily consists of gains and losses incurred in the MTM revaluation of marketable securities held by the Company. In Q2 2021, the Company incurred a loss of $1,100 in relation to the revaluation of these securities.

Incometaxes

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

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
	June 30,			March 31,			June 30,
	2021			2021			2020
Revenue	$	312,205		$	260,320		$	117,480
Cost of goods sold		156,967			131,853			56,844
Gross profit before impact of biological assets		155,238			128,467			60,636
Net change in fair value of biological assets		29,257			12,347			20,591
Gross profit		184,495			140,814			81,227
Operating expenses		132,609			107,109			59,536
Other income (expense), net		(19,026	)		(20,208	)		(9,993	)
Net loss		(9,764	)		(17,211	)		(1,836	)
Loss per share attributable to Curaleaf Holdings, Inc. - basic and diluted	$	(0.01	)	$	(0.03	)	$	(0.00	)
	June 30,		December 31,		June 30,
---	---	---	---	---	---	---
	2021		2020		2020
Total assets	$	3,154,693	$	2,386,591	$	1,332,578
Long-term debt		336,452		285,001		273,559
Long-term lease liabilities		293,190		270,495		81,868

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2021AND 2020 AND THE THREE MONTHS ENDED DECEMBER 31, 2020

The following table summarizes our results of operations for the three months ended June 30, 2021 and 2020 and the three months ended December 31, 2020:

	Three<br> months ended
	Q2 '21			Q1 '21			Q2 '21 vs		Q2 '21 vs			Q2 '20			Q2 '21 vs		Q2 '21 vs
	June 30,			March 31,			Q1 '21		Q1 '21			June 30,			Q2 '20		Q2 '20
	2021			2021			Change		% Change			2020			Change		% Change
Revenues:
Retail<br> revenue	$	222,147		$	187,677					18	%	$	66,275					235	%
Wholesale<br> revenue		89,347			72,206					24	%		33,304					168	%
Management<br> fee income		711			437					63	%		17,901			)		(96	)%
Total revenues		312,205			260,320					20	%		117,480					166	%
Cost of<br> goods sold		156,967			131,853					19	%		56,844					176	%
Gross profit before impact of<br> biological assets		155,238			128,467					21	%		60,636					156	%
Realized fair value amounts included<br> in inventory sold		(81,803	)		(68,914	)		)		19	%		(22,423	)		)		265	%
Unrealized<br> fair value gain on growth of biological assets		111,060			81,261					37	%		43,014					158	%
Gross profit		184,495			140,814					31	%		81,227					127	%
Operating<br> expenses		132,609			107,109					24	%		59,536					123	%
Income from operations		51,886			33,705					54	%		21,691					139	%
Other expense,<br> net		(19,026	)		(20,208	)				(6	)%		(9,993	)		)		90	%
Income (Loss) before provision<br> for income taxes		32,860			13,497					143	%		11,698					(181	)%
Income tax<br> expense		(42,624	)		(30,708	)		)		39	%		(13,534	)		)		215	%
Net loss		(9,764	)		(17,211	)				(43	)%		(1,836	)		)		432	%
Less:<br> Net income (loss) attributable to redeemable non-controlling interest		(2,524	)		—			)		100	%		193			)		(1,408	)%
Net loss<br> attributable to Curaleaf, Holdings Inc.	$	(7,240	)	$	(17,211	)				58	%	$	(2,029	)		)		(257	)%

All values are in US Dollars.

	Three months ended
	Q2 '21			Q1 '21			Q2 '20
	June 30,			March 31,			June 30,
	2021			2021			2020
Retail revenue	$	222,147		$	187,677		$	66,275
Wholesale revenue		89,347			72,206			33,304
Management fee income		711			437			17,901
Total revenues		312,205			260,320			117,480
Cost of goods sold		156,967			131,853			56,844
Gross profit before impact of biological assets		155,238			128,467			60,636
Realized fair value amounts included in inventory sold		(81,803	)		(68,914	)		(22,423	)
Unrealized fair value gain on growth of biological assets		111,060			81,261			43,014
Gross profit	$	184,495		$	140,814		$	81,227
Gross margin		59	%		54	%		69	%
Gross profit before impact of management fee income and biological assets	$	154,527		$	128,030		$	42,735
Gross margin before impact of management fee income and biological assets		50	%		49	%		43	%
Gross profit before impact of management fee income and after net gain on biological assets	$	183,784		$	140,377		$	63,326
Gross margin before impact of management fee income and after net gain on biological assets		59	%		54	%		64	%

Comparison of the three months ended June 30,2021 and June 30, 2020

Revenue

Retail and wholesale revenue for the three months ended June 30, 2021 was $311,494, an increase of $211,915 or 213% compared to $99,579 for the three months ended June 30, 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, Maine Organic Therapy, and EMMAC 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 June 30, 2021 there were no significant seasonality impacts on retail and wholesale revenue.

The decrease in management fee income of $17,190 is primarily due to the acquisition of Curaleaf NJ, the managed not-for-profit in New Jersey in July 2020 and Alternative Therapies Group (“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 June 30, 2021 increased $100,123 or 176% compared to the three months ended June 30, 2020. The increase was primarily due to cultivation and processing costs directly related to the increase in cannabis revenue for the three months endedJune 30, 2021 as described above.

Biological asset transformation for the three months ended June 30, 2021 increased $8,666 or 42% compared to $20,591 the three months ended June 30, 2021. The change 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 June 30, 2021 was $184,495, or 59%, compared to $81,227, or 69%, for the three months ended June 30, 2020.

Gross profit before management fee income and biological asset adjustments for the three months ended June 30, 2021 was $154,527 compared to $42,735 for the three months ended June 30, 2020. Gross margin for the three months ended June 30, 2021 was 50% compared to 43% for the three months ended June 30, 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 June 30, 2021 was $183,784 or 59%, compared to $63,326, or 64%, for the three months ended June 30, 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<br> months ended						Q2<br> '21 vs		Q2<br> '21 vs
	June 30,		March<br> 31,		June 30,		Q1<br> '21 vs		Q2<br> '20
	2021		2021		2020		Change		Change
Salaries and benefits	$	47,265	$	41,067	$	22,131
Sales and marketing		10,140		10,489		5,010		)
Rent and occupancy		6,897		6,905		1,338		)
Travel		1,846		781		930
Professional fees		7,824		6,693		4,862
Office supplies and services		7,119		7,337		3,802		)
Other		6,868		6,818		2,393
Total<br> selling, general, and administrative		87,959		80,090		40,466
Depreciation and amortization		26,280		22,112		14,237
Share-based<br> compensation		18,370		4,907		4,833
Total<br> operating expenses	$	132,609	$	107,109	$	59,536

All values are in US Dollars.

Total operating expenses represented 42% and 51% of total revenue for the three months ended June 30, 2021 and 2020, respectively. Total operating expenses for the three months ended June 30, 2021 were $132,609, an increase of $73,073 or 123%, compared to $59,536 for the three months ended June 30, 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 57 at June 30, 2020 to 107 at June 30, 2021, which increased the level of support staff necessary to run the expanded operations. Every category of expense increased in whole dollars due to the large growth in operations over the comparison period, including acquisitions as discussed in the “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

Other Expense

	Three Months Ended									Q2 '21 vs		Q1 '21 vs
	June 30,			March 31,			June 30,			Q1 '21		Q1 '20
	2021			2021			2020			Change		Change
Interest income	$	278		$	88		$	3,573					)
Interest expense		(12,269	)		(12,151	)		(11,357	)		)		)
Interest expense related to lease liabilities		(9,339	)		(8,560	)		(2,132	)		)		)
Other income (expense)		2,304			415			(77	)
Total other expense, net	$	(19,026	)	$	(20,208	)	$	(9,993	)				)

All values are in US Dollars.

Total other expense for the three months ended June 30, 2021 was $19,026 compared to $9,993 for the three months ended June 30, 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 June 30, 2021 and 2020 was $278 and $3,573, respectively. The decrease of $3,295 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 June 30, 2021 and 2020 was $12,269 and $11,357 respectively. The increase of $912 was primarily due to the debt as described above.

Interest expense related to lease liabilities for the three months ended June 30, 2021 and 2020 was $9,339 and $2,132, respectively. The increase relates to additional leases in 2021 in addition to inclusions from the previously mentioned acquisitions.

Provision for Income Taxes

The Company recorded total income tax expense of $42,624 for the three months ended June 30, 2021 compared to $13,534 for the three months ended June 30, 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 June 30, 2021 was $9,764 compared to a net loss of $1,836 for the three months ended June 30, 2020; representing an increase of $7,928, or 432%. The increase was primarily driven by changes to operating expenses and taxes as described above.

Comparison of the three months ended June 30, 2021 and March31, 2021

Revenue

Retail and wholesale revenue for the three months ended June 30, 2021 was $311,494, an increase of $51,611 or 20% compared to $259,883 for the three months ended March 31, 2021. The increase in retail and wholesale revenue was primarily due to organic growth in dispensaries as well as the addition of EMMAC and the consolidation of the Maryland entities as previously described.

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 June 30, 2021 was $156,967, an increase of $25,114 or 19% compared to cost of goods sold for the three months ended March 31, 2021. The increase was primarily due to cultivation and processing costs directly related to the increase in cannabis revenue for the three months ended June 30, 2021.

Biological asset transformation for the three months ended June 30, 2021 was $29,257 compared to $12,347 for the three months ended March 31, 2021. This was primarily due to the acquisition of two new cultivation facilities, startup of two new Curaleaf cultivation facilities, and the additions to hoop-house cultivation in Florida.

Gross Profit

Gross profit for the three months ended June 30, 2021 was $184,495, a gross margin of 59%, compared to $140,814, or a gross margin of 54%.

Gross profit before management fee income and biological asset adjustments for the three months ended June 30, 2021 was $154,527 compared to $128,030 for the three months ended March 31, 2021. Gross margin for the three months ended June 30, 2021 was 50% compared to 49% for the three months ended March 31, 2021. The gross profit increase was primarily due to the changes in revenue mentioned previously.

Gross profit before management fee income and after net gains on biological assets for the three months ended June 30, 2021 was $183,784, compared to $140,377 for the three months ended March 31, 2021, which was a 31% increase quarter over quarter. The increase in gross profit is primarily due to higher operating capacity of the Company’s cultivation and processing facilities.

Operating Expenses

Total operating expenses for the three months ended June 30, 2021 were $132,609, an increase of $25,500 or 24%, compared to $107,109 for the three months ended March 31, 2021, which represents 42% and 41% of total revenue for the three months ended June 30, 2021 and March 31, 2021, respectively. The increase in total operating expenses was primarily attributable to an increase in salaries and benefits due to increased staffing levels as previously described, professional fees due to continued acquisitions and expansions, and finally, due to an increase in travel as COVID restrictions have begun easing.

Depreciation and amortization totaled $26,280 for the three months ended June 30, 2021, compared to $22,112 for the three months ended March 31, 2021, which represents an increase of $4,168. The increase was primarily due to expense associated with additional retail operations.

Share-based compensation totaled $18,370 for the three months ended June 30, 2021, compared to $4,907 for the three months ended March 31, 2021 which represents an increase of $13,463. The increase was primarily due to the annual compensation cycle and the recognition of share-based compensation expense related to the EMMAC acquisition in the current quarter.

Other Expense

Total other expense, net for the three months ended June 30, 2021 was $19,026 compared to $20,208 for the three months ended March 31, 2021.

Provision for Income Taxes

The Company recorded an income tax expense of $42,624 for the three months ended June 30, 2021, compared to an income tax expense of $30,708 for the three months ended March 31, 2021. 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 June 30, 2021 was $9,764 compared to net loss of $17,211 for the three months ended March 31, 2021, which represents an increase in profitability of $7,447, or 43%. The increase was primarily driven by the increase in gross profit 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 June 30, 2021, the Company had $333,791 of cash and working capital of $590,187 (current assets less current liabilities), compared with $73,542 of cash and $197,736 of working capital as of December 31, 2020. The increase of $392,451 in our working capital was primarily due to a $260,249 increase in cash largely resulting from the Credit Facility entered into by the Company in January 2021 and the equity raise in January 2021 of $240,569 as well as cash on hand at Curaleaf International as a part of the EMMAC acquisition.

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, which was comprised of $85,000 of senior secured debt issued in 2018, 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.

For the quarter ended June 30, 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.

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%.

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.

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 Term Loan Facility 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. Since the closing of the offering, the Company has used the net proceeds 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:

	Six months ended
	June 30,
	2021			2020
Net cash provided by (used in) operating activities	$	(79,127	)	$	21,814
Net cash used in investing activities		(33,529	)		(116,799	)
Net cash provided by financing activities		372,835			175,438
Net increase in cash and cash equivalents	$	260,179		$	80,453

Operating Activities

During the six months ended June 30, 2021, operating activities used $79,127 of cash, primarily resulting from a net loss of $26,978. Cash used by changes in operating assets and liabilities was primarily due to an increase in inventories.

During the six months ended June 30, 2020, operating activities provided $21,814 of cash, primarily resulting from a decrease in biological assets of $26,852 and an increase in payables, deferred taxes, and accrued expenses of $34,747 combined, which was partially offset by an increase in inventories of $46,197.

Investing Activities

During the six months ended June 30, 2021, investing activities used $33,529 of cash, consisting of $73,342 net purchases of property, plant and equipment offset by $24,884 in proceeds from selling the HMS Assets.

During the six months ended June 30, 2020, investing activities used $116,799 of cash, consisting of payments totaling $51,511 in purchases of property and equipment, $51,188 in connection with acquisitions, and $14,100 in connection with amounts advanced under notes receivable.

Financing Activities

During the six months ended June 30, 2021, financing activities provided $372,835 of cash, consisting primarily of $240,569 cash received in issuance of SVS and $54,599 in cash received from a financing agreement, partially offset by $25,130 of lease liability payments.

During the six months ended June 30, 2020, financing activities provided $175,438 of cash, consisting primarily of $185,723 cash received from new debt borrowing offset by $11,164 of lease liability payments.

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 six months)	$	73,033
2022		52,223
2023		50,691
2024		49,132
2025 and thereafter		422,965
Total undiscounted lease liability		648,044
Impact of discount		(336,007	)
Lease liability at June 30, 2021		312,037
Less current portion of lease liability		(18,312	)
Less long-term lease liabilities transferred to liabilities associated with assets held for sale		(535	)
Long-term portion of lease liability	$	293,190

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 June 30, 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 six months)	$	1,706
2022		—
2023		300,000
2024		60,000
2025		—
2026 and thereafter		1,225
	$	362,931

SUMMARY OF QUARTERLY RESULTS

	Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019			Q3 2019
Revenue	$	312,205		$	260,320		$	230,253		$	182,408		$	117,480		$	96,496		$	75,457		$	61,820
Cost of goods sold		156,967			131,853			119,658			90,633			56,844			44,013			35,695			27,079
Net change in fair value of biological<br> assets		29,257			12,347			14,867			24,008			20,591			15,556			5,533			13,810
Gross profit		184,495			140,814			125,462			115,783			81,227			68,039			45,295			48,551
Operating expenses		132,609			107,109			104,835			99,412			59,536			63,046			52,563			47,108
Other expense, net		(19,026	)		(20,208	)		(17,893	)		(6,557	)		(9,993	)		(7,196	)		(7,858	)		(3,598	)
Net loss		(9,764	)		(17,211	)		(35,109	)		(8,931	)		(1,836	)		(15,452	)		(27,152	)		(7,434	)
Less: Net<br> income (loss) attributable to redeemable non-controlling interest		(2,524	)		—			165			412			193			(363	)		(591	)		(599	)
Net loss attributable to Curaleaf<br> Holdings, Inc.		(7,240	)		(17,211	)		(35,274	)		(9,343	)		(2,029	)		(15,089	)		(26,561	)		(6,835	)
Loss per share - basic and diluted	$	(0.01	)	$	0.03		$	(0.05	)	$	(0.01	)	$	(0.00	)	$	(0.03	)	$	(0.06	)	$	(0.01	)
Weighted average common shares<br> outstanding - basic and diluted		701,668,932			682,041,420			660,398,593			625,228,556			533,192,806			507,700,498			468,445,941			464,073,130

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<br> months ended						Period<br> ended						Balances<br> as of
	June 30,						June 30,						June 30,			December 31,
	2021			2020			2021			2020			2021			2020
Transaction		Related party transactions					Related party transactions							Balance receivable (payable)
Processing<br> fees ^(1)^	$	—		$	535		$	—		$	1,194		$	—		$	—
Consulting<br> fees ^(2)^		362			—			456			74			—			—
Travel<br> and reimbursement ^(2)^		22			60			1,277			151			—			—
Rent<br> expense, net ^(3)^		(42	)		(60	)		(54	)		(119	)		—			—
Equipment<br> purchases ^(4)^		—			—			1,426			—			—			—
Promissory<br> Note - 2024 ^(5)^		329			—			654			—			(9,700	)		(9,700	)
Non-consolidated<br> GR Companies ^(6)^		—			—			—			—			—			5,947
	$	671		$	535		$	3,759		$	1,300		$	(9,700	)	$	(3,753	)

(2) For the three and six months ended June 30, 2021, the Company recognized $22 and $1,277 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 and six months ended June 30, 2021, the Company recognized consulting expense of $92 and $186 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 and six months ended June 30, 2021, the Company recognized a rent expense credit of $60 and $119 for a sublease between Curaleaf NY, Inc. and Measure 8 Venture Partners, a company controlled by Boris Jordan, Executive Chairman. For the three and six months ended June 30, 2021, the Company recognized a rent expense of $18 and $65 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 six months ended June 30, 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 period ended June 30, 2021, the Company had an outstanding notes payable balance of $9,700 and recognized a related interest expense of $329 and $654 for the three and six months ended June 30, 2021 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 represents on-going contractual commitments.. 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, 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.

	Three months ended June 30,				Six months ended June 30,
Key management personnel compensation	2021		2020		2021		2020
Short-term employee benefits	$	3,194	$	1,251	$	4,094	$	2,287
Other long-term benefits		11		12		21		19
Share-based payments		4,323		4,598		6,741		8,152
	$	7,528	$	5,861	$	10,856	$	10,458

RECENT ACQUISITIONS

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

On April 7, 2021, the Company established an overseas subsidiary named Curaleaf International Holdings Limited (“Curaleaf International”) together with a strategic investor who provided initial capital of $130,798 for 31.5% equity stake in Curaleaf International (the “Curaleaf International Transaction”). Curaleaf International was used for the acquisition of EMMAC Life Sciences Limited (“EMMAC”), the largest vertically integrated independent cannabis company in Europe. 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 acquisition of EMMAC (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.

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.

In connection with the EMMAC Transaction, 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.

The terms of the EMMAC Transaction and Curaleaf International 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 and Curaleaf International 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% 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 is 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 initial release of 5% of SVS at closing and subsequent releases of 5% of SVS from such restrictions at the end of each calendar quarter following the closing.

TRANSACTIONS CLOSED SUBSEQUENT TO JUNE 30,2021

The following acquisition was completed subsequent to June 30, 2021. In accordance with IFRS 10 – Consolidated Financial Statements, prior to acquisition, the Company had concluded that it does control the operations of the acquiree, and has therefore consolidated the results of the entity in the Interim Financial Statements. Due to the timing of the transaction closing, sufficient information was not available to complete the Purchase Price accounting at the time of filing:

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

PENDING TRANSACTIONS

The following acquisition had been signed, but was not yet completed as of June 30, 2021. The Company has concluded that it does not control the operations of the acquiree in accordance with IFRS 10 – Consolidated Financial Statements, and accordingly, the results of the following entity are not included in the Interim Financial Statements:

Los Sueños Farms, LLC and its relatedentities

In May 2021, the Company signed definitive documents to acquire Los Sueños and its related entities which will significantly expand the Company’s Colorado presence, vertically integrating in the state with large scale outdoor cannabis cultivation and two retail dispensaries. The proposed transaction includes three Pueblo, Colorado outdoor cannabis grow facilities covering 66 acres of cultivation capacity (once fully expanded), an 1,800 plant indoor grow, and two retail cannabis dispensary locations, called “The Spot 420” (in Trinidad and Pueblo West) serving medical as well as adult use customers.

Total base consideration for the proposed acquisition of Los Sueños will be approximately $67,000 to be paid 61% in SVS, 29% in cash at closing, and 10% in assumed debt maturing in five years. Additional contingent consideration of up to $4,000, is payable in 2023 based on operating cash flow based targets for 2022. The transaction is expected to close in late 2021.

All SVS that may be issued pursuant to the definitive agreements will be subject to contractual restrictions on resale for a period starting on the date of their issuance and ending on the 5th anniversary of the closing, with the following release schedule: 20% of the SVS will be released from the resale restrictions on the first anniversary of their issuance, and the remaining SVS will be released in 5% quarterly increments thereafter, the whole subject to certain acceleration events. The proposed transaction has been unanimously approved by the Company’s board of directors and will close after regulatory approval.

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

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.

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 June 30, 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.

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 June 30, 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.

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; including, but not limited to, the following areas of focus.

Customer Impact: While the Company has not experienced an overall downturn in demand for its products in connection with the pandemic, if its customers become ill with COVID-19, are forced to quarantine, decide to self-quarantine or not to visit its stores or distribution points to observe “social distancing”, it may have material negative impact on demand for its products while the pandemic continues. While the Company implemented measures, where permitted, such as “curb side” sales and delivery, to reduce infection risk to its customers, regulators may not permit such measures, or such measures may not prevent a reduction in demand. Notably, on May 16, 2021, the Centers for Disease Control issued the following revised guidance for individuals who have received one of the COVID-19 vaccines: “Fully vaccinated people can resume activities without wearing a mask or physically distancing, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance.” As a result, the Company recently revised its masking and social distancing directives for both employees and customers/patients in light of this recent CDC guidance. That said, there is no assurance that new, vaccine resistant COVID-19 variant strains will not appear which could result in an increase in infections and a corresponding impact to customer activity. In particular, the B.1.617.2 (Delta) variant was classified by the CDC as a ‘variant of concern’ because it spreads from person to person more easily than other variants and may cause more severe disease.

Staffing Disruption: Earlier in the pandemic, the Company implemented among its staff where feasible “social distancing” measures recommended by such bodies as the Centers for Disease Control (CDC), the Presidential Administration, as well as state and local governments. The Company cancelled non-essential travel by employees, implemented remote meetings where possible, and permitted all staff who can work remotely to do so. For those whose duties require them to work on-site, measures were implemented to reduce infection risk, such as reducing contact with customers, mandating additional cleaning of workspaces and hand disinfection, providing masks and gloves to certain personnel, and contact tracing following reports of employee infection. More recently, following the increase in vaccination rates in the states in which the Company has operations, the Company has seen a decrease in the incidence of employees reporting COVID-19 infections or exposures. Moreover, the Company is encouraging its employees to become vaccinated and is requiring employees to verify their vaccination status; those employees who are not vaccinated are required to continue to follow masking guidelines while those who are vaccinated are given the option to forego masking at the workplace. Nevertheless, the emergence of new strains could result in an increase in infections and a corresponding increase in employee absenteeism. If such absenteeism increases, the Company may not be able, including through replacement and temporary staff, to continue to operate at desired levels in some or all locations.

Notably, on July 27, 2021, CDC announced updated Guidance for COVID-19 Prevention Strategies based on emerging evidence of the B.1.617.2 (Delta) variant. CDC now recommends that all people, regardless of vaccination status, wear masks in public indoor settings in areas of substantial or high transmission. A new CDC study supports previous findings that B.1.617.2 (Delta) is highly contagious, and is contributing to an increase in cases, including those with severe outcomes and those due to vaccine breakthrough infections. While vaccinated people can still develop COVID-19, they are far less likely to get severely sick or die than people who are unvaccinated. The emergence of the Delta variant, if uncontrolled, could lead to federal, state and/or local governments reinstituting protocols that could adversely impact the Company’s business in affected communities.

Vaccination rates: On December 11, 2020, the federal Food and Drug Administration (FDA) issued an emergency use authorization (EUA) for the Pfizer BioN-Tech COVID-19 vaccine, the first such approval. Additional EUAs were issued on December 18, 2020 for a vaccine created by Moderna, and on February 27, 2021 for a vaccine created by Janssen Biotech (a Johnson & Johnson affiliate). As of August 5, 2021, the CDC reports that about 181 million people in the U.S. over the age of 18, or 70.4% of that population, have received at least one dose of vaccine. About 165 million people, or about 50% of the total U.S. population, have been fully vaccinated. As of now, the supply of vaccines in the states in which the Company does business appears to be sufficient to meet the demand of all those who seek to be vaccinated. That said, there can be no assurance of when the Company’s employees in any particular jurisdiction will access the vaccine. Moreover, there can be no assurance that all employees will choose to avail themselves of the vaccine or, if so, when they will choose to do so. The same applies to the Company’s patients, customers, regulators, and suppliers. Consequently, the COVID-19 risk factors described above continue to be applicable.

Europe Opening-Up: Countries in Europe are beginning to open-up following public health restrictions and lock-down measures to deal with COVID-19. Each country in Europe has adopted its own public health response, but the larger economies (being Germany, the UK, Italy, Spain, and France) are relaxing previously strict “lock-down” measures and non-essential businesses, closed for extended periods are now open with most operating restrictions (including social distancing) largely removed. Cannabis consumption in Europe is exclusively medical, and like other medicines, supply of medical cannabis has continued during the pandemic, with doctors and pharmacies adopting tele-medicine to hold consultations and supply prescriptions to patients. Whilst the Company has faced delays and difficulties the Company’s manufacturing sites in Spain and the UK, and its cultivation site in Portugal, have continued operations without significant disruption. Further waves of the virus and additional lock-downs in the winter months of 2021 and early 2022 may have a material impact on the Company’s ability to generate revenue and on operations generally, and such risk will remain while the Covid-19 virus continues in widespread circulation and new strains are identified.

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 June 30, 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.

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 June 30, 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 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 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^1^. 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^2^.

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.

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”)^3^.

^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. Scientific Reports, 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. Neurotoxicology and 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.

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

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.

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.

On July 14, 2021, Senate Majority Leader Chuck Schumer (D-NY) along with Cory Booker (D-NJ), and Ron Wyden (D-OR) released draft legislation titled the Cannabis Administration and Opportunity Act (the “CAOA”). The CAOA remove cannabis from Schedule 1 of the Controlled Substances Act which would permit its decriminalization and allow the expungement of federal non-violent marijuana crimes. The CAOA would impose a federal tax on cannabis of 10% in its first year of enactment, eventually increasing to 25% in 5% increments. The taxes raised would be used to petition fund programs to benefit communities disproportionately impacted by the “War on Drugs”.

The CAOA enshrines the current State cannabis licensing regimes, but introduces additional federal permitting of cannabis wholesalers. Regulatory responsibility for cannabis control would be transferred from the U.S. Drug Enforcement Agency (DEA) to the Alcohol and Tobacco Tax and Trade Bureau (TTB), the Bureau of Alcohol Tobacco Firearms and Explosives (ATF). Senators Schumer, Booker, and Wyden are currently seeking feedback from the public as the proposal is finalized, encouraging stakeholders to submit comments by September 1st, 2021.

The publication of the CAOA by Democratic congressional leaders represents a significant milestone in the move toward federal legalization of cannabis. While the CAOA indicates that legalization may come with significant federal tax burden, federal legalization will also bring long-awaited benefits to the industry of the removal of the Section 280e tax burden, clarity as to the status of state-licensed cannabis businesses, broad access to the banking and card payment system, increased availability, and reduced cost, of capital.

At the time of the CAOA announcement, Senator Schumer indicated the bill currently does not have sufficient support in the Congress to pass and he targeted Spring 2023 for passage of legislation based on the CAOA draft. Therefore, there can be no assurance that the expected benefits of cannabis decriminalization and regulation will be realized in the near future. Moreover, there can be no assurance that provision in the CAOA that are favorable to the cannabis industry, such as preserving the current state regulatory system, will remain in any final legislation. In addition, the CAOA lacks clarity regarding the transition of cannabis control from the DEA to TTB and the FDA, which presents the risk that existing operators may face a period of regulatory uncertain if legislation similar to the CAOA is enacted. Such uncertainty may impede growth of, and investment in, incumbent cannabis businesses, while exposing them to increased competition from the illicit market.

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 $900,000,000 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;
3.	Requesting from state licensing and enforcement authorities available information about the business and<br>related parties;
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);
5.	Ongoing monitoring of publicly available sources for adverse information about the business and related<br>parties;
6.	Ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance;<br>and
7.	Refreshing information obtained as part of customer due diligence on a periodic basis and commensurate<br>with the risk.

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.^4^ 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.

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.

^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/.

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.^5^ 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.

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 U.S. federal laws regarding cannabis, 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.

^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.

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, as well as regional and state-level compliance officers. Each compliance officer is charged with knowing the local regulatory process in the state or states for which he or she is responsible and for monitoring developments with their governing bodies. Each compliance officer regularly reports regulatory developments to the Company’s CCO through written and oral communications and are charged with the creation and implementation of plans regarding all regulatory developments. The Company’s CCO works 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, and two vice presidents, works 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 consultants, 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 filed 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 99.2

FORM 7

MONTHLY PROGRESS REPORT

Name of Listed Issuer: Curaleaf Holdings, Inc. (the “Issuer” or “Curaleaf”).

Trading Symbol: CURA

Number of Outstanding Listed Securities: 606,281,130

Date: September 9, 2021

This Monthly Progress Report must be posted before the opening of trading on the fifth trading day of each month. This report is not intended to replace the Issuer’s obligation to separately report material information forthwith upon the information becoming known to management or to post the forms required by Exchange Policies. If material information became known and was reported during the preceding month to which this report relates, this report should refer to the material information, the news release date and the posting date on the Exchange website.

This report is intended to keep investors and the market informed of the Issuer’s ongoing business and management activities that occurred during the preceding month. Do not discuss goals or future plans unless they have crystallized to the point that they are "material information" as defined in the Policies. The discussion in this report must be factual, balanced and non-promotional.

General Instructions

(a)	Prepare this Monthly Progress Report using the format set out below. The sequence of questions must not<br>be altered nor should questions be omitted or left unanswered. The answers to the items must be in narrative form. State when the answer<br>to any item is negative or not applicable to the Issuer. The title to each item must precede the answer.
(b)	The term “Issuer” includes the Issuer and any of its subsidiaries.
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(c)	Terms used and not defined in this form are defined or interpreted in Policy 1 – Interpretation and General Provisions.
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Report on Business

1.	Provide a general overview and discussion of the development of the Issuer’s business and operations<br>over the previous month. Where the Issuer was inactive disclose this fact.

General

Curaleaf Holdings, Inc. (“Curaleaf” or the “Company”) 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 including operating 109 dispensaries, 22 cultivation sites and 30 processing sites with a focus on highly populated, limited license states, including New York, New Jersey, Florida 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. Moreover, Curaleaf International Holdings Limited (“Curaleaf International”), a subsidiary of the Issuer, is the largest vertically integrated independent cannabis company in Europe with a unique supply and distribution network throughout the European market, bringing together pioneering science and research with leading cultivation, extraction and production capabilities.

Recent developmentsregarding the Issuer’s business and operations

On August 9, 2021, Curaleaf reported record second quarter 2021 results.

Please see the Issuer’s press release dated August 9, 2021, filed on the Issuer’s website for more information.

On August 25, 2021, Curaleaf announced the opening of a new dispensary in Bordentown, New Jersey.

Please see the Issuer’s press release dated August 25, 2021, filed on the Issuer’s website for more information.

2.	Provide a general overview and discussion of the activities of management.

Boris Jordan, Executive Chairman, was featured in an interview with Barron’s following the Company’s earnings call on August 9^,^2021. Mr. Jordan also participated in a fireside chat and investor calls through Canaccord Genuity’s 41^st^ Annual Growth Conference on August 10, 2021, and participated in several broadcast interviews on August 10, 2021, including Bloomberg TV, CNBC, and Yahoo Finance. On August 16, 2021, he was quoted in Bloomberg’s Cannabis Weekly Newsletter by Tiffany Kary.

Joseph F. Lusardi, Executive Vice Chairman, participated in investor calls through Canaccord Genuity’s 41^st^ Annual Growth Conference on August 10, 2021.

Joseph D. Bayern, CEO, was also featured in several earnings interviews on August 10, 2021, including Cheddar TV and Business Insider. Mr. Bayern also participated in investor calls through Canaccord Genuity’s 41^st^ Annual Growth Conference on August 10, 2021. Later in the month, Mr. Bayern was interviewed for the September issue of Cannabis Ventures magazine where he discussed Curaleaf’s expansion in New Jersey.

Ranjan Kalia, CFO, participated in investor calls through Canaccord Genuity’s 41^st^ Annual Growth Conference on August 10, 2021.

3.	Describe and provide details of any new products or services developed or offered. For resource companies,<br>provide details of new drilling, exploration or production programs and acquisitions of any new properties and attach any mineral or oil<br>and gas or other reports required under Ontario securities law.

N/A

4.	Describe and provide details of any products or services that were discontinued. For resource companies,<br>provide details of any drilling, exploration or production programs that have been amended or abandoned.

N/A

5.	Describe any new business relationships entered into between the Issuer, the Issuer’s affiliates<br>or third parties including contracts to supply products or services, joint venture agreements and licensing agreements etc. State whether<br>the relationship is with a Related Person of the Issuer and provide details of the relationship.

N/A

6.	Describe the expiry or termination of any contracts or agreements between the Issuer, the Issuer’s<br>affiliates or third parties or cancellation of any financing arrangements that have been previously announced.

N/A

Describe any acquisitions by the Issuer or dispositions of the Issuer’s assets that occurred during<br>the preceding month. Provide details of the nature of the assets acquired or disposed of and provide details of the consideration paid<br>or payable together with a schedule of payments if applicable, and of any valuation. State how the consideration was determined and whether<br>the acquisition was from or the disposition was to a Related Person of the Issuer and provide details of the relationship.

N/A

8.	Describe the acquisition of new customers or loss of customers.

Please see Item 1 above regarding new dispensary openings.

9.	Describe any new developments or effects on intangible products such as brand names, circulation lists,<br>copyrights, franchises, licenses, patents, software, subscription lists and trade-marks.

N/A

10.	Report on any employee hirings, terminations or lay-offs with details of anticipated length of lay-offs.

As of August 31, 2021, the Issuer had a total of 5,535 employees, which includes 558 new hires and 229 terminations in the month of August.

11.	Report on any labour disputes and resolutions of those disputes if applicable.

N/A

12.	Describe and provide details of legal proceedings to which the Issuer became a party, including the name<br>of the court or agency, the date instituted, the principal parties to the proceedings, the nature of the claim, the amount claimed, if<br>any, if the proceedings are being contested, and the present status of the proceedings.

Curaleaf may become threatened by a party, or otherwise become party to litigation from time to time in the ordinary course of business which could adversely affect its business. Among other disputes, Curaleaf is defending against (1) claims in arbitration relating primarily to a lock-up agreement that the former minority shareholders of Curaleaf’s Connecticut operations signed in connection with their receipt of Subordinate Voting Shares of the Issuer in exchange for their minority interest and (2) purported class actions alleging, among other things, mislabelling and fraud related to sales of the Select brand, in most cases related to periods prior to the Company’s acquisition of the brand in February 2020.

Connecticut

No updates since this matter was last reported on the Form 7 filed with the CSE on April 13, 2021.

13.	Provide details of any indebtedness incurred or repaid by the Issuer together with the terms of such indebtedness.

N/A

14.	Provide details of any securities issued and options or warrants granted
Security	Number Issued	Details of Issuance	Use of Proceeds^(1)^
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Subordinate Voting Shares	260,510	Shares issued in connection with option exercises and RSU conversions	The proceeds from payment of the option exercise price will be used for general working capital purposes.
(1)	State aggregate proceeds and intended allocation of proceeds.
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15.	Provide details of any loans to or by Related Persons.
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N/A

16.	Provide details of any changes in directors, officers or committee members.

N/A

17.	Discuss any trends which are likely to impact the Issuer including trends in the Issuer’s market(s)<br>or political/regulatory trends.

Cannabis Administrationand Opportunity Act

On Wednesday, July 14, 2021 Senate Majority Leader Chuck Schumer (D-NY) along with Cory Booker (D-NJ), and Ron Wyden (D-OR) released draft legislation titled the Cannabis Administration and Opportunity Act (the “CAOA”). The CAOA remove cannabis from Schedule 1 of the Controlled Substances Act which would permit its decriminalization and allow the expungement of federal non-violent marijuana crimes. The CAOA would impose a federal tax on cannabis of 10% in its first year of enactment, eventually increasing to 25% in 5% increments. The taxes raised would be used to petition fund programs to benefit communities disproportionately impacted by the “War on Drugs”.

At the time of the CAOA announcement, Senator Schumer indicated the bill currently does not have sufficient support in the Congress to pass and he targeted Spring 2023 for passage of legislation based on the CAOA draft. Therefore, there can be no assurance that the expected benefits of cannabis decriminalization and regulation will be realized in the near future. Moreover, there can be no assurance that provisions in the CAOA that are favorable to the cannabis industry, such as preserving the current state regulatory system, will remain in any final legislation. In addition, the CAOA lacks clarity regarding the transition of cannabis control from the DEA to TTB and the FDA, which presents the risk that existing operators may face a period of regulatory uncertain if legislation similar to the CAOA is enacted. Such uncertainty may impede growth of, and investment in, incumbent cannabis businesses, while exposing them to increased competition from the illicit market.

Several industry trade groups have submitted comments as called for by the Senate drafters. The US Cannabis Council, of which the Company is a member, submitted its comments to the bill that included the following points:

·	The Tax and Trade Bureau at the Treasury Department should be the primary<br>regulator of cannabis, and not the Food and Drug Administration (FDA); the FDA should set health and safety standards.
·	The complexity of production and wide variety of cannabis products<br>require a new model of taxation, at rates that do not fuel the illicit market.
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·	Before significantly changing the regulatory landscape, new rules should<br>recognize state programs, account for current legal obstacles and include a sufficient transition period after de-scheduling to ensure<br>that regulators and businesses of all sizes – particularly emerging and social equity businesses – have the necessary time<br>to adapt ahead of the onset of a national marketplace.
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Concerns about Marijuana Efficacyand Safety

Adverse publicity reports or other media attention regarding the safety, efficacy and quality of marijuana in general, or associating the consumption of adult-use and medical marijuana with illness or other negative effects or events, could have such a material adverse effect. There is no assurance that such adverse publicity reports or other media attention will not arise. A negative shift in the public's perception of cannabis, including vaping or other forms of cannabis administration, in the U.S. or any other applicable jurisdiction could cause State jurisdictions to abandon initiatives or proposals to legalize medical and/or adult-use cannabis, thereby limiting the number of new State jurisdictions into which Curaleaf could expand. Recent medical alerts by the Centers for Disease Control (CDC) and future bans on the sale of vaping products in the locations Curaleaf serves, and recent state health agencies’ approaches to vaping related illness and other issues directly related to cannabis consumption could potentially create an inability to fully implement Curaleaf's expansion strategy and may have a material adverse effect on Curaleaf's business, results of operations or prospects.

This year, the U.S. media has increasingly reported an apparent new trend in the distribution to consumers of hemp-based products purporting to contain the ingredient Delta-8 tetrahydrocannabinol (“Delta-8 THC”), one of many cannabinoids that are found in the cannabis plant. Most Delta-8 THC on the market is derived from the chemical conversion of hemp-derived cannabidiol (“CBD”). Notably, the Drug Enforcement Act includes Delta-8 THC on its list of controlled substances (updated August 2020) under “tetrahydrocannabinols,” but Section 12619(b) of the 2018 Farm Bill legislation expressly carved out “tetrahydrocannabinols in hemp” of the 2018 Farm Bill thus leaving some lack of clarity regarding the legal status of this substance. Delta-8 THC products appear to offer a similar but somewhat less intoxicating psychotropic effect in users.

Anecdotal reports indicate that Delta-8 THC products are being manufactured and distributed in the U.S outside of state licensed cannabis processors and dispensaries including, for example, through convenience stores, gas stations and even via the Internet to consumers under the age of 21. Moreover, these products do not appear to be subject to the testing requirements applicable to Delta-9 THC products. These products are being sold without state mandated cannabis excise taxes applied, thus leading to significant price differentials with Delta-9 THC products.

Given the pricing differential and the absence of state cannabis excise taxes, continued proliferation of unregulated Delta-8 THC products through unlicensed distribution points could ultimately alter certain elements of the current Delta-9 THC market in the U.S. Recently, several states have begun to promulgate new regulations and interpretations of existing regulations that effectively prohibit the development of Delta-8 THC products. For example, New York issued interpretive guidance stating that “Delta-8 THC products are not permitted in the New York State Cannabinoid Hemp Program. Retailers are not permitted to sell Delta-8 THC products and processors are not permitted to manufacture them.” Massachusetts took another approach by declaring that since “delta-8 THC is not naturally occurring in hemp (except for possible trace amounts), to produce delta-8 THC in commercial quantities it must be derived from hemp synthetically. While the Farm Bill did remove hemp from the Controlled Substances Act, it did not impact the control status of synthetically derived cannabinoids, thus delta-8 THC remains a controlled substance, regardless of the source. As a result, we do not allow hemp-derived delta-8 THC products to be processed or sold in Massachusetts.” If this trend continues, the potential impact of Delta-8 THC products on the Delta-9 THC cannabis market could be blunted.

COVID-19

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. The outbreak spread throughout Europe, the Middle East and North America, causing companies and various international jurisdictions to impose restrictions such as quarantines, business closures and travel restrictions. While these effects have been mitigated by the application of precautions such as social distancing and masking as well as the development and distribution of vaccines, the situation remains fluid. While the Company has continuously sought to assess the potential impact of the pandemic on its financial and operating results, any assessment continues to be subject to uncertainty as to probability, severity and duration of the pandemic as reflected by infection rates at local, state, and regional levels. The Company has attempted to assess the impact of the pandemic by identifying risks in the following principal areas:

• Mandatory Closures. In response to the pandemic, many states and localities implemented mandatory closures of, or limitations to, businesses to prevent the spread of COVID-19; this impacted the Company’s operations. Subsequently, the Company’s business was deemed an "essential service," permitting it to stay open despite the mandatory closure of non-essential businesses. More recently, the mandatory closures that impacted the Company’s operations were lifted and the Company resumed full operations, albeit subject to various COVID-19 related precautions and changes in local infection rates. The Company’s ability to generate revenue would be materially impacted by any future shut down of its operations.

• Customer Impact. While the Company has not experienced an overall downturn in demand for its products in connection with the pandemic, if its customers become ill with COVID-19, are forced to quarantine, decide to self-quarantine or not to visit its stores or distribution points to observe "social distancing", it may have material negative impact on demand for its products while the pandemic continues. While the Company implemented measures, where permitted, such as "curb side" sales and delivery, to reduce infection risk to its customers, regulators may not permit such measures, or such measures may not prevent a reduction in demand. Notably, on May 16, 2021, the Centers for Disease Control issued revised guidance for individuals who have received one of the COVID-19 vaccines: “Fully vaccinated people can resume activities without wearing a mask or physically distancing, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance.” As a result, the Company then revised its masking and social distancing directives for both employees and customers/patients in light of this CDC guidance.

On July 27, 2021, CDC announced updated Guidance for COVID-19 Prevention Strategies based on emerging evidence of the B.1.617.2 (Delta) variant. CDC now recommends that all people, regardless of vaccination status, wear masks in public indoor settings in areas of substantial or high transmission. A new CDC study supports previous findings that B.1.617.2 (Delta) is highly contagious, and is contributing to an increase in cases, including those with severe outcomes and those due to vaccine breakthrough infections. While vaccinated people can still develop COVID-19, they are far less likely to get severely sick or die than people who are unvaccinated. The emergence of the Delta variant, if uncontrolled, could lead to federal, state and/or local governments reinstituting protocols that could adversely impact the Company’s business in affected communities.

Following the emergence of the Delta variant, the CDC reports that the number of COVID-19 cases appears to have initiated a new upward trend that began earlier this summer. Indeed, the CDC reports that the current 7-day moving average of daily new COVID-19 cases (153,246) reflects an increase of 4.9% compared with the previous 7-day moving average (146,087). The current 7-day moving average is 123.6% higher than the value observed approximately one year ago. To the extent this upward trend continues or remains at this level, there could be an impact on both employee availability to work in Company facilities as well as the willingness of the Company’s customers and patients to venture into Company dispensaries to purchase products.

**• Supply Chain Disruption.**The Company relies on third party suppliers for equipment and services to produce its products and keep its operations going. If its suppliers are unable to continue operating due to mandatory closures or other effects of the pandemic, it may negatively impact its own ability to continue operating. At this time, the Company has not experienced any failure to secure critical supplies or services. However, disruptions in the Company’s supply chain may affect its ability to continue certain aspects of the Company’s operations or may significantly increase the cost of operating its business and significantly reduce its margins.

**• Staffing Disruption.**Earlier in the pandemic, the Company implemented among its staff where feasible "social distancing" measures recommended by such bodies as the Centers for Disease Control (CDC), the Presidential Administration, as well as state and local governments. The Company cancelled non-essential travel by employees, implemented remote meetings where possible, and permitted all staff who can work remotely to do so. For those whose duties require them to work on-site, measures were implemented to reduce infection risk, such as reducing contact with customers, mandating additional cleaning of workspaces and hand disinfection, providing masks and gloves to certain personnel, and contact tracing following reports of employee infection. More recently, following the increase in vaccination rates in the states in which the Company has operations, the Company saw a decrease in the incidence of employees reporting COVID-19 infections or exposures, although the recent emergence of the Delta Variant appears to be leading to some reversal of that trend.

The Company is continuing to encourage its employees to become vaccinated and is requiring employees to verify their vaccination status, Moreover, the Company is experimenting with a program to bring vaccination programs to Company sites to further encourage employees to become vaccinated. While the Company did adopt a policy earlier this year that compelled those employees who are not vaccinated to continue to follow masking guidelines while those who are vaccinated were given the option to forego masking at the workplace, as noted above, the emergence of new strains such as the Delta variant coupled with an overall increase in infection rates has led the Company to reimpose masking mandates on most employees irrespective of vaccination status. As noted earlier in the pandemic, higher infection rates could result in an increin employee absenteeism. If such absenteeism increases, the Company may not be able, including through replacement and temporary staff, to continue to operate at desired levels in some or all locations.

• Regulatory Backlog. Regulatory authorities, including those that oversee the cannabis industry on the state level, have been heavily occupied with their response to the pandemic. These regulators as well as other executive and legislative bodies in the states in which the Company operates may not be able to provide the level of support and attention to day-to-day regulatory functions as well as to needed regulatory development and reform that they would otherwise have provided. Such regulatory backlog may materially hinder the development of the Company’s business by delaying such activities as product launches, facility openings and approval of business acquisitions, thus materially impeding development of its business. The Company is actively addressing the risk to business continuity represented by each of the above factors through the implementation of a broad range of measures throughout its structure and is reassessing its response to the COVID-19 pandemic on an ongoing basis.

• Vaccination rates. On December 11, 2020, the federal Food and Drug Administration (FDA) issued an emergency use authorization (EUA) for the Pfizer BioN-Tech COVID-19 vaccine, the first such approval. Additional EUAs were issued on December 18, 2020 for a vaccine created by Moderna, and on February 27, 2021 for a vaccine created by Janssen Biotech (a Johnson & Johnson affiliate). As of September 2, 2021, the CDC reports that about 205 million people in the U.S., or 62% of the total population have received at least one dose of vaccine. About 175 million people, or about 53% of the total U.S. population, have been fully vaccinated. For people ages 12 years or older, 72.5% have received at least one dose of vaccine and 61.7% are fully vaccinated. As of now, the supply of vaccines in the states in which the Company does business appears to be sufficient to meet the demand of all those who seek to be vaccinated. That said, there can be no assurance of when the Company’s employees in any particular jurisdiction will access the vaccine. Moreover, there can be no assurance that all employees will choose to avail themselves of the vaccine or, if so, when they will choose to do so. The same applies to the Company’s patients, customers, regulators, and suppliers. Consequently, the COVID-19 risk factors described above continue to be applicable.

On August 18, 2021, the CDC made the following announcement: “The available data make very clear that protection against SARS-CoV-2 infection begins to decrease over time following the initial doses of vaccination, and in association with the dominance of the Delta variant, we are starting to see evidence of reduced protection against mild and moderate disease. Based on our latest assessment, the current protection against severe disease, hospitalization, and death could diminish in the months ahead, especially among those who are at higher risk or were vaccinated during the earlier phases of the vaccination rollout. For that reason, we conclude that a booster shot will be needed to maximize vaccine-induced protection and prolong its durability.” The CDC has indicated that boosters will be recommended for those who have been fully vaccinated for eight months. At this time, the Company is still assessing the impact of this development upon Company employees as well as the Company’s patients and customers.

• Europe Opening-Up. Countries in Europe are beginning to open-up following public health restrictions and lock-down measures to deal with COVID-19. Each country in Europe has adopted its own public health response, but the larger economies (being Germany, the UK, Italy, Spain and France) are relaxing previously strict “lock-down” measures and non-essential businesses, closed for extended periods are now open. Cannabis consumption in Europe is exclusively medical, and like other medicines, supply of medical cannabis has continued during the pandemic, with doctors and pharmacies adopting tele-medicine to hold consultations and supply prescriptions to patients. Whilst the Company has faced delays and difficulties the Company’s manufacturing sites in Spain and the UK, and its cultivation site in Portugal, have continued operations without significant disruption. Further waves of the virus and additional lock-downs in the Winter months of 2021 and early 2022 may have a material impact on the Company’s ability to generate revenue and on operations generally, and such risk will remain while the Covid-19 virus continues in widespread circulation and new strains are identified.

This document contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements or information. Generally, forward-looking statements and information may be identified by the use of forward-looking terminology such as "plans", "expects" or, "proposed", "is expected", "intends", "anticipates", " or "believes", or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. More particularly and without limitation, this Monthly Progress Report contains forward-looking statements and information concerning (i) the Issuer's current litigation and arbitration proceedings, (ii) the potential impacts of adverse publicity reports or other media attention regarding the safety, efficacy and quality of marijuana in general, or associating the consumption of adult-use and medical marijuana, (iii) the emergence of the new Delta 8 THC trend and its potential impacts on the Company, and (iv) the potential impacts of the COVID-19 pandemic on the Issuer's business and operations. Such forward-looking statements and information reflect management's current beliefs and are based on assumptions made by and information currently available to the Issuer with respect to the matter described in this Monthly Progress Report. Forward-looking statements involve risks and uncertainties, which are based on current expectations as of the date of this Monthly Progress Report and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Additional information about these assumptions and risks and uncertainties is contained under "Risk Factors" in the Issuer's management's discussion and analysis for the year ended December 31, 2020 filed on March 11, 2021 and under "Risk Factors" in the Issuer’s annual information form for the year ended December 31, 2020 filed on April 28, 2021, each of which is available under the Company’s SEDAR profile at www.sedar.com, and in other filings that the Company has made and may make with applicable securities authorities in the future. Forward-looking statements contained herein are made only as to the date of this Monthly Progress Report and the Issuer undertakes 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 law. The Issuer cautions investors not to place undue reliance on the forward-looking statements contained in this Monthly Progress Report.

[signature page follows]

Certificate of Compliance

The undersigned hereby certifies that:

1.	The undersigned is a director and/or senior officer of the Issuer and has been duly authorized by a resolution<br>of the board of directors of the Issuer to sign this Certificate of Compliance.
2.	As of the date hereof there is no material information concerning the Issuer which has not been publicly<br>disclosed.
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3.	The undersigned hereby certifies to the Exchange that the Issuer is in compliance with the requirements<br>of applicable securities legislation (as such term is defined in National Instrument 14-101) and all Exchange Requirements (as defined<br>in CNSX Policy 1).
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4.	All of the information in this Form 7 Monthly Progress Report is true.
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Dated September 9, 2021.
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	Peter Clateman
	Name of Director or Senior Officer
	/s/ Peter Clateman
	Signature
	Chief Legal Officer
	Official Capacity
Issuer Details<br><br> <br>Name of Issuer<br><br> <br>Curaleaf Holdings, Inc.	For Month Ended<br><br> <br>August 31, 2021	Date of Report<br><br> <br>YY/MM/D<br><br> <br>September 9, 2021
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Issuer Address<br><br> <br>301 Edgewater Place #405
City/Province/Postal Code<br><br> <br><br><br> <br>Wakefield, MA 01880 USA	Issuer Fax No.<br><br> <br>N/A	Issuer Telephone No.<br><br> <br>(781) 451-0150
Contact Name<br><br> <br>Investor Relations	Contact Position<br><br> <br>Investor Relations	Contact Telephone No.<br><br> <br>(781) 451-0150
Contact Email Address<br><br> <br>[email protected]	Web Site Address<br><br> <br>www.curaleaf.com

Exhibit 99.3

Curaleaf Announces Voting Results of its AnnualandSpecial Meeting of Shareholders

WAKEFIELD, Mass., September 9, 2021 /CNW/ -- Curaleaf Holdings, Inc. (CSE: CURA / OTCQX: CURLF) ("Curaleaf" or the "Company"), a leading international provider of consumer products in cannabis, conducted its annual and special meeting of shareholders (the "Meeting") on September 9, 2021 at 2:00 p.m. (Eastern Time).

At the Meeting, the number of directors on the board of directors of the Company for the ensuing year was fixed at nine (9) by the shareholders and the following nominees for election as directors of the Company were elected by a majority of votes cast by the shareholders virtually present or represented by proxy at the Meeting:

·	Boris Jordan;
·	Joseph Lusardi;
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·	Dr. Jaswinder Grover;
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·	Karl Johansson;
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·	Peter Derby; and
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·	Mitchell Kahn.
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Further, Antares Professional Corporation, Chartered Professional Accountants was reappointed as the Company’s auditor for the ensuing year.

Finally, at the Meeting, the shareholders approved the amendment (the "Amendment") to the articles of the Company in order to extend the automatic termination of the dual-class structure of the Company and to maintain such dual-class structure of the Company until the earlier to occur of (i) the transfer or disposition of the multiple voting shares in the capital of the Company by Mr. Boris Jordan, the Executive Chairman of the Company, to one or more third parties (which are not Permitted Holders (i.e. members of his immediate family and entities controlled by Mr. Jordan and members of his immediate family)); (ii) Mr. Jordan or his Permitted Holders no longer beneficially owning, directly or indirectly and in the aggregate, at least 5% of the issued and outstanding shares of the Company; and (iii) the first business day following the first annual meeting of shareholders of the Company following the subordinate voting shares of the Company being listed and posted for trading on a United States national securities exchange such as The Nasdaq Stock Market or The New York Stock Exchange.

In accordance with the corporate and securities legislation, the special resolution authorizing the Amendment was duly approved at the meeting by:

(i)	99.53% of the votes cast at the Meeting by all holders of subordinate voting shares and multiple voting<br>shares present in person or represented by proxy, voting together as a single class;
(ii)	100% of the votes cast at the Meeting by all holders of multiple voting shares present in person or represented<br>by proxy, voting as a class;
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(iii)	97.528% of the votes cast at the Meeting by all holders of subordinate voting shares present in person<br>or represented by proxy, voting as a class; and
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(iv)	for the purpose of confirming the requisite minority approval under Multilateral Instrument 61-101 –<br>Protection of Minority Securityholders in Special Transactions has been obtained, a majority of the votes cast at the Meeting by<br>the holders of subordinate voting shares, excluding the votes attached to 59,235,411 subordinate voting shares beneficially owned or over<br>which control or direction is exercised by Mr. Jordan as at the record date; and the Subordinate Voting Shares beneficially owned or over<br>which control or direction is exercised by related parties of Mr. Jordan and persons acting jointly or in concert with Mr. Jordan (including<br>affiliates and associated).
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- 2 -

The Company expects to file a notice of alteration with the British Columbia Registrar of Companies declaring that the articles of the Company have been amended in accordance with the Amendment on September 10, 2021, the first business day following the Meeting, and the date on which the Amendment will become effective.

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 and Select, 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 109 dispensaries, 22 cultivation sites and over 30 processing sites, and employs over 5,000 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.

Forward-Looking Statements

This news release contains forward–looking statements and forward–looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements relate to future events or future performance. All statements other than statements of historical fact may be forward–looking statements or information. Generally, forward-looking statements may be identified by the use of forward-looking terminology such as "plans", "expects" or, "proposed", "is expected", "intends", "anticipates", or "believes", or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. More particularly and without limitation, this news release contains forward–looking statements concerning the filing by the Company of a notice of alteration with the British Columbia Registrar of Companies and the effectiveness of the amendment of the articles of the Company, as well as the listing of the subordinate voting shares on a U.S. national securities exchange. Investors should be aware that, while it currently is the Company’s intent and objective to apply to list the subordinate voting shares of the Company on a U.S. national exchange such as The Nasdaq Stock Market or The New York Stock Exchange, there is currently no expectation nor guaranty that the Company will be successful in doing so, nor can the Company guaranty that it will be able to meet the initial listing requirements of such exchanges or that the Company would be eligible to post the subordinate voting shares for trading on such exchanges at all. The forward-looking statements included in this news release reflect management's current beliefs and are based on assumptions made by and information currently available to the company with respect to the matter described in this news release. Forward-looking statements involve risks and uncertainties, which are based on current expectations as of the date of this news release and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Additional information about these assumptions and risks and uncertainties is contained under "Risk Factors and Uncertainties" in the Company's latest annual information form dated April 28, 2021, as well as under "Particulars of Matters to be Acted Upon – Amendment to the Articles of the Company – Risk Factors" in the Company’s management information circular dated July 30, 2021, both of which are available under the Company's SEDAR profile at www.sedar.com, and in other filings that the Company has made and may make with applicable securities authorities in the future. Forward-looking statements contained herein are made only as to the date of this news release and the Company undertakes 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 law. We caution investors not to place undue reliance on the forward-looking statements contained in this news release.

The Canadian Securities Exchange has not reviewed, approved or disapproved the content of this news release.

-3 -

Investor Contact:

Curaleaf Holdings, Inc.

Carlos Madrazo, SVP Head of IR & Capital Markets

[email protected]

Media Contact:

Curaleaf Holdings, Inc.

Tracy Brady, VP Corporate Communications

[email protected]

SOURCE Curaleaf Holdings, Inc.

Exhibit 99.4

Mailing Address: PO Box 9431 Stn Prov Govt Victoria BC V8W 9V3 www.corporateonline.gov.bc.ca Location: 2nd Floor - 940 Blanshard Street Victoria BC 1 877 526-1526 Notice of Articles BUSINESS CORPORATIONS ACT CERTIFIED COPY Of a Document filed with the Province of British Columbia Registrar of Companies CAROL PREST This Notice of Articles was issued by the Registrar on: September 10, 2021 08:10 AM Pacific Time Incorporation Number: BC1018969 Recognition Date and Time: Incorporated on November 13, 2014 02:27 PM Pacific Time NOTICE OF ARTICLES Name of Company: CURALEAF HOLDINGS, INC. REGISTERED OFFICE INFORMATION Mailing Address: SUITE 1700, PARK PLACE 666 BURRARD STREET VANCOUVER BC V6C 2X8 CANADA Delivery Address: SUITE 1700, PARK PLACE 666 BURRARD STREET VANCOUVER BC V6C 2X8 CANADA RECORDS OFFICE INFORMATION Mailing Address: SUITE 1700, PARK PLACE 666 BURRARD STREET VANCOUVER BC V6C 2X8 CANADA Delivery Address: SUITE 1700, PARK PLACE 666 BURRARD STREET VANCOUVER BC V6C 2X8 CANADA Page: 1 of 3

DIRECTOR INFORMATION Last Name, First Name, Middle Name: Lusardi, Joseph Mailing Address: 1926 BELLONA STREET DANIEL ISLAND SC 29492 UNITED STATES Delivery Address: 1926 BELLONA STREET DANIEL ISLAND SC 29492 UNITED STATES Last Name, First Name, Middle Name: Derby, Peter Mailing Address: 26 DERBY LANE IRVINGTON NY 10553 UNITED STATES Delivery Address: 26 DERBY LANE IRVINGTON NY 10553 UNITED STATES Last Name, First Name, Middle Name: Kahn, Mitchell Mailing Address: 4740 S. OCEAN BLVD. #801 HIGHLAND BEACH FL 33487 UNITED STATES Delivery Address: 4740 S. OCEAN BLVD. #801 HIGHLAND BEACH FL 33487 UNITED STATES Last Name, First Name, Middle Name: Grover, Jaswinder Mailing Address: 917 TROPHY HILLS DRIVE LAS VEGAS NV 89134 UNITED STATES Delivery Address: 917 TROPHY HILLS DRIVE LAS VEGAS NV 89134 UNITED STATES Last Name, First Name, Middle Name: Jordan, Boris Mailing Address: 1175 SPANISH RIVER ROAD BOCA RATON FL 33432 UNITED STATES Delivery Address: 1175 SPANISH RIVER ROAD BOCA RATON FL 33432 UNITED STATES Last Name, First Name, Middle Name: Johansson, Karl Mailing Address: 789 OLD NORTH SHORE ROAD TWO HARBORS MN 55616 UNITED STATES Delivery Address: 789 OLD NORTH SHORE ROAD TWO HARBORS MN 55616 UNITED STATES

RESOLUTION DATES: Date(s) of Resolution(s) or Court Order(s) attaching or altering Special Rights and Restrictions attached to a class or a series of shares: October 12, 2018 September 9, 2021 AUTHORIZED SHARE STRUCTURE 1. No Maximum Subordinate Voting Shares Without Par Value With Special Rights or Restrictions attached _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 2. No Maximum Multiple Voting Shares Without Par Value With Special Rights or Restrictions attached _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Consolidated version

Effective September 10, 2021

ArticlesofCURALEAF HOLDINGS, INC.

Incorporation number: BC1018969

TABLE OF CONTENTS

		Page No.
1.	Interpretation	2
2.	Shares and Share Certificates	2
3.	Issue of Shares	4
4.	Share Registers	4
5.	Share Transfers	5
6.	Transmission of Shares	6
7.	Purchase of Shares	6
8.	Borrowing Powers	7
9.	Alterations	7
10.	Meetings of Shareholders	8
11.	Proceedings at Meetings of Shareholders	10
12.	Votes of Shareholders	13
13.	Directors	16
14.	Election and Removal of Directors	18
15.	Alternate Directors	20
16.	Powers and Duties of Directors	21
17.	Disclosure of Interest of Directors	21
18.	Proceedings of Directors	23
19.	Executive and Other Committees	25
20.	Officers	26
21.	Indemnification	27
22.	Dividends	28
23.	Documents, Records and Reports	29
24.	Notices	30
25.	Seal	31
26.	Prohibitions	32
27.	Special Rights and Restrictions	32

1. Interpretation

1.1	Definitions

In these Articles, the following words and phrases have the meanings set out beside them:

(1)	“board of directors”, “directors” and “board”<br>mean the directors or sole director of the Company for the time being;
(2)	“Business Corporations Act” means the Business Corporations Act (British<br>Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that<br>Act;
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(3)	“Company” means the company whose name is set out at the top of page 1, being<br>the company which has adopted these Articles;
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(4)	“Interpretation Act” means the Interpretation Act (British Columbia) from<br>time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;
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(5)	“legal personal representative” means the personal or other legal representative of<br>the shareholder;
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(6)	“registered address” of a shareholder means the shareholder's address as recorded in<br>the central securities register;
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(7)	“seal” means the seal of the Company, if any.
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1.2	Business Corporations Act and Interpretation Act Definitions Applicable
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The definitions in the Business CorporationsAct and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict between these Articles and the Business Corporations Act, the Business Corporations Act will prevail.

2. Shares and Share Certificates

2.1	Authorized Share Structure

The authorized share structure of the Company consists of shares of the kinds, classes and, if any, series described in the Notice of Articles of the Company.

2.2	Form of Share Certificate

Each share certificate issued by the Company must comply with, and be signed as required by, the Business Corporations Act.

2.3	Shareholder Entitled to Certificate or Acknowledgment

Each shareholder is entitled, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the shareholder's name or (b) a non-transferable written acknowledgment of the shareholder's right to obtain such a share certificate, but in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate and delivery of a share certificate for a share to one of several joint shareholders or to one of the shareholders' duly authorized agents will be sufficient delivery to all.

2.4	Delivery by Mail

Any share certificate or non-transferable written acknowledgment of a shareholder's right to obtain a share certificate may be sent to the shareholder by mail at the shareholder's registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.

2.5	Replacement of Worn Out or Defaced Certificate or Acknowledgement

If the directors are satisfied that a share certificate or a non-transferable written acknowledgment of the shareholder's right to obtain a share certificate is worn out or defaced, they must, on production to them of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as they think fit:

(1)	order the share certificate or acknowledgment, as the case may be, to be cancelled; and
(2)	issue a replacement share certificate or acknowledgment, as the case may be.
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2.6	Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment
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If a share certificate or a non-transferable written acknowledgment of a shareholder's right to obtain a share certificate is lost, stolen or destroyed, a replacement share certificate or acknowledgment, as the case may be, must be issued to the person entitled to that share certificate or acknowledgment, as the case may be, if the directors receive:

(1)	proof satisfactory to them that the share certificate or acknowledgment is lost, stolen or destroyed;<br>and
(2)	any indemnity the directors consider adequate.
---	---
2.7	Splitting Share Certificates
---	---

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder's name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

2.8	Certificate Fee

There must be paid to the Company, in relation to the issue of any share certificate under Articles 2.5, 2.6 or 2.7, the amount, if any and which must not exceed the amount prescribed under the Business Corporations Act, determined by the directors.

2.9	Recognition of Trusts

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

3. Issue of Shares

3.1	Directors Authorized

Subject to the rights of the holders of issued shares of the Company, the Company may allot, sell, issue and otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

3.2	Commissions and Discounts

The Company may pay at any time a reasonable commission or allow a reasonable discount to any person in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company or any other person or procuring or agreeing to procure purchasers for shares of the Company.

3.3	Brokerage

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

3.4	Conditions of Issue

Except as provided for by the Business CorporationsAct, no share may be issued until it is fully paid. A share is fully paid when:

(1)	consideration is provided to the Company for the issue of the share by one or more of the following:
(a)	past services performed for the Company;
---	---
(b)	property;
---	---
(c)	money; and
---	---
(2)	the value of the consideration received by the Company equals or exceeds the issue price set for the share<br>under Article 3.1.
---	---
3.5	Share Purchase Warrants and Rights
---	---

The Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

4. Share Registers

4.1	Central Securities Register

The Company must maintain in British Columbia a central securities register as required by the Business Corporations Act. The directors may appoint:

(1)	an agent to maintain the central securities register; and
(2)	one or more agents, including the agent which keeps the central securities register, as transfer agent<br>for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or<br>such class or series of its shares.
---	---

The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

4.2	Closing Register

The Company must not at any time close its central securities register.

5. Share Transfers

5.1	Registering Transfers

A transfer of a share of the Company must not be registered unless:

(1)	a duly signed instrument of transfer in respect of the share has been received by the Company;
(2)	if a share certificate has been issued by the Company in respect of the share to be transferred, that<br>share certificate has been surrendered to the Company; and
---	---
(3)	if a non-transferable written acknowledgment of the shareholder's right to obtain a share certificate<br>has been issued by the Company in respect of the share to be transferred, that acknowledgment has been surrendered to the Company.
---	---
5.2	Form of Instrument of Transfer
---	---

The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company's share certificates or in any other form that may be approved by the directors from time to time.

5.3	Transferor Remains Shareholder

Except to the extent that the Business CorporationsAct otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

5.4	Signing of Instrument of Transfer

If a shareholder, or their duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

(1)	in the name of the person named as transferee in that instrument of transfer; or
(2)	if no person is named as transferee in that instrument of transfer, in the name of the person on whose<br>behalf the instrument is deposited for the purpose of having the transfer registered.
---	---

5.5	Enquiry as to Title Not Required

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.

5.6	Transfer Fee

There must be paid to the Company, in relation to the registration of any transfer, the amount, if any, determined by the directors.

6. Transmission of Shares

6.1	Legal Personal Representative Recognized on Death

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder's interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate.

6.2	Rights of Legal Personal Representative

The legal personal representative has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

7. Purchase of Shares

7.1	Company Authorized to Purchase Shares

Subject to Article 7.2 and the special rights and restrictions attached to the shares of any class or series, the Company, if authorized by the directors, may purchase or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

7.2	Purchase When Insolvent

The Company must not make a payment or provide any other consideration to purchase or otherwise acquire any of its shares if there are reasonable grounds for believing that:

(1)	the Company is insolvent; or
(2)	making the payment or providing the consideration would render the Company insolvent.
---	---
7.3	Sale and Voting of Purchased Shares
---	---

If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

(1)	is not entitled to vote the share at a meeting of its shareholders;
(2)	must not pay a dividend in respect of the share; and
---	---
(3)	must not make any other distribution in respect of the share.
---	---

8. Borrowing Powers

The Company, if authorized by the directors, may:

(1)	borrow money in the manner and amount, on the security, from the sources and on the terms and conditions<br>that they consider appropriate;
(2)	issue bonds, debentures and other debt obligations either outright or as security for any liability or<br>obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;
---	---
(3)	guarantee the repayment of money by any other person or the performance of any of any other person; and
---	---
(4)	mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give<br>other security on, the whole or any part of the present and future assets and undertaking of the Company.
---	---

9. Alterations

9.1	Alteration of Authorized Share Structure

Subject to Article 9.2, the Company may by:

(1)	a resolution of its board of directors
(a)	increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out<br>of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series<br>of shares for which no maximum is established;
---	---
(b)	change all or any of its unissued, or fully paid issued, shares with par value into shares without par<br>value or any of its unissued shares without par value into shares with par value;
---	---
(c)	alter the identifying name of any of its shares; and
---	---
(d)	subdivide or consolidate all or any of its unissued, or fully paid issued, shares.
---	---
(2)	an ordinary resolution:
---	---
(a)	create one or more classes or series of shares or, if none of the shares of a class or series of shares<br>are allotted or issued, eliminate that class or series of shares; and
---	---
(b)	if the Company is authorized to issue shares of a class of shares with par value:
---	---
(i)	decrease the par value of those shares; and
---	---
(ii)	if none of the shares of that class of shares are allotted or issued, increase the par value of those<br>shares.
---	---
(3)	a special resolution, otherwise alter its shares or authorized share structure when required or permitted<br>to do so by the Business Corporations Act.
---	---

9.2	Special Rights and Restrictions

The Company may by ordinary resolution:

(1)	create special rights or restrictions for, and attach those special rights or restrictions to, the shares<br>of any class or series of shares, unless any of those shares have been issued in which case the Company may do so only by special resolution;<br>or
(2)	or delete any special rights or restrictions attached to the shares of any class or series of unless any<br>of those shares have been issued in which case the Company may do so only by special resolution.
---	---
9.3	Change of Name
---	---

The Company may by a resolution of its board of directors authorize an alteration of its Notice of Articles to change its name or adopt or change any translation of that name.

9.4	Other Alterations

If the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by special resolution alter these Articles.

10. Meetings of Shareholders

10.1	Annual General Meetings

The Company must, unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, hold its first annual general meeting following incorporation, amalgamation or continuation within 18 months after the date on which it was incorporated or otherwise created and recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.

10.2	Resolution Instead of Annual General Meeting

If all the shareholders entitled to vote at an annual general meeting consent by a unanimous resolution under the Business Corporations Act to all of the business required to be transacted at that annual general meeting, the meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.2, select as the Company's annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

10.3	Calling and Location of Meetings of Shareholders

The directors may, whenever they think fit, call a meeting of shareholders to be held in British Columbia, Calgary, Alberta or Toronto, Ontario or at such other location as may be approved by the Registar of Companies at such time and place as may be determined by the directors.

10.4	Notice for Meetings of Shareholders

The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

(1)	if and for so long as the Company is a public company, 21 days;
(2)	otherwise, 10 days.
---	---
10.5	Record Date for Notice
---	---

The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

(1)	if and for so long as the Company is a public company, 21 days;
(2)	otherwise, 10 days.
---	---

If no record date is set, it is 5:00 p.m. on the business day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.6	Record Date for Voting

The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.7	Failure to Give Notice and Waiver of Notice

The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

10.8	Notice of Special Business at Meetings of Shareholders

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

(1)	state the general nature of the special business; and
(2)	if the special business includes considering, approving, ratifying, adopting or authorizing any document<br>or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document<br>will be available for inspection by shareholders:
---	---
(a)	at the Company's records office, or at such other reasonably accessible location in British Columbia as<br>is specified in the notice; and (b) during statutory business hours on any one or more specified days before the day set for the<br>holding of the meeting.
---	---

11. Proceedings at Meetings of Shareholders

11.1	Special Business

At a meeting of shareholders, the following business is special business:

(1)	at a meeting of shareholders that is not an annual general meeting, all business is special business except<br>business relating to the conduct of or voting at the meeting;
(2)	at an annual general meeting, all business is special business except for the following:
---	---
(a)	business relating to the conduct of or voting at the meeting;
---	---
(b)	consideration of any financial statements of the Company presented to the meeting;
---	---
(c)	consideration of any reports of the directors or auditor;
---	---
(d)	the setting or changing of the number of directors;
---	---
(e)	the election or appointment of directors;
---	---
(f)	the appointment of an auditor;
---	---
(g)	the setting of the remuneration of an auditor;
---	---
(h)	business arising out of a report of the directors not requiring the passing of a special resolution or<br>an exceptional resolution; and
---	---
(i)	any other business which, under these Articles or the Business Corporations Act, may be transacted<br>at a meeting of shareholders without prior notice of the business being given to the shareholders.
---	---
11.2	Special Majority
---	---

The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

11.3	Quorum

Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two shareholders who are present in person or represented by proxy.

11.4	One Shareholder May Constitute Quorum

If there is only one shareholder entitled to vote at a meeting of shareholders:

(1)	the quorum is one person who is, or who represents by proxy, that shareholder, and
(2)	that shareholder, present in person or by proxy, may constitute the meeting.
---	---
11.5	Other Persons May Attend
---	---

The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

11.6	Requirement of Quorum

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

11.7	Lack of Quorum

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

(1)	in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and
(2)	in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the<br>next week at the same time and place.
---	---
11.8	Lack of Quorum at Succeeding Meeting
---	---

If, at the meeting to which the meeting referred to in Article 11.7(2) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

11.9	Chair

The following individuals are entitled to preside as chair at a meeting of shareholders:

(1)	the chair of the board, if any; or
(2)	if the chair of the board is absent or unwilling to act as chair of the meeting, the first of the following<br>individuals to agree to act as chair: the president, if any.
---	---
11.10	Selection of Alternate Chair
---	---

If, at any meeting of shareholders, the chair of the board or president are not present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, one of the chief executive officer, the chief financial officer, a vice-president, the secretary or the Company's legal counsel may act as chair of the meeting and, failing them, the directors present must choose one of their number to be chair of the meeting or if all of the directors present decline to take the chair or fail to so choose or if no director is present, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

11.11	Adjournments

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than tl1e business left unfinished at the meeting from which the adjournment took place.

11.12	Notice of Adjourned Meeting

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

11.13	Decisions by Show of Hands or Poll

Every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

11.14	Declaration of Result

The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in tl1e minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

11.15	Motion Need Not be Seconded

No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

11.16	Casting Vote

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

11.17	Manner of Taking Poll

Subject to Article 11.18, if a poll is duly demanded at a meeting of shareholders:

(1)	the poll must be taken:
(a)	at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs;<br>and
---	---
(b)	in the manner, at the time and at the place that the chair of the meeting directs;
---	---
(2)	the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and
---	---
(3)	the demand for the poll may be withdrawn by the person who demanded it.
---	---
11.18	Demand for Poll on Adjournment
---	---

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

11.19	Chair Must Resolve Dispute

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and their determination made in good faith is final and conclusive.

11.20	Casting of Votes

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

11.21	Demand for Poll

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

11.22	Demand for Poll

Not to Prevent Continuance of Meeting The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

11.23	Retention of Ballots and Proxies

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting at its records office, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

12. Votes of Shareholders

12.1	Number of Votes by Shareholder or by Shares

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

(1)	on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to<br>vote on the matter has one vote; and
(2)	on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled<br>to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.
---	---
12.2	Votes of Persons in Representative
---	---

Capacity A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

12.3	Votes by Joint Holders

If there are joint shareholders registered in respect of any share:

(1)	any one of the joint shareholders may vote at any meeting, either personally or by proxy, in respect of<br>the share as if that joint shareholder were solely entitled to it; or
(2)	if more than one of the joint shareholders is present at any meeting, personally or by proxy, and more<br>than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central<br>securities register in respect of the share will be counted.
---	---

12.4	Legal Personal Representatives as Joint Shareholders

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of Article 12.3, deemed to be joint shareholders.

12.5	Representative of a Corporate Shareholder

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as Its representative at any meeting of shareholders of the Company, and:

(1)	for that purpose, the instrument appointing a representative must:
(a)	be received at the registered office of the Company or at any other place specified, in the notice calling<br>the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if<br>no number of days is specified, two business days before the day set for the holding of the meeting; or
---	---
(b)	be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the<br>meeting;
---	---
(2)	if a representative is appointed under this Article 12.5:
---	---
(a)	the representative is entitled to exercise in respect of and at that meeting the same rights on behalf<br>of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual,<br>including, without limitation, the right to appoint a proxy holder; and
---	---
(b)	the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and<br>is deemed to be a shareholder present in person at the meeting.
---	---

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.6	Proxy Provisions Do Not Apply to All Companies

Articles 12.9 and 12.12 do not apply to the Company if and for so long as it is a public company or a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply.

12.7	Appointment of Proxy Holders

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more (but not more than five) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

12.8	Alternate Proxy Holders

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

12.9	When Proxy Holder Need Not Be Shareholder

Subject to Article 12.6 a person must not be appointed as a proxy holder unless the person is a shareholder, although a person who is not a shareholder may be appointed as a proxy holder if:

(1)	the person appointing the proxy holder is a corporation or a representative of a corporation appointed<br>under Article 12.5;
(2)	the Company has at the time of the meeting for which the proxy holder is to be appointed only one shareholder<br>entitled to vote at the meeting; or
---	---
(3)	the shareholders present in person or by proxy at and entitled to vote at the meeting for which the proxy<br>holder is to be appointed, by a resolution on which the proxy holder is not entitled to vote but in respect of which the proxy holder<br>is to be counted in the quorum, permit the proxy holder to attend and vote at the meeting.
---	---
12.10	Deposit of Proxy
---	---

A proxy for a meeting of shareholders must:

(1)	be received at the registered office of the Company or at any other place specified, in the notice calling<br>the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified,<br>two business days before the day set for the holding of the meeting; or
(2)	unless the notice provides otherwise, be provided, at the meeting, to the chair of the meeting or to a<br>person designated by the chair of the meeting. A proxy may be sent to the Company by written instrument, fax or any other method of transmitting<br>legibly recorded messages.
---	---
12.11	Validity of Proxy Vote
---	---

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

(1)	at the registered office of the Company, at any time up to and including the last business day before<br>the day set for the holding of the meeting at which the proxy is to be used; or
(2)	by the chair of the meeting, before the vote is taken.
---	---
12.12	Form of Proxy
---	---
(1)	Subject to Article 12.6, a proxy, whether for a specified meeting or otherwise, must be either in<br>the following form or in any other form approved by the directors or the chair of the meeting:
---	---

[name of company]

(the “Company”)

The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name], as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy if given in respect of all shares registered in the name of the shareholder):

Signed [month, day, year]
[Signature of shareholder]
[Name of shareholder-printed]
12.13	Revocation of Proxy
---	---

Every proxy may be revoked by an instrument in writing that is:

(1)	received at the registered office of the Company at any time up to and including the last business day<br>before the day set for the holding of the meeting at which the proxy is to be used; or
(2)	provided, at the meeting, to the chair of the meeting.
---	---
12.14	Revocation of Proxy Must Be Signed
---	---

An instrument referred to in Article 12.13 must be signed as follows:

(1)	if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed<br>by the shareholder or their legal personal representative or trustee in bankruptcy;
(2)	if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be<br>signed by the corporation or by a representative appointed for the corporation under Article 12.5.
---	---
12.15	Production of Evidence of Authority to Vote
---	---

The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

13. Directors

13.1	First Directors; Number of Directors

The directors, or the first directors after the Company being incorporated, amalgamated or continued, are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Business Corporations Act. The number of directors, excluding additional directors appointed under Article 14.8, is set at:

(1)	subject to paragraphs (2) and (3), the number of directors that is equal to the number of the<br>Company's first directors;
(2)	if the Company is a public company, the greater of three and the most recently set of:
---	---
(a)	the number of directors set by ordinary resolution (whether or not previous notice of the resolution was<br>given);and
---	---
(b)	the number of directors set under Article 14.4;
---	---

(3)	if the Company is not a public company, the most recently set of:
(a)	the number of directors set by ordinary resolution (whether or not previous notice of the resolution was<br>given); and
---	---
(b)	the number of directors set under Article 14.4.
---	---
13.2	Change in Number of Directors
---	---

If the number of directors is set under Articles 13.1(2)(a) or 13.1(3)(a):

(1)	the shareholders may elect or appoint the directors needed to fill any vacancies in the board of directors<br>up to that number;
(2)	if the shareholders do not elect or appoint the directors needed to fill any vacancies in the board of<br>directors up to that number contemporaneously with the setting of that number, then the directors may appoint, or the shareholders may<br>elect or appoint, directors to fill those vacancies.
---	---
13.3	Directors' Acts Valid Despite Vacancy
---	---

An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

13.4	Qualifications of Directors

A director is not required to hold a share in the capital of the Company as qualification for their office but must be qualified as required by the Business Corporations Act to become, act or continue to act as a director.

13.5	Remuneration of Directors

The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If they so decide, the remuneration, if any, of the directors will be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such, who is also a director.

13.6	Reimbursement of Expenses of Directors

The Company must reimburse each director for the reasonable expenses they may incur in and about the business of the Company.

13.7	Special Remuneration for Directors

If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Company's business, they may be paid remuneration fixed by the directors, or, at the option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or in substitution for, any other remuneration that they may be entitled to receive.

13.8	Gratuity, Pension or Allowance on Retirement of Director

Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to their spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

14. Election and Removal of Directors

14.1	Election at Annual General Meeting

At every annual general meeting and in every unanimous resolution contemplated by Article 10.2:

(1)	the shareholders entitled to vote at the annual general meeting for the election of directors must elect,<br>or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these<br>Articles; and
(2)	the directors cease to hold office immediately before the election or appointment of directors under paragraph (1)<br>but are eligible for re-election or re-appointment.
---	---
14.2	Consent to be a Director
---	---

No election, appointment or designation of an individual as a director is valid unless:

(1)	that individual consents to be a director in the manner provided for in the Business Corporations Act;
(2)	that individual is elected or appointed at a meeting at which the individual is present and the individual<br>does not refuse, at the meeting, to be a director; or
---	---
(3)	with respect to first directors, the designation is otherwise valid under the Business CorporationsAct.
---	---
14.3	Failure to Elect or Appoint Directors
---	---

If:

(1)	the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote<br>at an annual general meeting fail to pass the unanimous resolution contemplated by Article 10.2, on or before the date by which the<br>annual general meeting is required to be held under the Business Corporations Act; or
(2)	the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by Article<br>10.2, to elect or appoint any directors; then each director then in office continues to hold office until the earlier of:
---	---
(3)	the date on which their successor is elected or appointed; and
---	---
(4)	the date on which they otherwise cease to hold office under the Business Corporations Act or these<br>Articles.
---	---
14.4	Places of Retiring Directors Not Filled
---	---

If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re- elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles until further new directors are elected at a meeting of shareholders convened for that purpose . If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

14.5	Directors May Fill Casual Vacancies

Any casual vacancy occurring in the board of directors may be filled by the directors.

14.6	Remaining Directors Power to Act

The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or for any other purpose.

14.7	Shareholders May Fill Vacancies

If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.

14.8	Additional Directors

Notwithstanding Articles 13.1 and 13.2, between annual general meetings or unanimous resolutions contemplated by Article 10.2, the directors may appoint one or more additional directors, but the number of additional directors appointed under this Article 14.8 must not at any time exceed:

(1)	one-third of the number of first directors, if, at the time of the appointments, one or more of the first<br>directors have not yet completed their first term of office; or
(2)	in any other case, one-third of the number of the current directors who were elected or appointed as directors<br>other than under this Article 14.8.
---	---

Any director so appointed ceases to hold office immediately before the next election or appointment of directors under Article 14.1(1), but is eligible for re-election or re-appointment.

14.9	Ceasing to be a Director

A director ceases to be a director when:

(1)	the term of office of the director expires;
(2)	the director dies;
---	---
(3)	the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company;<br>or
---	---
(4)	the director is removed from office pursuant to Articles 14.10 or 14.11.
---	---
14.10	Removal of Director by Shareholders
---	---

The Company may remove any director before the expiration of their term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

14.11	Removal of Director by Directors

The directors may remove any director before the expiration of their term of office if the director is convicted of an indictable offence, convicted by a court of an offence under or found in breach and sanctioned by a securities regulatory authority of any Canadian or United States securities legislation, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.

15. Alternate Directors

15.1	Appointment of Alternate Director

Any director (an “appointor”) may by notice in writing received by the Company appoint any person (an “appointee”) who is qualified to act as a director to be their alternate to act in their place at meetings of the directors or committees of the directors at which the appointor is not present unless (in the case of an appointee who is not a director) the directors have reasonably disapproved the appointment of such person as an alternate director and have given notice to that effect to the appointor within a reasonable time after the notice of appointment is received by the Company.

15.2	Notice of Meetings

Every alternate director so appointed is entitled to notice of meetings of the directors and of committees of the directors of which their appointor is a member and to attend and vote as a director at any such meetings at which their appointor is not present.

15.3	Alternate for More Than One Director Attending Meetings

A person may be appointed as an alternate director by more than one director, and an alternate director:

(1)	will be counted in determining the quorum for a meeting of directors once for each of their appointors<br>and, in the case of an appointee who is also a director, once more in that capacity;
(2)	has a separate vote at a meeting of directors for each of their appointors and, in the case of an appointee<br>who is also a director, an additional vote in that capacity;
---	---
(3)	will be counted in determining the quorum for a meeting of a committee of directors once for each of their<br>appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, once<br>more in that capacity;
---	---
(4)	has a separate vote at a meeting of a committee of directors for each of their appointors who is a member<br>of that committee and, in the case of an appointee who is also a member of that committee as a director, an additional vote in that capacity.
---	---
15.4	Consent Resolutions
---	---

Every alternate director, if authorized by the notice appointing them, may sign in place of their appointor any resolutions to be consented to in writing.

15.5	Alternate Director Not an Agent

Every alternate director is deemed not to be the agent of their appointor.

15.6	Revocation of Appointment of Alternate Director

An appointor may at any time, by notice in writing received by the Company, revoke the appointment of an alternate director appointed by them.

15.7	Ceasing to be an Alternate Director

The appointment of an alternate director ceases when:

(1)	their appointor ceases to be a director and is not promptly re-elected or re-appointed;
(2)	the alternate director dies;
---	---
(3)	the alternate director resigns as an alternate director by notice in writing provided to the Company or<br>a lawyer for the Company;
---	---
(4)	the alternate director ceases to be qualified to act as a director; or
---	---
(5)	their appointor revokes the appointment of the alternate director.
---	---
15.8	Remuneration and Expenses of Alternate Director
---	---

The Company must reimburse an alternate director for the reasonable expenses that would be properly reimbursed if they were a director, and the alternate director is entitled to receive from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the appointor may from time to time direct.

16. Powers and Duties of Directors

16.1	Powers of Management

The directors must, subject to these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the shareholders of the Company.

16.2	Appointment of Attorney of Company

The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove g. director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them.

17. Disclosure of Interest of Directors

17.1	Obligation to Account for Profits

A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business CorporationsAct.

17.2	Restrictions on Voting by Reason of Interest

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors' resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

17.3	Interested Director Counted in Quorum

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

17.4	Disclosure of Conflict of Interest or Property

A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual's duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act.

17.5	Director Holding Other Office in the Company

A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to their office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

17.6	No Disqualification

No director or intended director is disqualified by their office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

17.7	Professional Services by Director or Officer

A director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

17.8	Director or Officer in Other Corporations

A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and the director or officer is not accountable to the Company for any remuneration or other benefits received by them as director, officer or employee of, or from their interest in, such other person.

18. Proceedings of Directors

18.1	Meetings of Directors

The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

18.2	Voting at Meetings

Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does not have a second or casting vote.

18.3	Chair of Meetings

The following individual is entitled to preside as chair at a meeting of directors:

(1)	the chair of the board, if any;
(2)	in the absence of the chair of the board, the president, if any, if the president is a director; or
---	---
(3)	any other director chosen by the directors if:
---	---
(a)	neither the chair of the board nor the president, if a director, is present at the meeting within 15 minutes<br>after the time set for holding the meeting;
---	---
(b)	neither the chair of the board nor the president, if a director, is willing to chair the meeting; or
---	---
(c)	the chair of the board and the president, if a director, have advised the secretary, if any, or any other<br>director, that they will not be present at the meeting.
---	---
18.4	Meetings by Telephone or Other Communications Medium
---	---

A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other. A director may participate in a meeting of the directors or of any committee of the directors by a communications medium other than telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other and if all directors who wish to participate in the meeting agree to such participation. A director who pru1icipates in a meeting in a manner contemplated by this Article 18.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner.

18.5	Calling of Meetings

A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

18.6	Notice of Meetings

Other than for meetings held at regular intervals as determined by the directors pursuant to Article 18.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors and the alternate directors by any method set out in Article 24 1.

18.7	When Notice Not Required

It is not necessary to give notice of a meeting of the directors to a director or an alternate director if:

(1)	the meeting is to be held immediately following a meeting of shareholders at which that director was elected<br>or appointed, or is the meeting of the directors at which that director is appointed; or
(2)	the director or alternate director, as the case may be, has waived notice of the meeting.
---	---
18.8	Meeting Valid Despite Failure to Give Notice
---	---

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director or alternate director, does not invalidate any proceedings at that meeting.

18.9	Waiver of Notice of Meetings

Any director or alternate director may send to the Company a document signed by them waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and, unless the director otherwise requires by notice in writing to the Company, to their alternate director, and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director or alternate director.

18.10	Quorum

The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be set at two directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.

18.11	Validity of Acts Where Appointment Defective

An act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.

18.12	Consent Resolutions in Writing

A resolution of the directors or of any committee of the directors may be passed without a meeting:

(1)	in all cases, if each of the directors entitled to vote on the resolution consents to it in writing; or
(2)	in the case of a resolution to approve a contract or transaction in respect of which a director has disclosed<br>that they have or may have a disclosable interest, if each of the other directors who are entitled to vote on the resolution consents<br>to it in writing.
---	---

A consent in writing under this Article may be by signed document, fax, e-mail or any other method of transmitting legibly recorded messages. A consent in writing may be in two or more counterparts which together are deemed to constitute one consent in writing. A resolution of the directors or of any committee of the directors passed in accordance with this Article 18.12 is effective on the date stated in the consent in writing or on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.

19. Executive and Other Committees

19.1	Appointment and Powers of Executive Committee

The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors' powers, except:

(1)	the power to fill vacancies in the board of directors;
(2)	the power to remove a director;
---	---
(3)	the power to change the membership of, or fill vacancies in, any committee of the directors; and
---	---
(4)	such other powers, if any, as may be set out in the resolution or any subsequent directors' resolution.
---	---
19.2	Appointment and Powers of Other Committees
---	---

The directors may, by resolution:

(1)	appoint one or more committees (other than the executive committee) consisting of the director or<br>directors that they consider appropriate;
(2)	delegate to a committee appointed under paragraph (1) any of the directors ' powers, except:
---	---
(a)	the power to fill vacancies in the board of directors;
---	---
(b)	the power to remove a director;
---	---
(c)	the power to change the membership of, or fill vacancies in, any committee of the directors; and
---	---
(d)	the power to appoint or remove officers appointed by the directors; and
---	---
(3)	make any delegation referred to in paragraph (2) subject to the conditions set out in the resolution<br>or any subsequent directors ' resolution.
---	---
19.3	Obligations of Committees
---	---

In the exercise of the powers delegated to a committee appointed under Articles 19.1 or 19.2, the committee must:

(1)	confirm to any rules that may from time to time be imposed on it by the directors; and
(2)	report every act or thing done in exercise of those powers at such times as the directors may require.
---	---
19.4	Powers of Board
---	---

The directors may, at any time, with respect to a committee appointed under Articles 19.1 or 19.2:

(1)	revoke or alter the authority given to the committee, or override a decision made by the committee, except<br>as to acts done before such revocation, alteration or overriding;

(2)	terminate the appointment of, or change the membership of, the committee; and
(3)	fill vacancies in the committee.
---	---
19.5	Committee Meetings
---	---

Subject to Article 19.3(1) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under Articles 19.1 or 19.2:

(1)	the committee may meet and adjourn as it thinks proper;
(2)	the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting<br>the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are<br>members of the committee may choose one of their number to chair the meeting;
---	---
(3)	a majority of the members of the committee constitutes a quorum of the committee; and
---	---
(4)	questions arising at any meeting of the committee are determined by a majority of votes of the members<br>present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.
---	---

20. Officers

20.1	Directors May Appoint Officers

The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.

20.2	Functions, Duties and Powers of Officers

The directors may, for each officer:

(1)	determine the functions and duties of the officer;
(2)	entrust to and confer on the officer any of the powers exercisable by the directors on such terms and<br>conditions and with such restrictions as the directors think fit; and
---	---
(3)	revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.
---	---
20.3	Qualifications
---	---

An officer is not required to hold a share in the capital of the Company as qualification for their office but must be qualified as required by the Business Corporations Act to become, act or continue to act as an officer. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as a managing director must be a director. Any other officer need not be a director.

20.4	Remuneration and Terms of Appointment

All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors think fit and are subject to termination at the pleasure of the directors, and an officer, in addition to such remuneration, may receive, after they cease to hold such office or leaves the employment of the Company, a pension or gratuity.

21. Indemnification

21.1	Definitions

In this Article 21:

(1)	“eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount<br>paid in settlement of, an eligible proceeding;
(2)	“eligible proceeding” means a legal proceeding or investigative action, whether current,<br>threatened, pending or completed, in which a director, former director or alternate director of the Company (an “eligible party”)<br>or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director<br>or alternate director of the Company:
---	---
(a)	is or may be joined as a party; or
---	---
(b)	is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding;
---	---
(3)	“expenses” has the meaning set out in the Business Corporations Act.
---	---
21.2	Mandatory Indemnification of Directors and Officers and Former Directors and Officers
---	---

The Company must indemnify a director, officer, former director or officer or alternate director of the Company and their heirs and legal personal representatives, as set out in the Business Corporations Act, against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director, officer, former director and officer and alternate director is deemed to have contracted with the Comp any on the terms of the indemnity contained in this Article 21.2.

21.3	Mandatory Advancement of Expenses

The Company must pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible party in respect of that proceeding but the Company must first receive from the eligible party a written undertaking that, if it is ultimately determined that the payment of expenses is prohibited by the Business Corporations Act, the eligible party will repay the amounts advanced.

21.4	Indemnification of Other Persons

The Company may indemnify any other person in accordance with the Business Corporations Act.

21.5	Non-Compliance with Business Corporations Act

The failure of a director, alternate director or officer of the Comp any to comply with the Business Corporations Act or these Articles does not invalidate any indemnity to which they are entitled under this Part.

21.6	Company May Purchase Insurance

The Company may purchase and maintain insurance for the benefit of any person (or their heirs or legal personal representatives) who:

(1)	is or was a director, alternate director, officer, employee or agent of the Company;
(2)	is or was a director, alternate director, officer, employee or agent of a corporation at a time when the<br>corporation is or was an affiliate of the Company;
---	---
(3)	at the request of the Company, is or was a director, alternate director, officer, employee or agent of<br>a corporation or of a partnership, trust, joint venture or other unincorporated entity;
---	---
(4)	at the request of the Company, holds or held a position equivalent to that of a director, alternate director<br>or officer of a partnership, trust, joint venture or other unincorporated entity;
---	---

against any liability incurred by them as such director, alternate director, officer, employee or agent or person who holds or held such equivalent position.

22. Dividends

22.1	Payment of Dividends Subject to Special Rights

The provisions of this Article 22 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

22.2	Declaration of Dividends

The directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

22.3	No Notice Required

The directors need not give notice to any shareholder of any declaration under Article 22.2.

22.4	Record Date

The directors may set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months. If no record date is set, the record date is 5:00 p .m. on the date on which the directors pass the resolution declaring the dividend.

22.5	Manner of Paying Dividend

A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

22.6	Settlement of Difficulties

If any difficulty arises in regard to a distribution under Article 22.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:

(1)	set the value for distribution of specific assets;
(2)	determine that cash payments in substitution for all or any part of the specific assets to which any shareholders<br>are entitled may be made to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and
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(3)	vest any such specific assets in trustees for the persons entitled to the dividend.
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22.7	When Dividend Payable

Any dividend may be made payable on such date as is fixed by the directors.

22.8	Dividends to be Paid in Accordance with Number of Shares

All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

22.9	Receipt by Joint Shareholders

If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

22.10	Dividend Bears No Interest

No dividend bears interest against the Company.

22.11	Fractional Dividends

If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

22.12	Payment of Dividends

Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the ad dress of the shareholder, or in the case of joint shareholders, to the address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

22.13	Capitalization of Surplus

Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the surplus or any part of the surplus.

23. Documents, Records and Reports

23.1	Recording of Financial Affairs

The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Business Corporations Act.

23.2	Inspection of Accounting Records

Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.

24. Notices

24.1	Method of Giving Notice

Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report or other record required or permit ted by the Business CorporationsAct or these Articles to be sent by or to a person may be sent by any one of the following methods:

(1)	prepaid mail addressed to the person at the applicable address for that person as follows:
(a)	for a record mailed to a shareholder, the shareholder's registered address;
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(b)	for a record mailed to a director or officer, the prescribed address for mailing shown for the director<br>or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records<br>of that class;
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(c)	in any other case, the mailing address of the intended recipient;
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(2)	delivery at the applicable address for that person as follows, addressed to the person:
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(a)	for a record delivered to a shareholder, the shareholder's registered address;
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(b)	for a record delivered to a director or officer, the prescribed address for delivery shown for the director<br>or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records<br>of that class;
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(c)	in any other case, the delivery address of the intended recipient;
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(3)	fax to the fax number provided by the intended recipient for the sending of that record or records of<br>that class;
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(4)	e -mail to the e-mail address provided by the intended recipient for the sending of that record or records<br>of that class; or
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(5)	physical delivery to the intended recipient.
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24.2	Deemed Receipt of Mailing
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A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in Article 24.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing. A record that is delivered to a person or their applicable address is deemed to be received by the person on receipt by that person or delivery to that address. A record that is sent to a person by fax or e-mail is deemed to be received by the person on transmission if sent during business hours at the place of intended receipt by that person and, if not sent during their business hours, on the next business day of the place of intended receipt of that person.

24.3	Certificate of Sending

A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that behalf for the Company stating that a notice, statement, report or other record was addressed as required, and sent as permitted, by Article 24.1 is conclusive evidence of that fact.

24.4	Notice to Joint Shareholders

A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing the notice to the joint shareholder first named in the central securities register in respect of the share.

24.5	Notice to Trustees

A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:

(1)	mailing the record, addressed to them:
(a)	by name, by the title of the legal personal representative of the deceased or incapacitated shareholder,<br>by the title of trustee of the bankrupt shareholder or by any similar description; and
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(b)	at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled;<br>or
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(2)	if an address referred to in paragraph 24.5(1)(b) has not been supplied to the Company, by giving<br>the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.
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25. Seal

25.1	Who May Attest Seal

Except as provided in Articles 25.2 and 25.3, the Company's seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:

(1)	any t wo directors;
(2)	any officer, together with any director;
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(3)	if the Company only has one director, that director; or
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(4)	any one or more directors or officers or persons as may be determined by the directors.
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25.2	Sealing Copies
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For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite Article 25.1, the impression of the seal may be attested by the signature of any director or officer.

25.3	Mechanical Reproduction of Seal

The directors may authorize the seal to be impressed by third p arties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Business Corporations Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and the chair of the board or any senior officer together with the secretary, treasurer, secretary-treasurer, an assistant secretary, an assistant treasurer or an assistant secretary-treasurer may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such dies . Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.

26. Prohibitions

26.1	Definitions

In this Article 26:

(1)	“designated security” means:
(a)	a voting security of the Company;
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(b)	a security of the Company that is not a debt security and that carries a residual right to participate<br>in the earnings of the Company or, on the liquidation or winding up of the Company, in its assets; or
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(c)	a security of the Company convertible, directly or indirectly, into a security described in paragraph (a) or<br>(b);
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(2)	“security” has the meaning assigned in the Securities Act (British Columbia);
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(3)	“voting security” means a security of the Company that:
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(a)	is not a debt security, and
---	---
(b)	carries a voting right either under all circumstances or under some circumstances that have occurred and<br>are continuing.
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26.2	Application
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Article 26.3 does not apply to the Company if and for so long as it is a public company or its designated securities are beneficially owned, directly or indirectly, by more than 50 persons or companies, counting any two or more joint registered owners as one beneficial owner, and not counting employees and former employees of the Company or its affiliates.

26.3	Consent Required for Transfer of Shares or Designated Securities

No share or designated security may be sold, transferred or otherwise disposed of without the consent of the directors and the directors are not required to give any reason for re fusing to consent to any such sale, transfer or other disposition.

27. Special Rights and Restrictions

27.1	Subordinate Voting Shares
(1)	An unlimited number of Subordinate Voting Shares, without nominal or par value, having attached thereto<br>the special rights and restrictions as set forth below:
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(a)	Voting Rights.
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Holders of Subordinate Voting Shares shall be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. At each such meeting, holders of Subordinate Voting Shares shall be entitled to one vote in respect of each Subordinate Voting Share held.

(b)	Alteration<br> to Rights of Subordinate Voting Shares.

As long as any Subordinate Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Subordinate Voting Shares by separate special resolution, prejudice or interfere with any right or special right attached to the Subordinate Voting Shares.

(c)	Dividends.

Holders of Subordinate Voting Shares shall be entitled to receive, as and when declared by the directors, dividends in cash or property of the Company. No dividend will be declared or paid on the Subordinate Voting Shares unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Subordinate Voting Share basis) on the Multiple Voting Shares. In the event of the payment of a dividend in the form of shares, holders of Subordinate Voting Shares shall receive Subordinate Voting Shares, unless otherwise determined by the Board of Directors of the Company.

(d)	Liquidation,<br> Dissolution or Winding-Up.

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Subordinate Voting Shares shall, subject to the prior rights of the holders of any shares of the Company ranking in priority to the Subordinate Voting Shares, be entitled to participate rateably along with all other holders of Multiple Voting Shares (on an as-converted to Subordinate Voting Share basis) and Subordinate Voting Shares.

(e)	Rights<br> to Subscribe; Pre-Emptive Rights.

The holders of Subordinate Voting Shares are not entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of Subordinate Voting Shares, or bonds, debentures or other securities of the Company now or in the future.

(f)	Subdivision<br> or Consolidation.

No subdivision or consolidation of the Subordinate Voting Shares or Multiple Voting Shares shall occur unless, simultaneously, the Subordinate Voting Shares and Multiple Voting Shares are subdivided or consolidated in the same manner or such other adjustment is made so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes. Subject to Section 27.1(1)(g), the Subordinate Voting Shares cannot be converted into any other class of shares.

(g)	Conversion<br> of Subordinate Voting Shares Upon an Offer.

In the event that an offer is made to purchase Multiple Voting Shares, and the offer is one which is required, pursuant to applicable securities legislation or the rules of the Toronto Stock Exchange if the stock exchange on which the Multiple Voting Shares of the Company are listed has not implemented any rules with respect to "coattail protections", or if the Multiple Voting Shares are not then listed, to be made to all or substantially all the holders of Multiple Voting Shares in a province or territory of Canada to which the requirement applies, each Subordinate Voting Share shall become convertible at the option of the holder into Multiple Voting Shares at the inverse of the Conversion Ratio (as defined in Article 27.2(1)(f)(i)) then in effect, at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Subordinate Voting Shares for the purpose of depositing the resulting Multiple Voting Shares under the offer, and for no other reason. In such event, the Company shall deposit or cause the transfer agent for the Subordinated Voting Shares to deposit under the offer the resulting Multiple Voting Shares, on behalf of the holder. To exercise such conversion right, the holder or his or its attorney duly authorized in writing shall:

(i)	give written notice to the transfer agent<br> of the exercise of such right, and of the number of Subordinate Voting Shares in respect<br> of which the right is being exercised;
(ii)	deliver to the transfer agent the share<br> certificate or certificates representing the Subordinate Voting Shares in respect of which<br> the right is being exercised, if applicable; and pay any applicable stamp tax or similar<br> duty on or in respect of such conversion.
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(iii)	No share certificates representing the<br> Multiple Voting Shares, resulting from the conversion of the Subordinate Voting Shares will<br> be delivered to the holders on whose behalf such deposit is being made. If Multiple Voting<br> Shares, resulting from the conversion and deposited pursuant to the offer, are withdrawn<br> by the holder or are not taken up by the offeror, or the offer is abandoned, withdrawn or<br> terminated by the offeror or the offer otherwise expires without such Multiple Voting Shares<br> being taken up and paid for, the Multiple Voting Shares resulting from the conversion will<br> be re-converted into Subordinate Voting Shares at the then Conversion Ratio and the Company<br> shall send or cause the transfer agent to send to the holder a share certificate representing<br> the Subordinate Voting Shares. In the event that the offeror takes up and pays for the Multiple<br> Voting Shares resulting from conversion, the Company shall cause the transfer agent to deliver<br> to the holders thereof the consideration paid for such shares by the offeror.
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27.2	Multiple Voting Shares
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(1)	An unlimited number of Multiple Voting shares,<br> without nominal or par value, having attached thereto the special rights and restrictions<br> as set forth below:
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(a)	Voting<br> Rights.
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Holders of Multiple Voting Shares shall be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. At each such meeting, holders of Multiple Voting Shares will be entitled to 15 votes in respect of each Subordinate Voting Share into which such Multiple Voting Share could ultimately then be converted, which for greater certainty, shall initially equal 15 votes per Multiple Voting Share.

(b)	Alteration<br> to Rights of Multiple Voting Shares.

As long as any Multiple Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Multiple Voting Shares by separate special resolution, prejudice or interfere with any right or special right attached to the Multiple Voting Shares. Consent of the holders of a majority of the outstanding Multiple Voting Shares shall be required for any action that authorizes or creates shares of any class having preferences superior to or on a parity with the Multiple Voting Shares. In connection with the exercise of the voting rights contained in this paragraph (b), each holder of Multiple Voting Shares will have one vote in respect of each Multiple Voting Share held.

(c)	Dividends.

The holder of Multiple Voting Shares shall have the right to receive dividends, out of any cash or other assets legally available therefor, pari passu (on an as converted to Subordinated Voting Share basis, assuming conversion of all Multiple Voting Shares into Subordinate Voting Shares at the Conversion Ratio (as defined in Article 27.2(1)(f)(i)) as to dividends and any declaration or payment of any dividend on the Subordinate Voting Shares. No dividend will be declared or paid on the Multiple Voting Shares unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Subordinate Voting Share basis) on the Subordinate Voting Shares. In the event of the payment of a dividend in the form of shares, holders of Multiple Voting Shares shall receive Multiple Voting Shares, unless otherwise determined by the Board of Directors of the Company.

(d)	Liquidation,<br> Dissolution or Winding-Up.

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Multiple Voting Shares will, subject to the prior rights of the holders of any shares of the Company ranking in priority to the Multiple Voting Shares, be entitled to participate rateably along with all other holders of Multiple Voting Shares (on an as-converted to Subordinate Voting Share basis) and Subordinate Voting Shares.

(e)	Rights<br> to Subscribe; Pre-Emptive Rights.

The holders of Multiple Voting Shares are not entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of Subordinate Voting Shares, or bonds, debentures or other securities of the Company now or in the future.

(f)	Conversion.

Holders of Multiple Voting Shares shall have conversion rights as follows (the "Conversion Rights"):

(i)	Right<br> to Convert.

Each Multiple Voting Share shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Company or any transfer agent for such shares, into such number of fully paid and non-assessable Subordinate Voting Shares as is determined by multiplying the number of Multiple Voting Shares by the Conversion Ratio applicable to such share, determined as hereafter provided, in effect on the date the Multiple Voting Share is surrendered for conversion. The initial "Conversion Ratio" for shares of Multiple Voting Shares shall be one Subordinate Voting Share for each Multiple Voting Share; provided, however, that the Conversion Ratio shall be subject to adjustment as set forth in Sections 27.2(1)(f)(iv) and 27.2(1)(f)(v).

(ii)	Automatic<br> Conversion.

(A)	On the first business day following the<br> first annual meeting of the shareholders of the Company held after the Subordinate Voting<br> Shares become listed or quoted on a United States national securities exchange such as The<br> NASDAQ Stock Market or The New York Stock Exchange, each Multiple Voting Share shall be automatically<br> converted, without any further action, into such number of fully paid and non-assessable<br> Subordinate Voting Shares as is determined by multiplying the number of Multiple Voting Shares<br> by the Conversion Ratio, and each Permitted Holder of Multiple Voting Shares shall automatically<br> be deemed to have exercised his, her or its rights under subsection 27.2(1)(f)(i) to convert<br> such Multiple Voting Share into one fully paid and non-assessable Subordinate Voting Share.
(B)	Upon the first date that any Multiple<br> Voting Share shall be held by a person other than by a Permitted Holder, the Permitted Holder<br> which held such Multiple Voting Share until such date, without any further action, shall<br> automatically be deemed to have exercised his, her or its rights under subsection 27.2(1)(f)(i)<br> to convert such Multiple Voting Share into one fully paid and nonassessable Subordinate Voting<br> Share.
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(C)	In<br> addition, all Multiple Voting Shares held by a Permitted Holder will convert automatically,<br> without any further action, into Subordinate Voting Shares at such time as the Permitted<br> Holders that hold Multiple Voting Shares no longer as a group beneficially own, directly<br> or indirectly and in the aggregate, at least 5% of the issued and outstanding shares of the<br> Company on a non-diluted basis.
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(D)	A Multiple Voting Share that is converted<br> into Subordinate Voting Shares as provided for in subsection 27.2(1)(f)(ii)(A) or 27.2(1)(f)(ii)(B)<br> will automatically be cancelled.
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(E)	For the purposes hereof:
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(i)	"Members of the Immediate Family" means with respect to any individual, each parent (whether<br> by birth or adoption), spouse or child (including any step-child) or other descendants (whether<br> by birth or adoption) of such individual, each spouse of any of the aforementioned persons,<br> each trust created solely for the benefit of such individual and/or one or more of the aforementioned<br> persons, and each legal representative of such individual or of any aforementioned persons<br> (including without limitation a tutor, curator, mandatary due to incapacity, custodian, guardian<br> or testamentary executor), acting in such capacity under the authority of the law, an order<br> from a competent tribunal, a will or a mandate in case of incapacity or similar instrument.<br> For the purposes of this definition, a person shall be considered the spouse of an individual<br> if such person is legally married to such individual, lives in a civil union with such individual<br> or is the common law partner (as defined in the Income Tax Act (Canada) as amended<br> from time to time) of such individual. A person who was the spouse of an individual within<br> the meaning of this paragraph immediately before the death of such individual shall continue<br> to be considered a spouse of such individual after the death of such individual; and
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(ii)	"Permitted Holders" means (a) Boris Jordan and any Members of the Immediate Family of Boris<br> Jordan, and (b) any Person controlled, directly or indirectly by one or more of the Persons<br> referred to in clause (a) above.
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(iii)	Mechanics<br> of Conversion.

Before any holder of Multiple Voting Shares shall be entitled to convert Multiple Voting Shares into Subordinate Voting Shares, the holder thereof shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company or of any transfer agent for Subordinate Voting Shares or the equivalent in any non-certificated inventory system (such as, for example, a Direct Registration System) administered by any applicable depository or transfer agent of the Company, and shall give written notice to the Company at its principal corporate office, of the election to convert the same (each, a "Conversion Notice") and the Subordinate Voting Shares resulting therefrom shall be registered in the name of the registered holder of the Multiple Voting Shares converted or, subject to payment by the registered holder of any stock transfer or applicable taxes and compliance with any other reasonable requirements of the Company in respect of such transfer, in such name or names as such registered holder may direct in writing. Upon receipt of such notice and certificate or certificates and, as applicable, compliance with such other requirements, the Company shall (or shall cause its transfer agent to), at its expense, as soon as practicable thereafter, remove or cause the removal of such holder from the register of holders in respect of the Multiple Voting Shares for which the conversion right is being exercised, add the holder (or any person or persons in whose name or names such converting holder shall have directed the resulting Subordinate Voting Shares to be registered) to the securities register of holders in respect of the resulting Subordinate Voting Shares, cancel or cause the cancellation of the certificate or certificates representing such Multiple Voting Shares and issue and deliver at such office to such holder, or to the nominee or nominees of such holder, a certificate or certificates or the equivalent in any non-certificated inventory system (such as, for example, a Direct Registration System) administered by any applicable depository or transfer agent of the Company, representing the Subordinate Voting Shares issued upon the conversion of such Multiple Voting Shares. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the Multiple Voting Shares to be converted, and the person or persons entitled to receive the Subordinate Voting Shares issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Subordinate Voting Shares as of such date. If less than all of the Multiple Voting Shares represented by any certificate are to be converted, the holder shall be entitled to receive a new certificate representing the Multiple Voting Shares represented by the original certificate which are not to be converted. A Multiple Voting Share that is converted into Subordinate Voting Shares as provided for in this subsection 27.2(1)(f) will automatically be cancelled.

(iv)	Adjustments<br> for Distributions.

In the event the Company shall declare a distribution to holders of Subordinate Voting Shares payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights not otherwise causing adjustment to the Conversion Ratio (a "Distribution"), then, in each such case for the purpose of this Section 27.2(1)(f)(iv), the holders of Multiple Voting Shares shall be entitled to a proportionate share of any such Distribution as though they were the holders of the number of Subordinate Voting Shares into which their Multiple Voting Shares are convertible as of the record date fixed for the determination of the holders of Subordinate Voting Shares entitled to receive such Distribution.

(v)	Recapitalizations;<br> Stock Splits.

If at any time or from time-to-time, the Company shall (i) effect a recapitalization of the Subordinate Voting Shares; (ii) issue Subordinate Voting Shares as a dividend or other distribution on outstanding Subordinate Voting Shares; (iii) subdivide the outstanding Subordinate Voting Shares into a greater number of Subordinate Voting Shares; (iv) consolidate the outstanding Subordinate Voting Shares into a smaller number of Subordinate Voting Shares; or (v) effect any similar transaction or action (each, a "Recapitalization"), provision shall be made so that the holders of Multiple Voting Shares shall thereafter be entitled to receive, upon conversion of Multiple Voting Shares, the number of Subordinate Voting Shares or other securities or property of the Company or otherwise, to which a holder of Subordinate Voting Shares deliverable upon conversion would have been entitled on such Recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 27.2(1)(f) with respect to the rights of the holders of Multiple Voting Shares after the Recapitalization to the end that the provisions of this Section 27.2(1)(f) (including adjustment of the Conversion Ratio then in effect and the number of Multiple Voting Shares issuable upon conversion of Multiple Voting Shares) shall be applicable after that event as nearly equivalent as may be practicable.

(vi)	No<br> Fractional Shares and Certificate as to Adjustments.

No fractional Subordinate Voting Shares shall be issued upon the conversion of any Multiple Voting Shares and the number of Subordinate Voting Shares to be issued shall be rounded down to the nearest whole Subordinate Voting Share. Whether or not fractional Subordinate Voting Shares are issuable upon such conversion shall be determined on the basis of the total number of Multiple Voting Shares the holder is at the time converting into Subordinate Voting Shares and the number of Subordinate Voting Shares issuable upon such aggregate conversion.

(vii)	Adjustment<br> Notice.

Upon the occurrence of each adjustment or readjustment of the Conversion Ratio pursuant to this Section 27.2(1)(f), the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Multiple Voting Shares a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any holder of Multiple Voting Shares, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Ratio for Multiple Voting Shares at the time in effect, and (C) the number of Subordinate Voting Shares and the amount, if any, of other property which at the time would be received upon the conversion of a Multiple Voting Share.

(viii)	Effect<br> of Conversion.

All Multiple Voting Shares which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the time of conversion (the "Conversion Time"), except only the right of the holders thereof to receive Subordinate Voting Shares in exchange therefor and to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion.

(ix)	Retirement<br> of Shares.

Any Multiple Voting Share converted shall be retired and cancelled and may not be reissued as shares of such class or any other class or series, and the Company may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of Multiple Voting Shares accordingly.

(x)	Disputes.

Any holder of Multiple Voting Shares that beneficially owns more than 5% of the issued and outstanding Multiple Voting Shares may submit a written dispute as to the determination of the Conversion Ratio or the arithmetic calculation of the Conversion Ratio (as defined herein) by the Company to the Board of Directors with the basis for the disputed determinations or arithmetic calculations. The Company shall respond to the holder within five (5) business days of receipt, or deemed receipt, of the dispute notice with a written calculation of the Conversion Ratio, as applicable. If the holder and the Company are unable to agree upon such determination or calculation of the Conversion Ratio, as applicable, within five (5) business days of such response, then the Company and the holder shall, within one (1) business day thereafter, submit the disputed arithmetic calculation of the Conversion Ratio, as applicable, to the Company’s independent, outside accountant. The Company, at the Company’s expense, shall cause the accountant to perform the determinations or calculations and notify the Company and the holder of the results no later than five (5) business days from the time it receives the disputed determinations or calculations. Such accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

(g)	Notices<br> of Record Date.

Except as otherwise provided under applicable law, in the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of any class or any other securities or property, or to receive any other right, the Company shall mail to each holder of Multiple Voting Shares, at least 20 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

(h)	Conversion<br> of Multiple Voting Shares Upon an Offer.

In addition to the conversion rights set out in Section 27.2(1)(f), in the event that an offer is made to purchase Subordinate Voting Shares, and the offer is one which is required, pursuant to applicable securities legislation or the rules of the Toronto Stock Exchange if the stock exchange on which the Subordinate Voting Shares of the Company are then listed has not implemented any rules with respect to "coattail protections", or if the Subordinate Voting Shares are not then listed, to be made to all or substantially all the holders of Subordinate Voting Shares in a province or territory of Canada to which the requirement applies, each Multiple Voting Share shall become convertible at the option of the holder into Subordinate Voting Shares at the Conversion Ratio then in effect, at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right in this Section 27.2(1)(h) may only be exercised in respect of Multiple Voting Shares for the purpose of depositing the resulting Subordinate Voting Shares under the offer, and for no other reason. In such event, the Company shall or shall cause its transfer agent for the Subordinate Voting Shares to deposit under the offer the resulting Subordinate Voting Shares, on behalf of the holder.

To exercise such conversion right, the holder or his or its attorney duly authorized in writing shall:

(i)	give written notice to the transfer agent<br> of the exercise of such right, and of the number of Multiple Voting Shares in respect of<br> which the right is being exercised;
(ii)	deliver to the transfer agent the share<br> certificate or certificates representing the Multiple Voting Shares in respect of which the<br> right is being exercised, if applicable; and
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(iii)	pay any applicable stamp tax or similar<br> duty on or in respect of such conversion. No share certificates representing the Subordinate<br> Voting Shares, resulting from the conversion of the Multiple Voting Shares will be delivered<br> to the holders on whose behalf such deposit is being made. If Subordinate Voting Shares,<br> resulting from the conversion and deposited pursuant to the offer, are withdrawn by the holder<br> or are not taken up by the offeror, or the offer is abandoned, withdrawn or terminated by<br> the offeror or the offer otherwise expires without such Subordinate Voting Shares being taken<br> up and paid for, the Subordinate Voting Shares resulting from the conversion will be re-converted<br> into Multiple Voting Shares at the inverse of Conversion Ratio then in effect and the Company<br> shall send, or cause its transfer agent to send, to the holder a share certificate representing<br> the Multiple Voting Shares. In the event that the offeror takes up and pays for the Subordinate<br> Voting Shares resulting from conversion, the Company shall or shall cause its transfer agent<br> to deliver to the holders thereof the consideration paid for such shares by the offeror.
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27.3	Rights, Privileges, Restrictions and Conditions<br> Applicable to Subordinate Voting Shares – Redemption Provisions
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Redemption

(1)	For the purposes of this Section 27.3, the<br> following terms will have the meaning specified below:
1.1	"Board" means the board<br> of directors of the Company.
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1.2	"Business" means the<br> conduct of any activities relating to the cultivation, manufacturing and dispensing of cannabis<br> and cannabis - derived products in the United States, which include the owning and operating<br> of cannabis licenses.
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1.3	"Fair Market Value" will<br> equal: (i) the volume weighted average trading price (VWAP) of the Shares to be redeemed<br> for the five (5) Trading Day period immediately after the date of the Redemption Notice on<br> the Canadian Securities Exchange or other national or regional securities exchange on which<br> such Shares are listed, or (ii) if no such quotations are available, the fair market value<br> per share of such Shares as set forth in the Valuation Opinion.
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1.4	"Governmental Authority"<br> or "Governmental Authorities" means any United States or foreign, federal,<br> state, county, regional, local or municipal government, any agency, administration, board,<br> bureau, commission, department, service, or other instrumentality or political subdivision<br> of the foregoing, and any Person with jurisdiction exercising executive, legislative, judicial,<br> regulatory or administrative functions of or pertaining to government or monetary policy<br> (including any court or arbitration authority).
1.5	"Licenses" means all<br> licenses, permits, approvals, orders, authorizations, registrations, findings of suitability,<br> franchises, exemptions, waivers and entitlements issued by a Governmental Authority required<br> for, or relating to, the conduct of the Business.
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1.6	"Ownership" (and derivatives<br> thereof) means (i) ownership of record as evidenced in the Company's share register, (ii)<br> "beneficial ownership" as defined in Section 1 of the Business Corporations Act (British Columbia), or (iii) the power to exercise control or direction over a security;
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1.7	"Person" means an individual,<br> partnership, Company, limited liability Company, trust or any other entity.
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1.8	"Redemption" has the<br> meaning ascribed thereto in Section 27.3(5).
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1.9	"Redemption Date" means<br> the date on which the Company will redeem and pay for the Shares pursuant to Section 27.3(5).<br> The Redemption Date will be not less than thirty (30) Trading Days following the date of<br> the Redemption Notice unless a Governmental Authority requires that the Shares be redeemed<br> as of an earlier date, in which case, the Redemption Date will be such earlier date and if<br> there is an outstanding Redemption Notice, the Company will issue an amended Redemption Notice<br> reflecting the new Redemption Date forthwith.
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1.10	"Redemption Notice"<br> has the meaning ascribed thereto in Section 27.3(6).
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1.11	"Redemption Price" means<br> the price per Share to be paid by the Company on the Redemption Date for the redemption of<br> Shares pursuant to Section 27.3(5) and will be equal to the Fair Market Value of a Share,<br> unless otherwise required by any Governmental Authority;
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1.12	"Shares" means the Subordinate<br> Voting Shares of the Company.
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1.13	"Significant Interest"<br> means ownership of five percent (5%) or more of all of the issued and outstanding shares<br> of the Company.
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1.14	"Subject Shareholder"<br> means a person, a group of persons acting in concert or a group of persons who, the Board<br> reasonably believes, are acting jointly or in concert.
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1.15	"Trading Day" means<br> a day on which trades of the Shares are executed on the Canadian Securities Exchange or any<br> national or regional securities exchange on which the Shares are listed.
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1.16	"Unsuitable Person"<br> means
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(i)	any person (including a Subject Shareholder)<br> with a Significant Interest who a Governmental Authority granting the Licenses has determined<br> to be unsuitable to own Shares; or
(ii)	any person (including a Subject Shareholder)<br> with a Significant Interest whose ownership of Shares may result in the loss, suspension<br> or revocation (or similar action) with respect to any Licenses or in the Company being unable<br> to obtain any new Licenses in the normal course, including, but not limited to, as a result<br> of such person's failure to apply for a suitability review from or to otherwise fail to comply<br> with the requirements of a Governmental Authority, as determined by the Board, in its sole<br> discretion, after consultation with legal counsel and if a license application has been filed,<br> after consultation with the applicable Governmental Authority.
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1.17	"Valuation Opinion"<br> means a valuation and fairness opinion from an investment banking firm of nationally recognized<br> standing in Canada (qualified to perform such task and which is disinterested in the contemplated<br> redemption and has not in the then past two years provided services for a fee to the Company<br> or its affiliates) or a disinterested nationally recognized accounting firm.
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(2)	Subject to Section 27.3(4), no Subject Shareholder<br> will acquire or dispose of a Significant Interest, directly or indirectly, in one or more<br> transactions, without providing 15 days' advance written notice to the Company by mail sent<br> to the Company's registered office to the attention of the Corporate Secretary.
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(3)	If the Board reasonably believes that a Subject<br> Shareholder may have failed to comply with the provisions of Section 27.3(2), the Company<br> may apply to the Supreme Court of British Columbia, or such other court of competent jurisdiction<br> for an order directing that the Subject Shareholder disclose the number of Shares held.
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(4)	The provisions of Sections 27.3 (2) and 27.3(3)<br> will not apply to the ownership, acquisition or disposition of Shares as a result of:
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4.1	any transfer of Shares occurring by operation<br> of law including, inter alia, the transfer of Shares of the Company to a trustee in<br> bankruptcy;
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4.2	an acquisition or proposed acquisition<br> by one or more underwriters or portfolio managers who hold Shares for the purposes of distribution<br> to the public or for the benefit of a third party provided that such third party is in compliance<br> with Section 27.3(2); or
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4.3	the conversion, exchange or exercise of<br> securities of the Company (other than the Shares) duly issued or granted by the Company,<br> into or for Shares, in accordance with their respective terms.
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(5)	At the option of the Company, Shares owned<br> by an Unsuitable Person may be redeemed by the Company (the "Redemption'') for<br> the Redemption Price out of funds lawfully available on the Redemption Date. Shares redeemable<br> pursuant to this Section 27.3(5) will be redeemable at any time and from time to time pursuant<br> to the terms hereof.
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(6)	In the case of a Redemption, the Company<br> will send a written notice to the holder of the Shares called for Redemption, which will<br> set forth: (i) the Redemption Date, (ii) the number of Shares to be redeemed on the Redemption<br> Date, (iii) the formula pursuant to which the Redemption Price will be determined and the<br> manner of payment therefor, (iv) the place where such Shares (or certificate thereto, as<br> applicable) will be surrendered for payment, duly endorsed in blank or accompanied by proper<br> instruments of transfer, (v) a copy of the Valuation Opinion (if the Resulting Issuer is<br> no longer listed on the Canadian Securities Exchange or another recognized securities exchange),<br> and (vi) any other requirement of surrender of the Shares to be redeemed (the "Redemption Notice"). The Redemption Notice may be conditional such that the Company need not<br> redeem the Shares owned by an Unsuitable Person on the Redemption Date if the Board determines,<br> in its sole discretion, that such Redemption is no longer advisable or necessary on or before<br> the Redemption Date. The Company will send a written notice confirming the amount of the<br> Redemption Price as soon as possible following the determination of such Redemption Price.
(7)	The Company may pay the Redemption Price<br> by using its existing cash resources, incurring debt, issuing additional Shares, issuing<br> a promissory note in the name of the Unsuitable Person, or by using a combination of the<br> foregoing sources of funding.
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(8)	To the extent required by applicable laws,<br> the Company may deduct and withhold any tax from the Redemption Price. To the extent any<br> amounts are so withheld and are timely remitted to the applicable Governmental Authority,<br> such amounts shall be treated for all purposes herein as having been paid to the Person in<br> respect of which such deduction and withholding was made.
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(9)	On and after the date the Redemption Notice<br> is delivered, any Unsuitable Person owning Shares called for Redemption will cease to have<br> any voting rights with respect to such Shares and on and after the Redemption Date specified<br> therein, such holder will cease to have any rights whatsoever with respect to such Shares<br> other than the right to receive the Redemption Price, without interest, on the Redemption<br> Date; provided, however, that if any such Shares come to be owned solely by persons other<br> than an Unsuitable Person (such as by transfer of such Shares to a liquidating trust, subject<br> to the approval of any applicable Governmental Authority), such persons may exercise voting<br> rights of such Shares and the Board may determine, in its sole discretion, not to redeem<br> such Shares. Following any Redemption in accordance with the terms of this Section 27.3,<br> the redeemed Shares will be cancelled.
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(10)	All notices given by the Company to holders<br> of Shares pursuant to this Schedule, including the Redemption Notice, will be in writing<br> and will be deemed given when delivered by personal service, overnight courier or first-class<br> mail, postage prepaid, to the holder's registered address as shown on the Company's share<br> register.
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(11)	The Company's right to redeem Shares pursuant<br> to this Schedule will not be exclusive of any other right the Company may have or hereafter<br> acquire under any agreement or any provision of the articles or the bylaws of the Company<br> or otherwise with respect to the acquisition by the Company of Shares or any restrictions<br> on holders thereof.
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(12)	In connection with the conduct of its Business,<br> the Company may require that a Subject Shareholder provide to one or more Governmental Authorities,<br> if and when required, information and fingerprints for a criminal background check, individual<br> history form(s), and other information required in connection with applications for Licenses.
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(13)	In the event that any provision (or portion<br> of a provision) of this Section 27.3 or the application thereof becomes or is declared by<br> a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of<br> Section 27.3 (including the remainder of such provision, as applicable) will continue in<br> full force and effect.
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