What changed in this filing

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Item 1A. Risk Factors

2022-03-15 compared with 2021-03-31 · 849 added, 1853 removed, 183 unchanged (94% of the section changed)

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You should carefully consider the risks described in this section before deciding to invest in our securities.

If any of these

risks occurs, our business, financial condition, and results of operations could be materially, adversely affected.

In such case,

the trading price of our securities would likely decline, and you may lose all or part of your investment.

Set forth below is a summary of the principal

risks we face:

If any of these risks occurs, our business, financial condition, and results of operations could be materially, adversely affected.

In such case, the trading price of our securities would likely decline, and you may lose all or part of your investment.

Set forth below is a summary of the principal risks we face:

● There are various risks associated with the proposed arrangement with Verano that could impact our business operations, financial results, and share price, including the failure to complete or delays in completing the arrangement, termination of the arrangement, payment of termination amounts in certain circumstances, and the fixed nature of the consideration.

● Marijuana remains illegal under U.S.

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● We may be subject to action by the U.S.

federal government through various government agencies

for participation in the cannabis industry.

federal government through various government agencies for participation in the cannabis industry.

state and local regulation of cannabis is uncertain and changing.

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● We may be subject to heightened scrutiny by U.S.

and Canadian authorities, which could ultimately

lead to the market for Subordinate Voting Shares becoming highly illiquid and our shareholders having no ability effect trades

in Subordinate Voting Shares in Canada.

and Canadian authorities, which could ultimately lead to the market for Subordinate Voting Shares becoming highly illiquid and our shareholders having no ability effect trades in Subordinate Voting Shares in Canada.

● We may face state limitations on ownership of cannabis licenses.

● We may become subject to FDA or ATF regulation.

Cannabis businesses are subject to applicable anti-money laundering laws and regulations and have

restricted access to banking and other financial services.

We operate in a highly regulated sector and may not always succeed in complying fully with applicable

regulatory requirements in all jurisdictions where we carry on business.

● Cannabis businesses are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services.

● We operate in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business.

● Because marijuana is illegal under U.S.

federal law, we may be unable to access to U.S.

protections in the event of our bankruptcy or a bankruptcy in an entity in which we invest.

bankruptcy protections in the event of our bankruptcy or a bankruptcy in an entity in which we invest.

● Because our contracts involve marijuana and related activities, which are not legal under U.S.

federal law, we may face difficulties in enforcing our contracts.

We may not be able to secure our payment and other contractual rights with liens on the inventory

or licenses of our clients and contracting parties under applicable state laws.

● We may not be able to secure our payment and other contractual rights with liens on the inventory or licenses of our clients and contracting parties under applicable state laws.

● Because marijuana is illegal under U.S.

federal law, marijuana businesses may be subject to civil

asset forfeiture.

We may be subject to constraints on and differences in marketing our products under varying state

The results of future clinical research may be unfavorable to cannabis, which may have a material,

adverse effect on the demand for our products.

Inconsistent public opinion and perception of the medical recreational use marijuana industry hinders

market growth and state adoption.

federal law, marijuana businesses may be subject to civil asset forfeiture.

● We may be subject to constraints on and differences in marketing our products under varying state laws.

● The results of future clinical research may be unfavorable to cannabis, which may have a material, adverse effect on the demand for our products.

● Inconsistent public opinion and perception of the medical recreational use marijuana industry hinders market growth and state adoption.

● Investors in the Company who are not U.S.

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● As a cannabis business, we are subject to unfavorable tax treatment under the Code.

If our operations are found to be in violation of applicable money laundering legislation and our

revenues are viewed as proceeds of crime, we may be unable to effect distributions or repatriate funds to Canada.

We incurred net losses in fiscal years 2020 and 2019, with net cash used in operating activities,

and cannot provide assurance as to when or if we will become profitable and generate cash in our operating activities.

We anticipate requiring additional financing to operate our business and we may face

difficulties acquiring additional financing on terms acceptable to us or at all.

We are a holding company, and our earnings are dependent on the earnings and distributions of our

subsidiaries.

● If our operations are found to be in violation of applicable money laundering legislation and our revenues are viewed as proceeds of crime, we may be unable to effect distributions or repatriate funds to Canada.

● We incurred net losses in fiscal years 2021, 2020, and 2019, with net cash used in operating activities, and cannot provide assurance as to when or if we will become profitable and generate cash in our operating activities.

● We anticipate requiring additional financing to operate our business and we may face difficulties acquiring additional financing on terms acceptable to us or at all.

● We are a holding company, and our earnings are dependent on the earnings and distributions of our subsidiaries.

● Our subsidiaries may not be able to obtain necessary permits and authorizations.

Disparate state-by-state regulatory landscapes and the constraints related to holding cannabis

licenses in various states results in operational and legal structures for realizing the benefit from cannabis licenses that could

result in materially detrimental consequences to us.

The success of our business depends, in part, on our ability to successfully integrate recently

acquired businesses and to retain key employees of acquired businesses.

We may invest in pre-revenue companies which may not be able to meet anticipated revenue targets

in the future.

Our senior secured credit facility contains covenant restrictions that may limit our ability to

operate our business.

our debt will require a significant amount of cash, and we may not have sufficient cash

flow from our business to pay our substantial debt.

The nature of the medical and recreational cannabis industry may result in unconventional due diligence

processes and acquisition terms that could have unknown and materially detrimental consequences to us.

Our assets may be purchased with limited representations and warranties from the sellers of those

Lending by us to third parties may be unsecured, subordinate in interest or backed by unrealizable

license assets.

Competition for the acquisition and leasing of properties suitable for the cultivation, production

and sale of medical and recreational cannabis may impede our ability to make acquisitions or increase the cost of these acquisitions,

which could materially, adversely affect our operating results and financial condition.

● Disparate state-by-state regulatory landscapes and the constraints related to holding cannabis licenses in various states results in operational and legal structures for realizing the benefit from cannabis licenses that could result in materially detrimental consequences to us.

● The success of our business depends, in part, on our ability to successfully integrate recently acquired businesses and to retain key employees of acquired businesses.

● We may invest in pre-revenue companies which may not be able to meet anticipated revenue targets in the future.

● Our senior secured credit facility contains covenant restrictions that may limit our ability to operate our business.

● Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

● The nature of the medical and recreational cannabis industry may result in unconventional due diligence processes and acquisition terms that could have unknown and materially detrimental consequences to us.

● Our assets may be purchased with limited representations and warranties from the sellers of those assets.

● Lending by us to third parties may be unsecured, subordinate in interest or backed by unrealizable license assets.

● Competition for the acquisition and leasing of properties suitable for the cultivation, production and sale of medical and recreational cannabis may impede our ability to make acquisitions or increase the cost of these acquisitions, which could materially, adversely affect our operating results and financial condition.

● We face security risks related to our physical facilities and cash transfers.

We face exposure to fraudulent or illegal activity by employees, contractors, consultants, and

agents, which may subject us to investigations and actions.

We face risks related to the novelty of the cannabis industry, and the resulting lack of information

regarding comparable companies, unanticipated expenses, difficulties and delays, and the offering of new products and services

in an untested market.

● We face exposure to fraudulent or illegal activity by employees, contractors, consultants, and agents, which may subject us to investigations and actions.

● We face risks related to the novelty of the cannabis industry, and the resulting lack of information regarding comparable companies, unanticipated expenses, difficulties and delays, and the offering of new products and services in an untested market.

● We are dependent on the popularity and acceptance of our brand portfolio.

● Our business is subject to the risks inherent in agricultural operations.

We may encounter increasingly strict environmental regulation in connection with our operations

and the associated permitting, which may increase the expenses for cannabis production or subject us to enforcement actions by

regulatory authorities.

● We may encounter increasingly strict environmental regulation in connection with our operations and the associated permitting, which may increase the expenses for cannabis production or subject us to enforcement actions by regulatory authorities.

● We may face potential enforcement actions if we fail to comply with applicable laws.

We face risks related to our information technology systems, including potential cyber-attacks

and security and privacy breaches.

● We face risks related to our information technology systems, including potential cyber-attacks and security and privacy breaches.

● We may be required to disclose personal information to government or regulatory entities.

● We face risks related to our insurance coverage and uninsurable risks.

Our reputation and ability to do business may be negatively impacted by our suppliers’ inability

to produce and ship products.

We are dependent on key inputs, suppliers and skilled labor for the cultivation, extraction, and

production of cannabis products.

Our cannabis growing operations consume considerable energy, which makes us vulnerable to rising

energy costs.

● Our reputation and ability to do business may be negatively impacted by our suppliers’ inability to produce and ship products.

● We are dependent on key inputs, suppliers and skilled labor for the cultivation, extraction, and production of cannabis products.

● Our cannabis growing operations consume considerable energy, which makes us vulnerable to rising energy costs.

Accordingly, rising or volatile energy costs may adversely affect our business and our ability operate profitably.

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● We may be subject to growth-related risks.

We are currently involved in litigation, and there may be additional litigation in which we will

be involved in the future.

We face an inherent risk of product liability claims as a manufacturer, processor and producer

of products that are intended to be ingested by people.

● We are currently involved in litigation, and there may be additional litigation in which we will be involved in the future.

● We face an inherent risk of product liability claims as a manufacturer, processor and producer of products that are intended to be ingested by people.

● Our intellectual property may be difficult to protect.

We may be exposed to infringement or misappropriation claims by third parties, which, if determined

adversely to us, could subject us to significant liabilities and other costs.

Our products may be subject to product recalls, which may result in expense, legal proceedings,

regulatory action, loss of sales and reputation, and diversion of management attention.

We face unfavorable publicity or consumer perception of the safety, efficacy, and quality of our

cannabis products as a result of research, investigations, litigation, and publicity.

We face intense competition in a new and rapidly growing industry by other licensed companies with

more experience and financial resources than we have and by unlicensed, unregulated participants.

There are risks associated with consolidation of the industry by well-capitalized entrants developing

large-scale operations.

● We may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to us, could subject us to significant liabilities and other costs.

● Our products may be subject to product recalls, which may result in expense, legal proceedings, regulatory action, loss of sales and reputation, and diversion of management attention.

● We face unfavorable publicity or consumer perception of the safety, efficacy, and quality of our cannabis products as a result of research, investigations, litigation, and publicity.

● We face intense competition in a new and rapidly growing industry by other licensed companies with more experience and financial resources than we have and by unlicensed, unregulated participants.

● There are risks associated with consolidation of the industry by well-capitalized entrants developing large-scale operations.

● Synthetic products from the pharmaceutical industry may compete with cannabis use and products.

Our internal controls over financial reporting may not be effective, and our independent auditors

may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business.

The elimination of monetary liability against our directors, officers, and employees under British

Columbia law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result

in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees.

● Our internal controls over financial reporting may not be effective, and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business.

● The elimination of monetary liability against our directors, officers, and employees under British Columbia law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees.

● There is doubt as to the ability to enforce judgments in Canada or under Canadian law against U.S.

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● Our past performance may not be indicative of our future results.

Our business, financial condition, results of operations, and cash flow may be negatively impacted

by challenging global economic conditions.

Epidemics and pandemics, including the recent COVID-19 pandemic, may have a significant negative

impact on our business and financial results.

● Our business, financial condition, results of operations, and cash flow may be negatively impacted by challenging global economic conditions.

● Epidemics and pandemics, including the recent COVID-19 pandemic, may have a significant negative impact on our business and financial results.

● A return on our securities is not guaranteed.

Our voting control is concentrated given 37.2% of our voting power is held by our Chief Executive

● Our voting control is concentrated given 36.7% of our voting power is held by our Chief Executive Officer.

● Our capital structure and voting control may cause unpredictability.

Additional issuances of Subordinate Voting Shares, or securities convertible into Subordinate Voting

Shares, may result in dilution.

Sales of substantial numbers of Subordinate Voting Shares may have an adverse effect on their market

● Additional issuances of Subordinate Voting Shares, or securities convertible into Subordinate Voting Shares, may result in dilution.

● Sales of substantial numbers of Subordinate Voting Shares may have an adverse effect on their market price.

● The market price for the Subordinate Voting Shares may be volatile.

A decline in the price or trading volume of the Subordinate Voting Shares could affect our ability

to raise further capital and adversely impact our ability to continue operations.

If securities or industry analysts do not publish or cease publishing research or reports or publish

misleading, inaccurate, or unfavorable research about us, our business or our market, our stock price and trading volume could

● A decline in the price or trading volume of the Subordinate Voting Shares could affect our ability to raise further capital and adversely impact our ability to continue operations.

● If securities or industry analysts do not publish or cease publishing research or reports or publish misleading, inaccurate, or unfavorable research about us, our business or our market, our stock price and trading volume could decline.

● An investor may face liquidity risks with an investment in the Subordinate Voting Shares.

We are subject to increased costs as a result of being a public company in Canada and the United

We do not intend to pay dividends on our Shares and, consequently, the ability of investors to

achieve a return on their investment will depend entirely on appreciation in the price of our Subordinate Voting Shares.

We are eligible to be treated as an “emerging growth company” as defined in the JOBS

Act and our election to delay adoption of new or revised accounting standards applicable to public companies may result in our

financial statements not being comparable to those of some other public companies.

As a result of this and other reduced disclosure

requirements applicable to emerging growth companies, the Subordinate Voting Shares may be less attractive to investors.

Our shareholders are subject to extensive governmental regulation and, if a shareholder is found

unsuitable by one of our licensing authorities, that shareholder would not be able to beneficially own our securities.

Our shareholders

may also be required to provide information that is requested by licensing authorities and we have the right, under certain circumstances,

to redeem a shareholder’s securities;

● We are subject to increased costs as a result of being a public company in Canada and the United States.

● We do not intend to pay dividends on our Shares and, consequently, the ability of investors to achieve a return on their investment will depend entirely on appreciation in the price of our Subordinate Voting Shares.

● We are eligible to be treated as an “emerging growth company” as defined in the JOBS Act and our election to delay adoption of new or revised accounting standards applicable to public companies may result in our financial statements not being comparable to those of some other public companies.

As a result of this and other reduced disclosure requirements applicable to emerging growth companies, the Subordinate Voting Shares may be less attractive to investors.

● Our shareholders are subject to extensive governmental regulation and, if a shareholder is found unsuitable by one of our licensing authorities, that shareholder would not be able to beneficially own our securities.

Our shareholders may also be required to provide information that is requested by licensing authorities and we have the right, under certain circumstances, to redeem a shareholder’s securities;

we may be forced to use our cash or incur debt to fund such redemption of our securities.

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● Dispositions of Subordinate Voting Shares will be subject to Canadian and/or United States tax.

Although we do not intend to pay dividends on any of our Subordinate Voting Shares, any such dividends

would be subject to Canadian and/or United States withholding tax.

Transfers of Subordinate Voting Shares may be subject to United States estate and generation-skipping

transfer taxes.

● Although we do not intend to pay dividends on any of our Subordinate Voting Shares, any such dividends would be subject to Canadian and/or United States withholding tax.

● Transfers of Subordinate Voting Shares may be subject to United States estate and generation-skipping transfer taxes.

● Taxation of Non-U.S.

Holders upon a disposition of Subordinate Voting Shares depends on whether

we are classified as a United States real property holding corporation.

Holders upon a disposition of Subordinate Voting Shares depends on whether we are classified as a United States real property holding corporation.

● Changes in tax laws may affect the Company and holders of Subordinate Voting Shares.

● ERISA imposes additional obligations on certain investors.

The following are certain factors relating

to our business.

The following are certain factors relating to our business.

These risks and uncertainties are not the only ones facing the Company.

Additional risks and uncertainties not

presently known to us or currently deemed immaterial by us, may also impair our operations.

If any such risks occur, our shareholders

could lose all or part of their investment and our business, financial condition, liquidity, results of operations, and prospects

could be materially, adversely affected and our ability to implement our growth plans could be adversely affected.

Our shareholders

should carefully evaluate the following risk factors associated with the Subordinate Voting Shares.

Risks Related to the Regulatory System and Business Environment

Additional risks and uncertainties not presently known to us or currently deemed immaterial by us, may also impair our operations.

If any such risks occur, our shareholders could lose all or part of their investment and our business, financial condition, liquidity, results of operations, and prospects could be materially, adversely affected and our ability to implement our growth plans could be adversely affected.

Our shareholders should carefully evaluate the following risk factors associated with the Subordinate Voting Shares.

Risks Related to the Arrangement

Failure to complete, or delays in completing, the Arrangement could materially and adversely affect our results of operations and our stock price.

The completion of the Arrangement is subject to a number of conditions precedent, some of which are outside Verano’s and our control, including receipt of shareholder and regulatory approvals.

To complete the Arrangement, each of Goodness Growth and Verano must make certain filings with and obtain certain consents and approvals from various governmental and regulatory authorities, including the approval of the Supreme Court of British Columbia (or any other court with appropriate jurisdiction) at a hearing upon the procedural and substantive fairness of the terms and conditions of the Arrangement, approval under New York State regulatory requirements, and approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Goodness Growth and Verano have not yet obtained all of the regulatory approvals which are required to complete the Arrangement.

The regulatory approval processes may take a lengthy period of time to complete, which could delay completion of the Arrangement.

There can be no assurance as to the outcome of the approval processes, including the undertakings and conditions that may be required for approval, or whether the regulatory approvals will be obtained at all.

In addition, the completion of the Arrangement by Goodness Growth and Verano is conditional on, among other things, no action or circumstance occurring that would result in a material adverse effect on Goodness Growth’s or Verano’s business operations, financial results, and share price.

There can be no certainty, nor can Goodness Growth or Verano provide any assurance, that all conditions precedent to the Arrangement will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the Arrangement may not be completed or may be delayed.

If, for any reason, the Arrangement is not completed, its completion is materially delayed and/or the Arrangement Agreement is terminated, the market price of our Shares may be materially adversely affected.

Our business, financial condition, or results of operations could also be subject to various material adverse consequences, including that we would remain liable for costs relating to the Arrangement.

In addition, if the Arrangement is not completed for any reason, there are risks that the announcement of the Arrangement and the dedication of our resources to the completion thereof could have a negative impact on our relationships with our stakeholders and could have a material adverse effect on our current and future operations, financial condition, and prospects.

In addition, we may incur significant transaction expenses in connection with the Arrangement, regardless of whether the Arrangement is completed.

We are subject to customary non-solicitation provisions under the Arrangement Agreement.

The Arrangement Agreement also restricts us from taking specified actions until the Arrangement is completed without the consent of Verano.

These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the Arrangement.

There can be no assurance that the Arrangement will not be terminated by Goodness Growth or Verano in certain circumstances.

Each of Goodness Growth and Verano has the right, in certain circumstances, in addition to termination rights relating to the failure to satisfy the conditions of closing, to terminate the Arrangement.

Accordingly, there can be no certainty, nor can Goodness Growth provide any assurance that the Arrangement will not be terminated by either of Goodness Growth or Verano prior to the completion of the Arrangement.

In addition, if the Arrangement is not completed by December 31, 2022 (subject to the right of either party to extend by up to an additional 120 days if the required regulatory approvals have not been obtained or the final order of the court in British Columbia has not been obtained as a result of the COVID-19 pandemic, in each case, by such date as further described in the Arrangement Agreement), either Goodness Growth or Verano may choose to terminate the Arrangement Agreement.

The Arrangement Agreement also includes termination amounts payable if the Arrangement Agreement is terminated in certain circumstances.

Additionally, any termination will result in the failure to realize the expected benefits of the Arrangement in respect of the operations and business of Goodness Growth and Verano.

The termination amounts provided under the Arrangement Agreement may discourage other parties from attempting to acquire Goodness Growth or Verano.

Under the Arrangement Agreement, Goodness Growth is required to pay to Verano a termination amount of $14,875,000 in the event the Arrangement Agreement is terminated in connection with entry into a superior proposal.

This termination amount may discourage other parties from attempting to acquire our Shares or otherwise make an acquisition proposal to Goodness Growth, even if those parties, would otherwise be willing to offer greater value to our shareholders than that offered by Verano under the Arrangement.

There can be no assurance that the value of the Verano Shares received by the Shareholders will equal or exceed the value of the Goodness Growth Shares prior to the Effective Date.

The Exchange Ratio is fixed and will not increase or decrease due to fluctuations in the market price of Subordinate Voting Shares or Verano Shares.

The market price of Subordinate Voting Shares or Verano Shares could each fluctuate significantly prior to the Effective Date in response to various factors and events, including, without limitation, as a result of the differences between Goodness Growth’s and Verano’s actual financial or operating results and those expected by investors and analysts, changes in analysts’ projections or recommendations, changes in general economic or market conditions, and broad market fluctuations.

As a result of such fluctuations, historical market prices are not indicative of future market prices or the market value of the Verano Shares that holders of Goodness Growth Shares will receive on the Effective Date.

There can be no assurance that the market value of the Verano Shares that the holders of Goodness Shares will receive on the Effective Date will equal or exceed the market value of the Goodness Growth Shares held by such Shareholders prior to the Effective Date.

Similarly, there can be no assurance that the trading price of Verano Shares will not decline following the completion of the Arrangement.

The foregoing risks or other risks arising in connection with the failure of the Arrangement, including the diversion of management attention from conducting the business of Goodness Growth, may have a material adverse effect on Goodness Growth’s business operations, financial results and share price.

Risks Related to the Regulatory System and Business Environment for Cannabis

Marijuana remains illegal under U.S.

federal law, and

enforcement of U.S.

federal law, and enforcement of U.S.

cannabis laws could change.

United States federal law now bifurcates

the legality of “hemp” from “marihuana” (also commonly known as marijuana).

For purposes of this Annual Report on Form 10-K,

the term “cannabis” means “marihuana” as set forth in the Controlled Substances Act and is used interchangeably

with the term “marijuana.”

There are significant legal

restrictions and regulations that govern the cannabis industry in the United States.

Marijuana remains a Schedule I drug

under the Controlled Substances Act, making it illegal under federal law in the United States to, among other things,

cultivate, distribute, or possess cannabis in the United States.

In those states in which the use of marijuana has been

legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act.

The Controlled Substances

Act classifies marijuana as a Schedule I controlled substance, and as such, medical and adult-use cannabis use is illegal

United States federal law now bifurcates the legality of “hemp” from “marihuana” (also commonly known as marijuana).

For purposes of this Annual Report on Form 10-K, the term “cannabis” means “marihuana” as set forth in the Controlled Substances Act and is used interchangeably with the term “marijuana.”

There are significant legal restrictions and regulations that govern the cannabis industry in the United States.

Marijuana remains a Schedule I drug under the Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute, or possess cannabis in the United States.

In those states in which the use of marijuana has been legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act.

The Controlled Substances Act classifies marijuana as a Schedule I controlled substance, and as such, medical and adult-use cannabis use is illegal under U.S.

Unless and until the U.S.

Congress amends the Controlled Substances Act with respect to marijuana

(and the President approves such amendment), there is a risk that federal authorities may enforce current federal law.

Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the

United States may form the basis for prosecution under applicable U.S.

Congress amends the Controlled Substances Act with respect to marijuana (and the President approves such amendment), there is a risk that federal authorities may enforce current federal law.

Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable U.S.

federal money laundering legislation.

approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement

against individuals and businesses that comply with medical or adult-use cannabis regulatory programs in states where such

programs are legal, strict compliance with state laws with respect to cannabis will neither absolve Vireo of liability under

federal law, nor will it provide a defense to any federal proceeding which may be brought against Vireo.

Since federal

law criminalizing the use of marijuana pre-empts state laws that legalize its use, enforcement of federal law regarding

marijuana is a significant risk and would greatly harm our business, prospects, revenue, results of operation and financial

Any proceedings brought against Vireo under federal law may materially, adversely affect our operations and

financial performance.

Our activities are, and will continue to

be, subject to evolving regulation by governmental authorities.

We are either currently, or in the future expect to be, directly

or indirectly engaged in the medical and adult-use cannabis industry in the United States where state law permits such activities.

The legality of the production, cultivation, extraction, distribution, retail sales, transportation and use of cannabis differs

among states in the United States.

While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis regulatory programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve Goodness Growth of liability under U.S.

federal law, nor will it provide a defense to any federal proceeding which may be brought against Goodness Growth.

Since federal law criminalizing the use of marijuana pre-empts state laws that legalize its use, enforcement of federal law regarding marijuana is a significant risk and would greatly harm our business, prospects, revenue, results of operation and financial condition.

Any proceedings brought against Goodness Growth under federal law may materially, adversely affect our operations and financial performance.

Our activities are, and will continue to be, subject to evolving regulation by governmental authorities.

We are either currently, or in the future expect to be, directly or indirectly engaged in the medical and adult-use cannabis industry in the United States where state law permits such activities.

The legality of the production, cultivation, extraction, distribution, retail sales, transportation and use of cannabis differs among states in the United States.

Due to the current regulatory environment in the United States, new risks may emerge;

may not be able to predict all such risks.

As of the date of this filing, there are

36 states, plus the District of Columbia (and the territories of Guam, Puerto Rico, the U.S.

Virgin Islands and the Northern Mariana

Islands), that have laws and/or regulations that recognize, in one form or another, legitimate medical uses for cannabis and consumer

use of cannabis in connection with medical treatment.

Similarly, 14 states and the District of Columbia have legalized cannabis

for adult use.

Because our current and anticipated future

activities in the medical and adult-use cannabis industry may be illegal under the applicable federal laws of the United States,

there can be no assurance that the U.S.

management may not be able to predict all such risks.

As of the date of this filing, there are 39 states, plus the District of Columbia (and the territories of Guam, Puerto Rico, the U.S.

Virgin Islands and the Northern Mariana Islands), that have laws and/or regulations that recognize, in one form or another, legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment.

Similarly, 19 states and the District of Columbia have legalized cannabis for adult use.

Because our current and anticipated future activities in the medical and adult-use cannabis industry may be illegal under the applicable federal laws of the United States, there can be no assurance that the U.S.

federal government will not seek to enforce the applicable laws against us.

The consequences

of such enforcement would likely be materially adverse to the Company and our business, including our reputation, profitability

and the market price of our publicly traded Subordinate Voting Shares, and could result in the forfeiture or seizure of all or

substantially all of our assets.

Due to the conflicting views between state

legislatures and the federal government regarding cannabis, cannabis businesses are subject to inconsistent laws and regulations.

There can be no assurance that the federal government will not enforce federal laws relating to marijuana and seek to prosecute

cases involving marijuana businesses that are otherwise compliant with state laws in the future.

In 2013, the DOJ attempted to

address the inconsistent treatment of cannabis under state and federal law.

The consequences of such enforcement would likely be materially adverse to the Company and our business, including our reputation, profitability and the market price of our publicly traded Subordinate Voting Shares, and could result in the forfeiture or seizure of all or substantially all of our assets.

Due to the conflicting views between state legislatures and the federal government regarding cannabis, cannabis businesses are subject to inconsistent laws and regulations.

There can be no assurance that the federal government will not enforce federal laws relating to marijuana and seek to prosecute cases involving marijuana businesses that are otherwise compliant with state laws in the future.

In 2013, the DOJ attempted to address the inconsistent treatment of cannabis under state and federal law.

Deputy Attorney General James Cole sent all U.S.

the Cole Memorandum in August 2013, which outlined certain priorities for the DOJ relating to the prosecution of cannabis offenses.

The Cole Memorandum noted that, in jurisdictions that have enacted laws legalizing cannabis in some form and that have also implemented

strong and effective regulatory and enforcement systems to control the cultivation, production, distribution, sale and possession

of cannabis, conduct in compliance with such laws and regulations was not a priority for the DOJ.

However, the DOJ did not provide

(and has not provided since) specific guidelines for what regulatory and enforcement systems would be deemed sufficient under the

Cole Memorandum.

Attorneys the Cole Memorandum in August 2013, which outlined certain priorities for the DOJ relating to the prosecution of cannabis offenses.

The Cole Memorandum noted that, in jurisdictions that have enacted laws legalizing cannabis in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, production, distribution, sale and possession of cannabis, conduct in compliance with such laws and regulations was not a priority for the DOJ.

However, the DOJ did not provide (and has not provided since) specific guidelines for what regulatory and enforcement systems would be deemed sufficient under the Cole Memorandum.

On January 4, 2018, former U.S.

General Jeff Sessions formally issued the Sessions Memorandum, which rescinded the Cole Memorandum effective upon its issuance.

The Sessions Memorandum stated, in part, that current law reflects “Congress’ determination that cannabis is a dangerous

drug and cannabis activity is a serious crime,” and Mr.

Attorney General Jeff Sessions formally issued the Sessions Memorandum, which rescinded the Cole Memorandum effective upon its issuance.

The Sessions Memorandum stated, in part, that current law reflects “Congress’ determination that cannabis is a dangerous drug and cannabis activity is a serious crime,” and Mr.

Sessions directed all U.S.

Attorneys to enforce the laws enacted

by Congress and to follow well-established principles when pursuing prosecutions related to cannabis activities.

As a result of the Sessions Memorandum,

federal prosecutors are now free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities,

despite the existence of state-level laws that may be inconsistent with federal prohibitions.

No direction was given to federal

prosecutors in the Sessions Memorandum as to the priority they should ascribe to such cannabis activities, and thus it is uncertain

how active U.S.

Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to cannabis activities.

As a result of the Sessions Memorandum, federal prosecutors are now free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities, despite the existence of state-level laws that may be inconsistent with federal prohibitions.

No direction was given to federal prosecutors in the Sessions Memorandum as to the priority they should ascribe to such cannabis activities, and thus it is uncertain how active U.S.

federal prosecutors will be in the future in relation to such activities.

There can be no assurance that the federal

government will not enforce federal laws relating to cannabis and seek to prosecute cases involving cannabis businesses that are

otherwise compliant with state laws in the future.

On March 11, 2021, Merrick Garland was sworn in as the 86 th Attorney General of

the United States.

Most states that have legalized cannabis

continue to craft their regulations pursuant to the Cole Memorandum.

Federal enforcement agencies have taken little or no action

against state-compliant cannabis businesses.

However, the DOJ may change its enforcement policies at any time, with or without

advance notice.

There is a substantial risk of regulatory

or political change.

The success of our business strategy depends

on the legality of the cannabis industry in the U.S.

There can be no assurance that the federal government will not enforce federal laws relating to cannabis and seek to prosecute cases involving cannabis businesses that are otherwise compliant with state laws in the future.

On March 11, 2021, Merrick Garland was sworn in as the 86 th Attorney General of the United States.

Most states that have legalized cannabis continue to craft their regulations pursuant to the Cole Memorandum.

Federal enforcement agencies have taken little or no action against state-compliant cannabis businesses.

However, the DOJ may change its enforcement policies at any time, with or without advance notice.

There is a substantial risk of regulatory or political change.

The success of our business strategy depends on the legality of the cannabis industry in the U.S.

The political environment surrounding the cannabis industry in the U.S.

general can be volatile and the regulatory framework in the U.S.

in general can be volatile and the regulatory framework in the U.S.

remains in flux.

Despite the currently implemented laws and regulations

and its territories to legalize and regulate the cultivation, production, processing, sale, possession and use of cannabis,

and additional states that have pending legislation regarding the same, the risk remains that a shift in the regulatory or political

realm could occur and have a drastic impact on the industry as a whole, adversely impacting our ability to successfully invest

and/or participate in the selected business opportunities.

Further, there is no guarantee that at

some future date, voters and/or the applicable legislative bodies will not repeal, overturn or limit any such legislation legalizing

the sale, disbursement and consumption of medical or adult-use cannabis.

It is also important to note that local and city ordinances

may strictly limit and/or restrict disbursement of cannabis in a manner that will make it extremely difficult or impossible to

transact business that is necessary for the continued operation of the cannabis industry.

Despite the currently implemented laws and regulations in the U.S.

and its territories to legalize and regulate the cultivation, production, processing, sale, possession and use of cannabis, and additional states that have pending legislation regarding the same, the risk remains that a shift in the regulatory or political realm could occur and have a drastic impact on the industry as a whole, adversely impacting our ability to successfully invest and/or participate in the selected business opportunities.

Further, there is no guarantee that at some future date, voters and/or the applicable legislative bodies will not repeal, overturn or limit any such legislation legalizing the sale, disbursement and consumption of medical or adult-use cannabis.

It is also important to note that local and city ordinances may strictly limit and/or restrict disbursement of cannabis in a manner that will make it extremely difficult or impossible to transact business that is necessary for the continued operation of the cannabis industry.

Cannabis remains illegal under U.S.

law, and the U.S.

federal government could bring criminal and civil charges against us or our subsidiaries or our investments at

Federal actions against any individual or entity engaged in the cannabis industry or a substantial repeal of cannabis-related

legislation could have a material, adverse effect on our business, financial condition, or results of operations.

federal law, and the U.S.

federal government could bring criminal and civil charges against us or our subsidiaries or our investments at any time.

Federal actions against any individual or entity engaged in the cannabis industry or a substantial repeal of cannabis-related legislation could have a material, adverse effect on our business, financial condition, or results of operations.

We may be subject to action by the U.S.

federal government

through various government agencies for participation in the cannabis industry.

Because the cultivation, processing, production,

distribution, and sale of cannabis for any purpose, medical, adult use or otherwise, remain illegal under U.S.

federal law, it

is possible that we may be forced to cease any such activities.

federal government, through, among others, the DOJ, its

sub-agency the Drug Enforcement Administration (“ DEA ”) and the U.S.

Internal Revenue Service (“ IRS ”),

has the right to actively investigate, audit and shut down cannabis growing facilities, processors, and retailers.

government may also attempt to seize our property.

Any action taken by the DOJ, the DEA and/or the IRS to interfere with, seize

or shut down our operations will have an adverse effect on our business, prospects, revenue, results of operation and financial

Since federal law criminalizing the use

of cannabis pre-empts state laws that legalize its use, the federal government can assert criminal violations of federal law despite

state laws permitting the use of cannabis.

It does not appear that federal law enforcement and regulatory agencies are focusing

resources on licensed marijuana-related businesses that are operating in compliance with state law.

As the rescission of the Cole

Memorandum and the implementation of the Sessions Memorandum demonstrate, the DOJ may at any time issue additional guidance that

directs federal prosecutors to devote more resources to prosecuting marijuana related businesses.

In the event that the DOJ aggressively

pursues financiers or equity owners of cannabis-related businesses, and U.S.

Attorneys follow the DOJ policies through pursuing

prosecutions, then we could face:

seizure of our cash and other assets used to support or derived from our cannabis subsidiaries;

the arrest of our employees, directors, officers, managers, and investors;

ancillary criminal violations of the Controlled Substances Act for aiding and abetting, and conspiracy to violate the Controlled Substances Act by providing financial support to cannabis companies that service or provide goods to state-licensed or permitted cultivators, processors, distributors and/or retailers of cannabis.

Because the Cole Memorandum was rescinded,

the DOJ or an aggressive federal prosecutor could allege that the Company and our Board and, potentially, our shareholders, “aided

and abetted” violations of federal law by providing finances and services to our portfolio cannabis companies.

circumstances, federal prosecutors could seek to seize our assets, and to recover the “illicit profits” previously

distributed to shareholders resulting from any of our financing or services.

In these circumstances, our operations would cease,

shareholders may lose their entire investments and directors, officers and/or shareholders may be left to defend any criminal charges

against them at their own expense and, if convicted, be sent to federal prison.

Additionally, there can be no assurance as

to the position the current or any new federal administration may take on marijuana.

Any enforcement of current federal marijuana

laws could cause significant financial damage to the Company and our shareholders.

Further, future presidential administrations may

choose to treat marijuana differently and potentially enforce the federal laws more aggressively.

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.

These results could have a material, adverse effect on the Company,

including our reputation and ability to conduct business, our holding (directly or indirectly) of cannabis licenses in the United

States, the listing of our securities on various stock exchanges, our financial position, operating results, profitability or liquidity

or the market price of our Subordinate Voting Shares.

In addition, it is difficult to estimate the time or resources that would

be needed for the investigation or final resolution of any such matters because:

(i) the time and resources that may be needed

depend on the nature and extent of any information requested by the authorities involved;

and (ii) such time or resources could

be substantial.

state and local regulation of cannabis is uncertain

and changing.

There is no assurance 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.

government begins to enforce U.S.

federal laws relating to cannabis in states where the sale and use of cannabis is currently

legal, or if existing state laws are repealed or curtailed, our business or operations in those states or under those laws

would be materially and adversely affected.

Federal actions against any individual or entity engaged in the cannabis industry

or a substantial repeal of cannabis related legislation could materially adversely affect the Company, our business and our

assets or investments.

The rulemaking process at the state level

that applies to cannabis operators in any state will be ongoing and result in frequent changes.

As a result, a compliance program

is essential to manage regulatory risk.

All operating policies and procedures implemented by the Company are compliance-based and

are derived from the state regulatory structure governing cannabis businesses.

Notwithstanding Vireo’s efforts and diligence,

regulatory compliance, and the process of obtaining regulatory approvals can be costly and time-consuming.

No assurance can be

given that we will receive and maintain the necessary licenses, permits or cards to continue operating our business.

A state implementing

an adult-use cannabis program may prohibit participation by the Company in one or more aspects of that program, or require the

Company to pay fees to participate, which fees may be material or prohibitive.

States in which we are licensed to cultivate, process and/or

dispense medical cannabis may add a legal adult-use program, either by legislation or ballot initiative.

There can be no assurance

that we will be permitted to participate in adult-use cannabis cultivation, processing or dispensing simply because we hold medical

cannabis licenses.

Local laws and ordinances could also restrict

our business activity.

Although our operations are legal under the laws of the states in which it operates, local governments often

have the ability to limit, restrict and ban cannabis businesses from operating within their jurisdiction.

Land use, zoning, local

ordinances, and similar laws could be adopted or changed and have a material, adverse effect on our business.

Multiple states where medical and/or adult

use cannabis is legal have or are considering special taxes or fees on businesses in the marijuana industry.

It is uncertain at

this time whether other states are in the process of reviewing such additional taxes and fees.

The implementation of special taxes

or fees could have a material, adverse effect upon our business, prospects, revenue, results of operation and financial condition.

We currently operate cannabis dispensaries in Arizona, Maryland,

Minnesota, New Mexico, and New York.

State regulatory agencies may require us to post bonds

or significant fees.

There is a risk that a greater number of state regulatory agencies

will begin requiring entities engaged in certain aspects of the business or industry of legal marijuana to post a bond or significant

fees when applying, for example, for a dispensary license or renewal, as a guarantee of payment of sales and franchise taxes.

are not able to quantify at this time the potential scope of such bonds or fees in the states in which we currently operate or

may in the future operate, but they may be materially negative to our results of operations, financial condition and ultimate business

success, individually or in the aggregate.

We may be subject to heightened scrutiny

by United States and Canadian authorities, which could ultimately lead to the market for Subordinate Voting Shares becoming highly

illiquid and our shareholders having no ability to effect trades in Subordinate Voting Shares in Canada.

Currently, our Subordinate Voting Shares

are traded on the Canadian Securities Exchange and on the OTCQX tier of the OTC Markets in the United States.

Our business, operations,

and investments in the United States, and any such future business, operations, or investments, may become the subject of heightened

scrutiny by regulators, stock exchanges and other authorities in Canada and the United States.

As a result, we 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 our ability to operate or invest in the United States or any other

jurisdiction, in addition to those described herein.

In 2017, there were concerns that the Canadian

Depository for Securities Limited, through its subsidiary CDS Clearing and Depository Services Inc.

Canada’s central securities depository (clearing and settling trades in the Canadian equity, fixed income, and money markets),

would refuse to settle trades for cannabis issuers that have investments in the United States.

However, CDS has not implemented

On February 8, 2018, the Canadian Securities

Administrators published Staff Notice 51-352 describing the Canadian Securities Administrators’ disclosure expectations for

specific risks facing issuers with cannabis-related activities in the U.S.

Staff Notice 51-352 confirms that a disclosure-based

approach remains appropriate for issuers with U.S.

federal government through various government agencies for participation in the cannabis industry.

Because the cultivation, processing, production, distribution, and sale of cannabis for any purpose, medical, adult use or otherwise, remain illegal under U.S.

federal law, it is possible that we may be forced to cease any such activities.

federal government, through, among others, the DOJ, its sub-agency the Drug Enforcement Administration (“ DEA ”) and the U.S.

Internal Revenue Service (“ IRS ”), has the right to actively investigate, audit and shut down cannabis growing facilities, processors, and retailers.

federal government may also attempt to seize our property.

Any action taken by the DOJ, the DEA and/or the IRS to interfere with, seize or shut down our operations will have an adverse effect on our business, prospects, revenue, results of operation and financial condition.

Since federal law criminalizing the use of cannabis pre-empts state laws that legalize its use, the federal government can assert criminal violations of federal law despite state laws permitting the use of cannabis.

It does not appear that federal

law enforcement and regulatory agencies are focusing resources on licensed marijuana-related businesses that are operating in compliance with state law.

As the rescission of the Cole Memorandum and the implementation of the Sessions Memorandum demonstrate, the DOJ may at any time issue additional guidance that directs federal prosecutors to devote more resources to prosecuting marijuana related businesses.

In the event that the DOJ aggressively pursues financiers or equity owners of cannabis-related businesses, and U.S.

Attorneys follow the DOJ policies through pursuing prosecutions, then we could face:

(i) seizure of our cash and other assets used to support or derived from our cannabis subsidiaries;

(ii) the arrest of our employees, directors, officers, managers, and investors;

(iii) ancillary criminal violations of the Controlled Substances Act for aiding and abetting, and conspiracy to violate the Controlled Substances Act by providing financial support to cannabis companies that service or provide goods to state-licensed or permitted cultivators, processors, distributors and/or retailers of cannabis.

Because the Cole Memorandum was rescinded, the DOJ or an aggressive federal prosecutor could allege that the Company and our Board and, potentially, our shareholders, “aided and abetted” violations of federal law by providing finances and services to our portfolio cannabis companies.

Under these circumstances, federal prosecutors could seek to seize our assets, and to recover the “illicit profits” previously distributed to shareholders resulting from any of our financing or services.

In these circumstances, our operations would cease, shareholders may lose their entire investments and directors, officers and/or shareholders may be left to defend any criminal charges against them at their own expense and, if convicted, be sent to federal prison.

Additionally, there can be no assurance as to the position the current or any new federal administration may take on marijuana.

Any enforcement of current federal marijuana laws could cause significant financial damage to the Company and our shareholders.

Further, future presidential administrations may choose to treat marijuana differently and potentially enforce the federal laws more aggressively.

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.

These results could have a material, adverse effect on the Company, including our reputation and ability to conduct business, our holding (directly or indirectly) of cannabis licenses in the United States, the listing of our securities on various stock exchanges, our financial position, operating results, profitability or liquidity or the market price of our Subordinate Voting Shares.

In addition, it is difficult to estimate the time or resources that would be needed for the investigation or final resolution of any such matters because:

(i) the time and resources that may be needed depend on the nature and extent of any information requested by the authorities involved;

and (ii) such time or resources could be substantial.

state and local regulation of cannabis is uncertain and changing.

There is no assurance 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.

federal government begins to enforce U.S.

federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing state laws are repealed or curtailed, our business or operations in those states or under those laws would be materially and adversely affected.

Federal actions against any individual or entity engaged in the cannabis industry or a substantial repeal of cannabis related legislation could materially adversely affect the Company, our business and our assets or investments.

The rulemaking process at the state level that applies to cannabis operators in any state will be ongoing and result in frequent changes.

As a result, a compliance program is essential to manage regulatory risk.

All operating policies and procedures implemented by the Company are compliance-based and are derived from the state regulatory structure governing cannabis businesses.

Notwithstanding our efforts and diligence, regulatory compliance, and the process of obtaining regulatory approvals can be costly and time-consuming.

No assurance can be given that we will receive and

maintain the necessary licenses, permits or cards to continue operating our business.

A state implementing an adult-use cannabis program may prohibit participation by the Company in one or more aspects of that program, or require the Company to pay fees to participate, which fees may be material or prohibitive.

States in which we are licensed to cultivate, process and/or dispense medical cannabis may add a legal adult-use program, either by legislation or ballot initiative.

There can be no assurance that we will be permitted to participate in adult-use cannabis cultivation, processing or dispensing simply because we hold medical cannabis licenses.

Local laws and ordinances could also restrict our business activity.

Although our operations are legal under the laws of the states in which it operates, local governments often have the ability to limit, restrict and ban cannabis businesses from operating within their jurisdiction.

Land use, zoning, local ordinances, and similar laws could be adopted or changed and have a material, adverse effect on our business.

Multiple states where medical and/or adult use cannabis is legal have or are considering special taxes or fees on businesses in the marijuana industry.

It is uncertain at this time whether other states are in the process of reviewing such additional taxes and fees.

The implementation of special taxes or fees could have a material, adverse effect upon our business, prospects, revenue, results of operation and financial condition.

We currently operate cannabis dispensaries in Arizona, Maryland, Minnesota, New Mexico, and New York.

State regulatory agencies may require us to post bonds or significant fees.

There is a risk that a greater number of state regulatory agencies will begin requiring entities engaged in certain aspects of the business or industry of legal marijuana to post a bond or significant fees when applying, for example, for a dispensary license or renewal, as a guarantee of payment of sales and franchise taxes.

We are not able to quantify at this time the potential scope of such bonds or fees in the states in which we currently operate or may in the future operate, but they may be materially negative to our results of operations, financial condition and ultimate business success, individually or in the aggregate.

We may be subject to heightened scrutiny by United States and Canadian authorities, which could ultimately lead to the market for Subordinate Voting Shares becoming highly illiquid and our shareholders having no ability to effect trades in Subordinate Voting Shares in Canada.

Currently, our Subordinate Voting Shares are traded on the Canadian Securities Exchange and on the OTCQX tier of the OTC Markets in the United States.

Our business, operations, and investments in the United States, and any such future business, operations, or investments, may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in Canada and the United States.

As a result, we 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 our ability to operate or invest in the United States or any other jurisdiction, in addition to those described herein.

In 2017, there were concerns that the Canadian Depository for Securities Limited, through its subsidiary 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), would refuse to settle trades for cannabis issuers that have investments in the United States.

However, CDS has not implemented this policy.

On February 8, 2018, the Canadian Securities Administrators published Staff Notice 51-352 describing the Canadian Securities Administrators’ disclosure expectations for specific risks facing issuers with cannabis-related activities in the U.S.

Staff Notice 51-352 confirms that a disclosure-based approach remains appropriate for issuers with U.S.

cannabis-related activities.

Staff Notice 51-352 includes additional disclosure

expectations that apply to all issuers with U.S.

cannabis-related activities, including those with direct and indirect involvement

in the cultivation and distribution of cannabis, as well as issuers that provide goods and services to third parties involved in

Staff Notice 51-352 includes additional disclosure expectations that apply to all issuers with U.S.

cannabis-related activities, including those with direct and indirect involvement in the cultivation and distribution of cannabis, as well as issuers that provide goods and services to third parties involved in the U.S.

cannabis industry.

On February 8, 2018, following discussions

with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group, which is the owner and

operator of CDS, announced the signing of a Memorandum of Understanding (“ MOU ”) with Aequitas NEO Exchange Inc.,

the Canadian Securities Exchange, 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 United States.

The MOU confirms, with respect to the clearing

of listed securities, that CDS relies on the Canadian securities exchanges to review the conduct of listed issuers.

The MOU notes

that securities regulation requires that the rules of each of the exchanges must not be contrary to the public interest and that

the rules of each of the exchanges have been approved by the securities regulators.

Pursuant to the MOU, CDS will not ban accepting

deposits of or transactions for clearing and settlement of securities of issuers with cannabis-related activities in the United

Even though the MOU indicated that there are no plans to ban the settlement of securities through CDS, there can be no

guarantee that this approach to regulation will continue in the future.

If such a ban were implemented at a time when the Subordinate

Voting Shares are listed on a Canadian stock exchange, it would have a material, adverse effect on the ability of holders of Subordinate

Voting Shares to make and settle trades.

In particular, the market for Subordinate Voting Shares would become highly illiquid until

an alternative (if available) was implemented, and investors would have no ability to effect a trade of Subordinate Voting Shares

through the facilities of the applicable Canadian stock exchange.

We may face state limitations on ownership of cannabis

Certain jurisdictions in which we operate

or expect to operate limit the number of cannabis licenses and certain economic or commercial interests in the entity that holds

the license that can be held by one entity within that state.

As a result of the completion of certain acquisition transactions

that we have entered into or may enter into in the future, we may potentially hold more than the prescribed number of licenses

or economic or commercial interests in a licensed entity in certain states, and accordingly may be required to divest certain licenses

or entities that hold such license in order to comply with applicable regulations.

The divestiture of certain licenses or entities

that hold such licenses may result in a material, adverse effect on our business, financial condition, or results of operations.

On February 8, 2018, following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group, which is the owner and operator of CDS, announced the signing of a Memorandum of Understanding (“ MOU ”) with Aequitas NEO Exchange Inc., the Canadian Securities Exchange, 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 United States.

The MOU confirms, with respect to the clearing of listed securities, that CDS relies on the Canadian securities exchanges to review the conduct of listed issuers.

The MOU notes that securities regulation requires that the rules of each of the exchanges must not be contrary to the public interest and that the rules of each of the exchanges have been approved by the securities regulators.

Pursuant to the MOU, CDS will not ban accepting deposits of or transactions for clearing and settlement of securities of issuers with cannabis-related activities in the United States.

Even though the MOU indicated that there are no plans to ban the settlement of securities through CDS, there can be no guarantee that this approach to regulation will continue in the future.

If such a ban were implemented at a time when the Subordinate Voting Shares are listed on a Canadian stock exchange, it would have a material, adverse effect on the ability of holders of Subordinate Voting Shares to make and settle trades.

In particular, the market for Subordinate Voting Shares would become highly illiquid until an alternative (if available) was implemented, and investors would have no ability to effect a trade of Subordinate Voting Shares through the facilities of the applicable Canadian stock exchange.

We may face state limitations on ownership of cannabis licenses.

Certain jurisdictions in which we operate or expect to operate limit the number of cannabis licenses and certain economic or commercial interests in the entity that holds the license that can be held by one entity within that state.

As a result of the completion of certain acquisition transactions that we have entered into or may enter into in the future, we may potentially hold more than the prescribed number of licenses or economic or commercial interests in a licensed entity in certain states, and accordingly may be required to divest certain licenses or entities that hold such license in order to comply with applicable regulations.

The divestiture of certain licenses or entities that hold such licenses may result in a material, adverse effect on our business, financial condition, or results of operations.

We may become subject to FDA or ATF regulation.

Marijuana remains a Schedule I controlled

substance under U.S.

If the federal government reclassifies marijuana to a Schedule II, Schedule III, Schedule

IV, or Schedule V controlled substance or declassifies it as a controlled substance, it is possible that the U.S.

Food and Drug Administration

(the “ FDA ”) would seek to regulate cannabis under the Food, Drug and Cosmetics Act of 1938, as amended (the

The FDA is responsible for ensuring public health and safety through regulation of food, drugs, supplements,

and cosmetics, among other products, through its enforcement authority pursuant to the FDCA.

The FDA’s responsibilities include

regulating the ingredients as well as the marketing and labeling of drugs sold in interstate commerce.

Because marijuana is federally

illegal to produce and sell, and because it has few federally recognized medical uses, the FDA has historically deferred enforcement

related to cannabis to the DEA;

however, the FDA has enforced the FDCA with regard to industrial hemp-derived products, especially

CBD derived from industrial hemp sold outside of state-regulated cannabis businesses.

The FDA has recently affirmed its authority

to regulate CBD derived from both marijuana and industrial hemp, and its intention to develop a framework for regulating the production

and sale of CBD derived from industrial hemp.

Additionally, the FDA may issue rules and

regulations, including good manufacturing practices related to the growth, cultivation, harvesting, processing, and production

Marijuana remains a Schedule I controlled substance under U.S.

If the federal government reclassifies marijuana to a Schedule II, Schedule III, Schedule IV, or Schedule V controlled substance or declassifies it as a controlled substance, it is possible that the U.S.

Food and Drug Administration (the “ FDA ”) would seek to regulate cannabis under the Food, Drug and Cosmetics Act of 1938, as amended (the “ FDCA ”).

The FDA is responsible for ensuring public health and safety through regulation of food, drugs, supplements, and cosmetics, among other products, through its enforcement authority pursuant to the FDCA.

The FDA’s responsibilities include regulating the ingredients as well as the marketing and labeling of drugs sold in interstate commerce.

Because marijuana is federally illegal to produce and sell, and because it has few federally recognized medical uses, the FDA has historically deferred enforcement related to cannabis to the DEA;

however, the FDA has enforced the FDCA with regard to industrial hemp-derived products, especially CBD derived from industrial hemp sold outside of state-regulated cannabis businesses.

The FDA has recently affirmed its authority to regulate CBD derived from both marijuana and industrial hemp, and its intention to develop a framework for regulating the production and sale of CBD derived from industrial hemp.

Additionally, the FDA may issue rules and regulations, including good manufacturing practices related to the growth, cultivation, harvesting, processing, and production of cannabis.

Clinical trials may be needed to verify the efficacy and safety of cannabis and cannabis products.

It is also possible

that the FDA would require facilities where medical-use cannabis is grown to register with the FDA and comply with certain federally

prescribed regulations.

If some or all these regulations are imposed, the impact they would have on the cannabis industry is unknown,

including the costs, requirements and possible prohibitions that may be enforced.

If we are unable to comply with the potential

regulations or registration requirements prescribed by the FDA, it may have a material, adverse effect on our business, prospects,

revenue, results of operation and financial condition.

It is also possible that the federal government

could seek to regulate cannabis under the U.S.

It is also possible that the FDA would require facilities where medical-use cannabis is grown to register with the FDA and comply with certain federally prescribed regulations.

If some or all these regulations are imposed, the impact they would have on the cannabis industry is unknown, including the costs, requirements and possible prohibitions that may be enforced.

If we are unable to comply with the potential regulations or registration requirements prescribed by the FDA, it may have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

It is also possible that the federal government could seek to regulate cannabis under the U.S.

Bureau of Alcohol, Tobacco, Firearms and Explosives (“ ATF ”).

The ATF may issue rules and regulations related to the use, transporting, sale and advertising of cannabis or cannabis products.

Cannabis businesses are subject to

applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services.

Banks and other depository institutions

are currently hindered by federal law from providing financial services to marijuana businesses, even in states where those businesses

are regulated.

The Company and our subsidiaries are

subject to a variety of laws and regulations domestically and internationally that involve money laundering, financial

record-keeping and proceeds of crime, including the U.S.

Currency and Foreign Transactions Reporting Act of 1970 (commonly

known as 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, the Proceeds of Crime (Money

Laundering) and Terrorist Financing Act (Canada), as amended, and the rules and regulations thereunder, and any related or

similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

Cannabis businesses are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services.

Banks and other depository institutions are currently hindered by federal law from providing financial services to marijuana businesses, even in states where those businesses are regulated.

The Company and our subsidiaries are subject to a variety of laws and regulations domestically and internationally that involve money laundering, financial record-keeping and proceeds of crime, including the U.S.

Currency and Foreign Transactions Reporting Act of 1970 (commonly known as 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, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended, and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

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.

The Financial Crimes Enforcement Network

(“ FinCEN ”) of the U.S.

Department of the Treasury issued the FinCEN Memorandum on February 14, 2014, outlining

the pathways for financial institutions to bank cannabis businesses in compliance with federal enforcement priorities.

Memorandum states that, in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without

risking prosecution for violation of federal money laundering laws.

The FinCEN Memorandum refers to the Cole Memorandum’s

enforcement priorities.

The revocation of the Cole Memorandum has

not yet affected the status of the FinCEN Memorandum, nor has FinCEN given any indication that it intends to rescind the FinCEN

Memorandum itself.

Shortly after the Sessions Memorandum was issued, FinCEN did state that it would review the FinCEN Memorandum,

but FinCEN has not yet issued further guidance.

Although the FinCEN Memorandum remains

intact, it is unclear whether the current administration will continue to follow its guidelines.

The DOJ continues to have the

right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the

Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis.

conduct of the DOJ’s enforcement priorities could change for any number of reasons.

A change in the DOJ’s priorities

could result in the prosecution of banks and financial institutions for crimes that were not previously prosecuted.

If our operations, or proceeds thereof,

dividend distributions or profits or revenues derived from our operations were found to be in violation of money laundering legislation

or otherwise, such transactions may be viewed as proceeds from a crime (the sale of a Schedule I drug) under the Bank Secrecy Act’s

money laundering provisions.

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.

The Financial Crimes Enforcement Network (“ FinCEN ”) of the U.S.

Department of the Treasury issued the FinCEN Memorandum on February 14, 2014, outlining the pathways for financial institutions to bank cannabis businesses in compliance with federal enforcement priorities.

The FinCEN Memorandum states that, in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of federal money laundering laws.

The FinCEN Memorandum refers to the Cole Memorandum’s enforcement priorities.

The revocation of the Cole Memorandum has not yet affected the status of the FinCEN Memorandum, nor has FinCEN given any indication that it intends to rescind the FinCEN Memorandum itself.

Shortly after the Sessions Memorandum was issued, FinCEN did state that it would review the FinCEN Memorandum, but FinCEN has not yet issued further guidance.

Although the FinCEN Memorandum remains intact, it is unclear whether the current administration will continue to follow its guidelines.

The DOJ continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis.

Further, the conduct of the DOJ’s enforcement priorities could change for any number of reasons.

A change in the DOJ’s priorities could result in the prosecution of banks and financial institutions for crimes that were not previously prosecuted.

If our operations, or proceeds thereof, dividend distributions or profits or revenues derived from our operations were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds from a crime (the sale of a Schedule I drug) under the Bank Secrecy Act’s money laundering provisions.

This may restrict our ability to declare or pay dividends or effect other distributions.

The FinCEN Memorandum does not provide

any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal

Thus, most banks and other financial institutions in the United States do not appear comfortable providing banking

services to cannabis-related businesses or relying on this guidance given that it has the potential to be amended or revoked by

the current 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, we may have limited or no access

to banking or other financial services in the United States.

In addition, federal money laundering statutes and Bank Secrecy Act

regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless

of whether the state it operates in permits cannabis sales.

The inability or limitation of our 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 us to operate

and conduct our business as planned or to operate efficiently.

We operate in a highly regulated

sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry

Our business and activities are heavily

regulated in all jurisdictions where we carry on business.

Our operations are subject to various laws, regulations and guidelines

by state and local governmental authorities relating to the manufacture, marketing, management, transportation, storage, sale,

pricing and disposal of cannabis, cannabis oil and consumable cannabis products, and also including laws and regulations relating

to health and safety, insurance coverage, the conduct of operations and the protection of the environment.

Laws and regulations,

applied generally, grant government agencies and self-regulatory bodies broad administrative discretion over our activities, including

the power to limit or restrict business activities as well as impose additional disclosure requirements on our products and services.

Achievement of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by these governmental

authorities and obtaining all necessary regulatory approvals for the manufacture, production, storage, transportation, sale, import

and export, as applicable, of our products.

The FinCEN Memorandum does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators.

Thus, most banks and other financial institutions in the United States do not appear comfortable providing banking services to cannabis-related businesses or relying on this guidance given that it has the potential to be amended or revoked by the current 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, we may have limited or no access to banking or other financial services in the United States.

In addition, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless of whether the state it operates in permits cannabis sales.

The inability or limitation of our 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 us to operate and conduct our business as planned or to operate efficiently.

We operate in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business.

Our business and activities are heavily regulated in all jurisdictions where we carry on business.

Our operations are subject to various laws, regulations and guidelines by state and local governmental authorities relating to the manufacture, marketing, management, transportation, storage, sale, pricing and disposal of cannabis, cannabis oil and consumable cannabis products, and also including laws and regulations relating to health and safety, insurance coverage, the conduct of operations and the protection of the environment.

Laws and regulations, applied generally, grant government agencies and self-regulatory bodies broad administrative discretion over our activities, including the power to limit or restrict business activities as well as impose additional disclosure requirements on our products and services.

Achievement of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by these governmental authorities and obtaining all necessary regulatory approvals for the manufacture, production, storage, transportation, sale, import and export, as applicable, of our products.

The commercial cannabis industry is still a new industry at the state and local level.

The effect of relevant governmental authorities’ administration, application and enforcement of their respective regulatory

regimes and delays in obtaining, or failure to obtain, applicable regulatory approvals that may be required may significantly delay

or impact the development of markets, products and sales initiatives and could have a material, adverse effect on our business,

prospects, revenue, results of operation and financial condition.

While endeavor to comply with all

applicable laws, regulations and guidelines and, to our knowledge, we are in compliance with, or are in the process of being

assessed for compliance with all such laws, regulations and guidelines, any failure to comply with the regulatory

requirements applicable to our operations may lead to possible sanctions including the revocation or imposition of additional

conditions on licenses to operate our business;

the suspension or expulsion from a particular market or jurisdiction or of

our key personnel;

The effect of relevant governmental authorities’ administration, application and enforcement of their respective regulatory regimes and delays in obtaining, or failure to obtain, applicable regulatory approvals that may be required may significantly delay or impact the development of markets, products and sales initiatives and could have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

While endeavor to comply with all applicable laws, regulations and guidelines and, to our knowledge, we are in compliance with, or are in the process of being assessed for compliance with all such laws, regulations and guidelines, any failure to comply with the regulatory requirements applicable to our operations may lead to possible sanctions including the revocation or imposition of additional conditions on licenses to operate our business;

the suspension or expulsion from a particular market or jurisdiction or of our key personnel;

the imposition of additional or more stringent inspection, testing and reporting requirements;

imposition of fines and censures.

In addition, changes in regulations, more vigorous enforcement thereof or other

unanticipated events could require extensive changes to our operations, increase compliance costs or give rise to material

liabilities and/or revocation of our licenses and other permits, which could have a material, adverse effect on our business,

results of operations and financial condition.

Furthermore, governmental authorities may change their administration,

application, or enforcement procedures at any time, which may adversely affect our ongoing costs relating to regulatory

Because marijuana is illegal under

and the imposition of fines and censures.

In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increase compliance costs or give rise to material liabilities and/or revocation of our licenses and other permits, which could have a material, adverse effect on our business, results of operations and financial condition.

Furthermore, governmental authorities may change their administration, application, or enforcement procedures at any time, which may adversely affect our ongoing costs relating to regulatory compliance.

Because marijuana is illegal under U.S.

federal law, we may be unable to access to U.S.

bankruptcy protections in the event of our bankruptcy or a bankruptcy in an

entity in which we invest.

Many courts have denied cannabis businesses

bankruptcy protections because the use of cannabis is illegal under federal law.

In the event of a bankruptcy, it would be very

difficult for lenders to recoup their investments in the cannabis industry.

If we were to experience a bankruptcy, there is no

guarantee that U.S.

federal bankruptcy protections would be available to us, which would have a material, adverse effect on the

Additionally, there is no guarantee that

we will be able to effectively enforce any interests we may have in our other subsidiaries and investments.

A bankruptcy or other

similar event related to an entity in which we hold an interest that precludes such entity from performing its obligations under

an agreement may have a material, adverse effect on our business, financial condition, or results of operations.

Further, should

an entity in which we hold an interest have insufficient assets to pay its liabilities, it is possible that other liabilities will

be satisfied prior to the liabilities or equity owed to us.

In addition, bankruptcy or other similar proceedings are often a complex

and lengthy process, the outcome of which may be uncertain and could result in a material, adverse effect on our business, financial

condition or results of operations.

Because our contracts involve marijuana

and related activities, which are not legal under U.S.

bankruptcy protections in the event of our bankruptcy or a bankruptcy in an entity in which we invest.

Many courts have denied cannabis businesses bankruptcy protections because the use of cannabis is illegal under federal law.

In the event of a bankruptcy, it would be very difficult for lenders to recoup their investments in the cannabis industry.

If we were to experience a bankruptcy, there is no guarantee that U.S.

federal bankruptcy protections would be available to us, which would have a material, adverse effect on the Company.

Additionally, there is no guarantee that we will be able to effectively enforce any interests we may have in our other subsidiaries and investments.

A bankruptcy or other similar event related to an entity in which we hold an interest that precludes such entity from performing its obligations under an agreement may have a material, adverse effect on our business, financial condition, or results of operations.

Further, should an entity in which we hold an interest have insufficient assets to pay its liabilities, it is possible that other liabilities will be satisfied prior to the liabilities or equity owed to us.

In addition, bankruptcy or other similar proceedings are often a complex and lengthy process, the outcome of which may be uncertain and could result in a material, adverse effect on our business, financial condition or results of operations.

Because our contracts involve marijuana and related activities, which are not legal under U.S.

federal law, we may face difficulties in enforcing our contracts.

Because our contracts involve cannabis

and other activities that are not legal under federal law and in some state jurisdictions, we may face difficulties in enforcing

our contracts in federal courts and certain state courts.

Therefore, there is uncertainty as to whether we will be able to legally

enforce our agreements, which could have a material, adverse effect on the Company.

We may not be able to secure our

payment and other contractual rights with liens on the inventory or licenses of our clients and contracting parties under applicable

In general, the laws of the various states

that have legalized cannabis sale and cultivation do not expressly or impliedly allow for the pledge of inventory containing cannabis

as collateral for the benefit of third parties, such as the Company and our subsidiaries, that do not possess the requisite licenses

and entitlements to cultivate, process, sell, or possess cannabis pursuant to the applicable state law.

Likewise, the laws of those

states generally do not allow for transfer of the licenses and entitlements to sell or cultivate cannabis to third parties that

have not been granted such licenses and entitlements by the applicable state agency.

Our inability to secure our payment and other

contractual rights with liens on the inventory and licenses of our clients and contracting parties increases the risk of loss resulting

from breaches of the applicable agreements by the contracting parties, which, in turn, could have a material, adverse effect on

our business, financial condition or results of operations.

Because our contracts involve cannabis and other activities that are not legal under federal law and in some state jurisdictions, we may face difficulties in enforcing our contracts in federal courts and certain state courts.

Therefore, there is uncertainty as to whether we will be able to legally enforce our agreements, which could have a material, adverse effect on the Company.

We may not be able to secure our payment and other contractual rights with liens on the inventory or licenses of our clients and contracting parties under applicable state laws.

In general, the laws of the various states that have legalized cannabis sale and cultivation do not expressly or impliedly allow for the pledge of inventory containing cannabis as collateral for the benefit of third parties, such as the Company and our subsidiaries, that do not possess the requisite licenses and entitlements to cultivate, process, sell, or possess cannabis pursuant to the applicable state law.

Likewise, the laws of those states generally do not allow for transfer of the licenses and entitlements to sell or cultivate cannabis to third parties that have not been granted such licenses and entitlements by the applicable state agency.

Our inability to secure our payment and other contractual rights with liens on the inventory and licenses of our clients and contracting parties increases the risk of loss resulting from breaches of the applicable agreements by the contracting parties, which, in turn, could have a material, adverse effect on our business, financial condition or results of operations.

Because marijuana is illegal under U.S.

federal law, marijuana

businesses may be subject to civil asset forfeiture.

Because the marijuana industry remains

illegal under U.S.

federal law, any properties owned by participants in the marijuana industry which are either used in the course

of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent

civil asset forfeiture.

Even if the owner of the property were never charged with a crime, the property in question could still

be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject to forfeiture.

We may be subject to constraints on and differences in

marketing our products under varying state laws.

There may be restrictions on sales and

marketing activities imposed by government regulatory bodies that could hinder the development of our business and operating results.

Restrictions may include regulations that specify what, where and to whom product information and descriptions may appear and/or

be advertised.

Marketing, advertising, packaging, and labeling regulations also vary from state to state, potentially limiting

the consistency and scale of consumer branding communication and product education efforts.

federal law, marijuana businesses may be subject to civil asset forfeiture.

Because the marijuana industry remains illegal under U.S.

federal law, any properties owned by participants in the marijuana industry which are either used in the course of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture.

Even if the owner of the property were never charged with a crime, the property in question could still be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject to forfeiture.

We may be subject to constraints on and differences in marketing our products under varying state laws.

There may be restrictions on sales and marketing activities imposed by government regulatory bodies that could hinder the development of our business and operating results.

Restrictions may include regulations that specify what, where and to whom product information and descriptions may appear and/or be advertised.

Marketing, advertising, packaging, and labeling regulations also vary from state to state, potentially limiting the consistency and scale of consumer branding communication and product education efforts.

The regulatory environment in the U.S.

limits our ability to compete for market share in a manner similar to other industries.

If we are unable to effectively market

our products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed

through increased selling prices for our products, our sales and operating results could be materially, adversely affected.

The results of future clinical research may be unfavorable

to cannabis, which may have a material, adverse effect on the demand for our products.

The cannabis industry is highly dependent

upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

Consumer perception can be significantly

influenced by scientific research or findings regarding the consumption of cannabis products.

There can be no assurance that future

scientific research or findings will be favorable to the cannabis market or any particular product, or consistent with earlier

research or findings.

If we are unable to effectively market our products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for our products, our sales and operating results could be materially, adversely affected.

The results of future clinical research may be unfavorable to cannabis, which may have a material, adverse effect on the demand for our products.

The cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

Consumer perception can be significantly influenced by scientific research or findings regarding the consumption of cannabis products.

There can be no assurance that future scientific research or findings will be favorable to the cannabis market or any particular product, or consistent with earlier research or findings.

Research in Canada, the U.S.

and internationally regarding the medical benefits, viability, safety, efficacy

and dosing of cannabis or isolated cannabinoids (such as CBD and THC) remains in early stages.

There have been relatively few clinical

trials on the benefits of cannabis or isolated cannabinoids.

Although we believe that various articles, reports, and studies support

our beliefs regarding the medical benefits, viability, safety, efficacy and dosing of cannabis, future research and clinical trials

may prove such statements to be incorrect or could raise concerns regarding cannabis.

Future research studies and clinical trials

may draw opposing conclusions to those stated in this document or reach negative conclusions regarding the medical benefits, viability,

safety, efficacy, dosing, or other facts related to cannabis, which could have a material, adverse effect on the demand for our

products, and therefore on our business, prospects, revenue, results of operation and financial condition.

Inconsistent public opinion and perception of the medical

and adult-use use cannabis industry hinders market growth and state adoption.

Public opinion and support for medical

and adult-use cannabis has traditionally been inconsistent and varies from jurisdiction to jurisdiction.

While public opinion and

support appears to be rising generally for legalizing medical and adult-use cannabis, it remains a controversial issue subject

to differing opinions surrounding the level of legalization (for example, medical cannabis as opposed to legalization in general).

Inconsistent public opinion and perception of the medical and adult-use cannabis may hinder growth and state adoption, which could

have a material, adverse effect on our business, financial condition, or results of operations.

Our ability to generate revenue and be

successful in the implementation of our business plan is dependent on consumer acceptance and demand of our product lines.

management believes the medical and adult-use cannabis industry is highly dependent upon consumer perception regarding the safety,

efficacy and quality of the cannabis produced.

Acceptance of our products will depend on several factors, including availability,

cost, familiarity of use, perceptions of acceptance by other people, convenience, effectiveness, safety, and reliability.

do not accept our products, or if we fail to meet customers’ needs and expectations adequately, our ability to continue generating

revenues could be reduced.

Consumer perception of our products may be significantly influenced by scientific research or findings,

regulatory investigations, litigation, media attention and other publicity regarding the consumption of medical and adult-use cannabis

There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention

or other research findings or publicity will be favorable to the medical and adult-use cannabis market or any particular product,

or consistent with earlier publicity.

Future research reports, findings, regulatory proceedings, litigation, media attention or

other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could

have a material, adverse effect on the demand for our products and our business, results of operations, financial condition, and

Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings,

litigation, media attention or other publicity, whether or not accurate or with merit, could have a material, adverse effect on

the Company, the demand for our products, and our business, results of operations, financial condition and cash flows.

adverse publicity reports or other media attention regarding the safety, efficacy, and quality of cannabis in general, or our products

specifically, or associating the consumption of cannabis with illness or other negative effects or events, could have such a material,

adverse effect.

Such adverse publicity reports or other media attention could arise even if the adverse effects associated with

such products resulted from consumers’ failure to consume such products appropriately or as directed.

and internationally regarding the medical benefits, viability, safety, efficacy and dosing of cannabis or isolated cannabinoids (such as CBD and THC) remains in early stages.

There have been relatively few clinical trials on the benefits of cannabis or isolated cannabinoids.

Although we believe that various articles, reports, and studies support our beliefs regarding the medical benefits, viability, safety, efficacy and dosing of cannabis, future research and clinical trials may prove such statements to be incorrect or could raise concerns regarding cannabis.

Future research studies and clinical trials may draw opposing conclusions to those stated in this document or reach negative conclusions regarding the medical benefits, viability, safety, efficacy, dosing, or other facts related to cannabis, which could have a material, adverse effect on the demand for our products, and therefore on our business, prospects, revenue, results of operation and financial condition.

Inconsistent public opinion and perception of the medical and adult-use use cannabis industry hinders market growth and state adoption.

Public opinion and support for medical and adult-use cannabis has traditionally been inconsistent and varies from jurisdiction to jurisdiction.

While public opinion and support appears to be rising generally for legalizing medical and

adult-use cannabis, it remains a controversial issue subject to differing opinions surrounding the level of legalization (for example, medical cannabis as opposed to legalization in general).

Inconsistent public opinion and perception of the medical and adult-use cannabis may hinder growth and state adoption, which could have a material, adverse effect on our business, financial condition, or results of operations.

Our ability to generate revenue and be successful in the implementation of our business plan is dependent on consumer acceptance and demand of our product lines.

Our management believes the medical and adult-use cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

Acceptance of our products will depend on several factors, including availability, cost, familiarity of use, perceptions of acceptance by other people, convenience, effectiveness, safety, and reliability.

If customers do not accept our products, or if we fail to meet customers’ needs and expectations adequately, our ability to continue generating revenues could be reduced.

Consumer perception of our products may be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of medical and adult-use cannabis products.

There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the medical and adult-use cannabis market or any particular product, or consistent with earlier publicity.

Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could have a material, adverse effect on the demand for our products and our business, results of operations, financial condition, and cash flows.

Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material, adverse effect on the Company, the demand for our products, and our business, results of operations, financial condition and cash flows.

Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of cannabis in general, or our products specifically, or associating the consumption of cannabis with illness or other negative effects or events, could have such a material, adverse effect.

Such adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.

Investors in the Company who are not U.S.

be denied entry into the United States.

Because cannabis remains illegal

citizens may be denied entry into the United States.

Because cannabis remains illegal under U.S.

federal law, those individuals who are not U.S.

citizens employed at or investing in legal and licensed U.S.

cannabis companies could face detention, denial of entry or lifetime bans from the United States for their business

associations with U.S.

cannabis companies could face detention, denial of entry or lifetime bans from the United States for their business associations with U.S.

cannabis businesses.

Entry happens at the sole discretion of U.S.

Customs and Border Protection

(“ CBP ”) officers on duty, and these officers have wide latitude to ask questions to determine the

admissibility of a foreign national.

The government of Canada has started warning travelers on its website that previous use

of cannabis, or any substance prohibited by U.S.

Customs and Border Protection (“ CBP ”) officers on duty, and these officers have wide latitude to ask questions to determine the admissibility of a foreign national.

The government of Canada has started warning travelers on its website that previous use of cannabis, or any substance prohibited by U.S.

federal laws, could mean denial of entry to the United States.

financial involvement in the legal cannabis industry in Canada or in the United States could also be reason enough for U.S.

Business or financial involvement in the legal cannabis industry in Canada or in the United States could also be reason enough for U.S.

border guards to deny entry.

On September 21, 2018, CBP released a statement outlining its current position with respect to

enforcement of the laws of the United States.

It stated that Canada’s legalization of cannabis will not change CBP

enforcement of U.S.

laws regarding controlled substances and, because cannabis continues to be a controlled substance under

On September 21, 2018, CBP released a statement outlining its current position with respect to enforcement of the laws of the United States.

It stated that Canada’s legalization of cannabis will not change CBP enforcement of U.S.

laws regarding controlled substances and, because cannabis continues to be a controlled substance under U.S.

law, working in or facilitating the proliferation of the legal cannabis industry in U.S.

states where it is deemed legal

or Canada may affect admissibility to the United States.

As a result, CBP has affirmed that, employees, directors, officers,

managers, and investors of companies involved in business activities related to cannabis in the United States or Canada (such

as the Company), who are not U.S.

states where it is deemed legal or Canada may affect admissibility to the United States.

As a result, CBP has affirmed that, employees, directors, officers, managers, and investors of companies involved in business activities related to cannabis in the United States or Canada (such as the Company), who are not U.S.

citizens face the risk of being barred from entry into the United States for life.

October 9, 2018, CBP released an additional statement regarding the admissibility of Canadian citizens working in the legal

cannabis industry.

CBP stated that a Canadian citizen working in or facilitating the proliferation of the legal cannabis

industry in Canada coming into the United States for reasons unrelated to the cannabis industry will generally be admissible

to the United States;

however, if such person is found to be coming into the United States for reasons related to the

cannabis industry, such person may be deemed inadmissible.

As a cannabis business, we are subject to unfavorable

tax treatment under the Internal Revenue Code.

On October 9, 2018, CBP released an additional statement regarding the admissibility of Canadian citizens working in the legal cannabis industry.

CBP stated that a Canadian citizen working in or facilitating the proliferation of the legal cannabis industry in Canada coming into the United States for reasons unrelated to the cannabis industry will generally be admissible to the United States;

however, if such person is found to be coming into the United States for reasons related to the cannabis industry, such person may be deemed inadmissible.

As a cannabis business, we are subject to unfavorable tax treatment under the Internal Revenue Code.

Under Section 280E of the U.S.

Revenue Code of 1986 (together with the Treasury regulations promulgated and the rulings issued thereunder, the “ Code ”),

no deduction or credit is allowed for any amount paid or incurred during the taxable year in carrying on any trade or business

if the trade or business (or the activities which comprise the trade or business) consists of trafficking in controlled substances

(within the meaning of Schedules I and II of the Controlled Substances Act), which is prohibited by federal law or the law of any

state in which that trade or business is conducted.

The IRS has applied this provision to cannabis operations, prohibiting them

from deducting many expenses associated with cannabis businesses other than certain costs and expenses related to cannabis cultivation

and manufacturing operations.

Accordingly, Section 280E has a significant impact on the operations of cannabis companies, including

the Company, and an otherwise profitable business may operate at a loss, after taking into account its U.S.

Internal Revenue Code of 1986 (together with the Treasury regulations promulgated and the rulings issued thereunder, the “ Code ”), no deduction or credit is allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if the trade or business (or the activities which comprise the trade or

business) consists of trafficking in controlled substances (within the meaning of Schedules I and II of the Controlled Substances Act), which is prohibited by federal law or the law of any state in which that trade or business is conducted.

The IRS has applied this provision to cannabis operations, prohibiting them from deducting many expenses associated with cannabis businesses other than certain costs and expenses related to cannabis cultivation and manufacturing operations.

Accordingly, Section 280E has a significant impact on the operations of cannabis companies, including the Company, and an otherwise profitable business may operate at a loss, after taking into account its U.S.

income tax expenses.

If our operations are found to be

in violation of applicable money laundering legislation and our revenues are viewed as proceeds of crime, we may be unable to effect

distributions or repatriate funds to Canada.

We are subject to a variety of laws and

regulations in the U.S.

and Canada that involve money laundering, financial record-keeping 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, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended,

and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or

enforced by governmental authorities in the U.S.

If the operations of the Company or our

subsidiaries, or any proceeds thereof, any dividend distributions or any profits or revenues derived from these operations in the

United States 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 have a material, adverse

effect on the Company and, among other things, could restrict or otherwise jeopardize our ability to declare or pay dividends,

effect other distributions, or subsequently repatriate such funds back to Canada.

If our operations are found to be in violation of applicable money laundering legislation and our revenues are viewed as proceeds of crime, we may be unable to effect distributions or repatriate funds to Canada.

We are subject to a variety of laws and regulations in the U.S.

and Canada that involve money laundering, financial record-keeping 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, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended, and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

If the operations of the Company or our subsidiaries, or any proceeds thereof, any dividend distributions or any profits or revenues derived from these operations in the United States 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 have a material, adverse effect on the Company and, among other things, could restrict or otherwise jeopardize our ability to declare or pay dividends, effect other distributions, or subsequently repatriate such funds back to Canada.

Risks Related to our Business and Operations

We incurred net losses in fiscal

years 2020 and 2019 with net cash used in operating activities and cannot provide assurance as to when or if we will become profitable

and generate cash in our operating activities.

We incurred net losses in fiscal years 2021 and 2020 with net cash used in operating activities and cannot provide assurance as to when or if we will become profitable and generate cash in our operating activities.

We incurred net losses, under U.S.

accepted accounting principles, of $22,942,194 and $57,479,312 and net cash used in operating activities of $10,932,383 and $26,906,844

for the fiscal years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, we had an aggregate accumulated deficit

of $101,733,044.

generally accepted accounting principles, of $33,690,475 and $22,942,194 and net cash used in operating activities of $30,517,197 and $10,932,383 for the fiscal years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, we had an aggregate accumulated deficit of $135,423,519.

Such losses have historically required us to seek additional funding through the issuance of debt or equity securities.

In addition, we have historically experienced and may prospectively experience fluctuations in our quarterly earnings due to the nature

of our business.

Our long-term success is dependent upon among other things, achieving positive cash flows from operations and augmenting

such cash flows using external resources to satisfy our cash needs, and there is no assurance that we will be able to achieve such cash

We anticipate requiring

additional financing to operate our business and we may face difficulties acquiring additional financing on terms acceptable to

us or at all.

We may need additional capital to sustain

our operations and will likely seek further financing.

If we fail to raise additional capital, as needed, our ability to implement

our business model and strategy could be compromised.

To date, our operations and expansion of our business have been funded primarily

from cash-flow from operations as substantially supplemented by the proceeds of debt and equity financings and the sale of our

former Pennsylvania subsidiaries.

We expect to require substantial additional capital in the future primarily to fund working capital

requirements of our business, including operational expenses, operationalizing existing licenses, planned capital expenditures

including the focused development and growth of cultivation and dispensary facilities, debt service and acquisitions.

Even if we obtain financing for our near-term

operations and expansion, we expect that we will require additional capital thereafter.

Our capital needs will depend on numerous

factors including, without limitation:

In addition, we have historically experienced and may prospectively experience fluctuations in our quarterly earnings due to the nature of our business.

Our long-term success is dependent upon among other things, achieving positive cash flows from operations and augmenting such cash flows using external resources to satisfy our cash needs, and there is no assurance that we will be able to achieve such cash flows.

We anticipate requiring additional financing to operate our business and we may face difficulties acquiring additional financing on terms acceptable to us or at all.

We may need additional capital to sustain our operations and will likely seek further financing.

If we fail to raise additional capital, as needed, our ability to implement our business model and strategy could be compromised.

To date, our operations and expansion of our business have been funded primarily from cash-flow from operations as substantially supplemented by the proceeds of debt and equity financings and the sale of our former Pennsylvania subsidiaries and Arizona dispensary and cannabis licenses.

We expect to require substantial additional capital in the future primarily to fund working capital requirements of our business, including operational expenses, operationalizing existing licenses, planned capital expenditures including the focused development and growth of cultivation and dispensary facilities, debt service and acquisitions.

Even if we obtain financing for our near-term operations and expansion, we expect that we will require additional capital thereafter.

Our capital needs will depend on numerous factors including, without limitation:

(i) our profitability;

(ii) the release of competitive products by our competition;

the level of our investment in research and development;

(iv) the amount of our capital expenditures, including acquisitions;

debt service;

(iii) the level of our investment in research and development;

amount of our capital expenditures, including acquisitions;

(v) debt service;

and (vi) the taxes to which our businesses and operations are subject.

If we raise additional funds through the

issuance of equity or convertible debt securities, the percentage ownership held by our existing shareholders will be reduced and

our shareholders may experience significant dilution.

In addition, new securities may contain rights, preferences, or privileges

that are senior to those of existing securities.

If we raise additional capital by incurring debt, this will result in increased

interest expense.

If we raise additional funds through the issuance of equity securities, market fluctuations in the price of our

securities could limit our ability to obtain equity financing.

No assurance can be given that any additional

financing will be available to us, or if available, will be on terms favorable to us.

If we are unable to raise capital when needed,

our business, financial condition, and results of operations would be materially, adversely affected, and we could be forced to

reduce or discontinue our operations.

We are a holding company, and our earnings are dependent

on the earnings and distributions of our subsidiaries.

We are a holding company and essentially

all our assets are the capital stock or membership interests of our subsidiaries or management services agreements with entities

in each of the markets in which we operate, including in our core markets of Arizona, Maryland, Minnesota, New Mexico, and New

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership held by our existing shareholders will be reduced and our shareholders may experience significant dilution.

In addition, new securities may contain rights, preferences, or privileges that are senior to those of existing securities.

If we raise additional capital by incurring debt, this will result in increased interest expense.

If we raise additional funds through the issuance of equity securities, market fluctuations in the price of our securities could limit our ability to obtain equity financing.

No assurance can be given that any additional financing will be available to us, or if available, will be on terms favorable to us.

If we are unable to raise capital when needed, our business, financial condition, and results of operations would be materially, adversely affected, and we could be forced to reduce or discontinue our operations.

We are a holding company, and our earnings are dependent on the earnings and distributions of our subsidiaries.

We are a holding company and essentially all our assets are the capital stock or membership interests of our subsidiaries or management services agreements with entities in each of the markets in which we operate, including in our core markets of Maryland, Minnesota, New Mexico, and New York.

As a result, our shareholders are subject to the risks attributable to our subsidiaries.

As a holding company, we conduct

substantially all our business through our subsidiaries, which generate substantially all our revenues.

Consequently, our cash

flows and ability to complete current or desirable future enhancement opportunities are dependent on the earnings of our subsidiaries

and the distribution of those earnings to us.

The ability of these entities to pay dividends and other distributions will depend

on their operating results and will be subject to applicable laws and regulations which require that solvency and capital standards

be maintained by such companies and contractual restrictions contained in the instruments governing their debt.

In the event of

a bankruptcy, liquidation, or reorganization of any of our material subsidiaries, holders of indebtedness and trade creditors may

be entitled to payment of their claims from the assets of those subsidiaries before us.

Our subsidiaries may not be able to obtain necessary permits

and authorizations.

Our subsidiaries may not be able to obtain

or maintain the necessary licenses, permits, certificates, authorizations, or accreditations to operate their respective businesses,

or may only be able to do so at great cost.

In addition, our subsidiaries may not be able to comply fully with the wide variety

of laws and regulations applicable to the cannabis industry.

Failure to comply with or to obtain the necessary licenses, permits,

certificates, authorizations, or accreditations could result in restrictions on a subsidiary’s ability to operate in the

cannabis industry, which could have a material, adverse effect on our business, financial condition, and results of operations.

Disparate state-by-state regulatory

landscapes and the constraints related to holding cannabis licenses in various states results in operational and legal structures

for realizing the benefit from cannabis licenses that could result in materially detrimental consequences to us.

We realize, and will continue to realize,

the benefits from cannabis licenses pursuant to a number of different structures, depending on the regulatory requirements from

state-to-state, including realizing the economic benefit of cannabis licenses through management agreements.

Such agreements are

often required to comply with applicable laws and regulations or are in response to perceived risks that we determine warrant such

arrangements.

The foregoing structures present various

risks to the Company and our subsidiaries, including but not limited to the following risks, each of which could have a material,

adverse effect on our business, financial condition, and results of operations:

As a holding company, we conduct substantially all our business through our subsidiaries, which generate substantially all our revenues.

Consequently, our cash flows and ability to complete current or desirable future enhancement opportunities are dependent on the earnings of our subsidiaries and the distribution of those earnings to us.

The ability of these entities to pay dividends and other distributions will depend on their operating results and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained by such companies and contractual restrictions contained in the instruments governing their debt.

In the event of a bankruptcy, liquidation, or reorganization of any of our material subsidiaries, holders of indebtedness and trade creditors may be entitled to payment of their claims from the assets of those subsidiaries before us.

Our subsidiaries may not be able to obtain necessary permits and authorizations.

Our subsidiaries may not be able to obtain or maintain the necessary licenses, permits, certificates, authorizations, or accreditations to operate their respective businesses, or may only be able to do so at great cost.

In addition, our subsidiaries may not be able to comply fully with the wide variety of laws and regulations applicable to the cannabis industry.

Failure to comply with or to obtain the necessary licenses, permits, certificates, authorizations, or accreditations could result in restrictions on a subsidiary’s ability to operate in the cannabis industry, which could have a material, adverse effect on our business, financial condition, and results of operations.

Disparate state-by-state regulatory landscapes and the constraints related to holding cannabis licenses in various states results in operational and legal structures for realizing the benefit from cannabis licenses that could result in materially detrimental consequences to us.

We realize, and will continue to realize, the benefits from cannabis licenses pursuant to a number of different structures, depending on the regulatory requirements from state-to-state, including realizing the economic benefit of cannabis licenses through management agreements.

Such agreements are often required to comply with applicable laws and regulations or are in response to perceived risks that we determine warrant such arrangements.

The foregoing structures present various risks to the Company and our subsidiaries, including but not limited to the following risks, each of which could have a material, adverse effect on our business, financial condition, and results of operations:

● A governmental body or regulatory entity may determine that any of these structures are in violation of a legal or regulatory requirement or change such legal or regulatory requirements with the result that a management agreement structure violates such requirements (where it had not in the past).

There could be a material, adverse impact on the revenue stream Vireo receives from or on account of cannabis licenses (as we will not be the license holder, and therefore any economic benefit is received pursuant to a contractual arrangement).

● There could be a material, adverse impact on the revenue stream we receive from or on account of cannabis licenses (as we will not be the license holder, and therefore any economic benefit is received pursuant to a contractual arrangement).

If a management agreement is terminated, the Company will no longer receive any economic benefit from the applicable dispensary and/or cultivation license.

● These structures could potentially result in the funds invested by the Company being used for unintended purposes, such as to fund litigation.

If a management agreement structure is in place, Vireo will not be the license holder of the applicable state-issued cannabis license, and therefore, only have contractual rights in respect of any interest in any such license.

If the license holder fails to adhere to its contractual agreement with us, or if the license holder makes, or omits to make, decisions in respect of the license that we disagree with, Vireo will only have contractual recourse and will not have recourse to any regulatory authority.

● If a management agreement structure is in place, we will not be the license holder of the applicable state-issued cannabis license, and therefore, only have contractual rights in respect of any interest in any such license.

If the license holder fails to adhere to its contractual agreement with us, or if the license holder makes, or omits to make, decisions in respect of the license that we disagree with, we will only have contractual recourse and will not have recourse to any regulatory authority.

● The license holder may renege on its obligation to pay fees and other compensation pursuant to a management agreement or violate other provisions of these agreements.

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● The license holder may attempt to terminate the management agreement in violation of its express terms.

In any or all of the above situations,

it may be difficult and expensive for us to protect our rights through litigation, arbitration, or similar proceedings.

The success of our business depends,

in part, on our ability to execute on our acquisition strategy, to successfully integrate acquired businesses and to retain key

employees of acquired businesses.

Since the Company’s inception, we

have acquired and integrated complementary businesses, which have contributed to a significant portion of our growth.

to evaluate strategic acquisition opportunities that have the potential to support and strengthen our business, including acquisitions

in the United States, as part of our ongoing growth strategy.

In any or all of the above situations, it may be difficult and expensive for us to protect our rights through litigation, arbitration, or similar proceedings.

The success of our business depends, in part, on our ability to successfully integrate acquired businesses and to retain key employees of acquired businesses.

Since the Company’s inception, we have acquired and integrated complementary businesses, which have contributed to a significant portion of our growth.

We continue to evaluate strategic acquisition opportunities that have the potential to support and strengthen our business, including acquisitions in the United States, as part of our ongoing growth strategy.

We cannot predict the timing or size of any future acquisitions.

To successfully acquire a significant target, we may need to raise additional equity and/or indebtedness, which could increase

There can be no assurance that we will enter into definitive agreements with respect to any contemplated transaction

or that any contemplated transaction will be completed.

The investigation of acquisition candidates and the negotiation, drafting

and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention

and substantial costs for accountants, attorneys, and others.

If we fail to complete any acquisition for any reason, including

events beyond our control, the costs incurred up to that point for the proposed acquisition would not be recoverable.

Acquisitions typically require integration

of the acquired company’s estimation, project management, finance, information technology, risk management, purchasing and

fleet management functions.

We may be unable to successfully integrate an acquired business into our existing business, and an

acquired business may not be as beneficial or profitable as and when expected or at all.

Our inability to successfully integrate

new businesses in a timely and orderly manner could increase costs, reduce profits, or generate losses.

Factors affecting the successful

integration of an acquired business include, but are not limited to, the following:

To successfully acquire a significant target, we may need to raise additional equity and/or indebtedness, which could increase our debt.

There can be no assurance that we will enter into definitive agreements with respect to any contemplated transaction or that any contemplated transaction will be completed.

The investigation of acquisition candidates and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys, and others.

If we fail to complete any acquisition for any reason, including events beyond our control, the costs incurred up to that point for the proposed acquisition would not be recoverable.

Acquisitions typically require integration of the acquired company’s estimation, project management, finance, information technology, risk management, purchasing and fleet management functions.

We may be unable to successfully integrate an acquired business into our existing business, and an acquired business may not be as beneficial or profitable as and when expected or at all.

Our inability to successfully integrate new businesses in a timely and orderly manner could increase costs, reduce profits, or generate losses.

Factors affecting the successful integration of an acquired business include, but are not limited to, the following:

● we may become liable for certain liabilities of an acquired business, whether or not known to us, which could include, among others, tax liabilities, product liabilities, environmental liabilities and liabilities for employment practices, and these liabilities could be significant;

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● we may actively pursue a number of opportunities simultaneously and may encounter unforeseen expenses, complications and delays, including difficulties in employing sufficient staff and maintaining operational and management oversight.

Acquisitions involve risks that the acquired

business will not perform as expected and that business judgments concerning the value, strengths and weaknesses of the acquired

business will prove incorrect.

In addition, potential acquisition targets may be in states in which we do not currently operate,

which could result in unforeseen operating difficulties and difficulties in coordinating geographically dispersed operations, personnel,

and facilities.

In addition, if we enter new geographic markets, we may be subject to additional and unfamiliar legal and regulatory

requirements.

We cannot guarantee that we will

achieve synergies and cost savings in connection with completed or future acquisitions within the timing anticipated or at

Many of the businesses that we have acquired and may acquire in the future have unaudited financial statements that have

been prepared by management and have not been independently reviewed or audited.

We cannot guarantee that such financial

statements would not be materially different if such statements were independently reviewed or audited.

We cannot guarantee

that we will continue to acquire businesses at valuations consistent with prior acquisitions or that we will complete future

acquisitions at all.

We cannot guarantee that there will be attractive acquisition opportunities at reasonable prices, that

financing will be available or that we can successfully integrate acquired businesses into existing operations.

the results of operations from these acquisitions could, in the future, result in impairment charges for any of our

intangible assets, including goodwill or other long-lived assets, particularly if economic conditions worsen unexpectedly.

Our inability to effectively manage the integration of our completed and future acquisitions could prevent us from realizing

expected rates of return on an acquired business and could have a material and adverse effect on our financial condition,

results of operations or liquidity.

We may invest in pre-revenue companies

which may not be able to meet anticipated revenue targets in the future.

We have made and may in the future make

investments in companies with no significant sources of operating cash flow and no revenue from operations.

Our investments in

such companies will be subject to risks and uncertainties that new companies with no operating history may face.

In particular,

there is a risk that our investment in these pre-revenue companies will not be able to meet anticipated revenue targets or will

generate no revenue at all, or such underperforming pre-revenue companies may fail, which could have a material, adverse effect

on our business, prospects, revenue, results of operation and financial condition.

senior secured credit facility contains covenant restrictions that may limit our ability to operate our business.

25, 2021 , we entered into the Credit Facility.

The Credit Facility contains, and any of our other

future debt agreements may contain, covenant restrictions that limit our ability to operate our business, including restrictions

on our ability to, among other things, incur additional debt or issue guarantees, create additional liens, pay cash dividends,

repurchase stock or make other restricted payments, make certain voluntary prepayments of specified debt, engage in sale-leasebacks

involving certain assets, and enter into mergers or acquisitions or dispose of certain assets.

The Credit Facility also contains,

and any of our other future debt agreements may contain, financial covenants regarding our liquidity, minimum consolidated adjusted

EBITDA, and consolidated fixed charge coverage ratio.

As a result of these covenants, our ability to respond to changes in business

and economic conditions and engage in beneficial transactions, including to obtain additional financing as needed, may be restricted.

Furthermore, our failure to comply with our debt covenants could result in a default under our debt agreements, which could permit

the holders to accelerate our obligation to repay the debt.

If any of our debt is accelerated, we may not have sufficient funds

available to repay it.

our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial

December 31, 2020, we had $2,010,000 in aggregate principal indebtedness (refer to Notes 15 and 17) to the consolidated financial statements

included elsewhere in this Annual Report on Form 10-K) and we entered into the Credit Facility on March 25, 2021, which provides for delayed

draw term loans of up to $46 million, $26 million of which we borrowed on March 25, 2021.

substantial consolidated indebtedness may increase our vulnerability to any generally adverse economic and industry

We and our subsidiaries may, subject to the limitations in the terms of our existing and future indebtedness,

incur additional debt, secure existing or future debt, or recapitalize our debt.

Our ability to make scheduled payments of

the principal of, to pay interest on, or to refinance our current and future indebtedness, depends on our future performance,

which is subject to economic, financial, competitive, and other factors beyond our control.

Our business has not generated

positive cash flow from operations.

If this continues in the future, we may not have sufficient cash flows to service our

debt and make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or

more alternatives, such as selling assets, restructuring debt, or obtaining additional equity capital on terms that may be

onerous or highly dilutive.

Our ability to refinance our current and future indebtedness will depend on the capital markets

and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these

activities on desirable terms, which could result in a default on our debt obligations.

The nature of the medical and adult-use

cannabis industry may result in unconventional due diligence processes and acquisition terms that could have unknown and materially

detrimental consequences to us.

The uncertainty inherent in various aspects

of the medical and adult-use cannabis industry may result in what otherwise would be considered to be inadequate investment due

diligence information and uncertain legal consequences relative to arrangements affecting a target investment.

The reluctance of

banks and other financial institutions to facilitate financial transactions in the medical and adult-use cannabis industry can

result in inadequate and unverifiable financial information about target investments, as well as cash management practices that

are vulnerable to theft and fraud.

The lack of established, traditional sources of financing for industry participants can result

in unusual and uncertain arrangements affecting the ownership and obligations of a target investment.

The reluctance of lawyers

to represent industry participants in furtherance of financing and other business transactions can result in the lack of appropriate

documentation setting forth the terms of the transactions, inadequately documented transactions, and transactions that in whole

or in part are illegal under applicable state law, among other detrimental consequences.

We may have invested in, and may in the

future invest in, businesses and companies that are or may become party to legal proceedings, may have inadequate financial and

other due diligence information, may employ vulnerable cash management practices, lack written or adequate legal documents governing

significant transactions, and otherwise have known or unknown conditions that could be detrimental to our business and assets.

Our assets may be purchased with

limited representations and warranties from the sellers of those assets.

We will generally acquire assets and businesses,

after conducting our due diligence, with only limited representations and warranties from the seller regarding the quality of the

assets and the likelihood of payment.

As a result, if defects in the assets or business are subsequently discovered, we may not

be able to pursue a claim for all or any of our damages against the owners of such seller, and may be limited to asserting our

claims against the seller.

The extent of damages that we may incur as a result of such matters cannot be predicted, but potentially

could have a material, adverse effect on the value of our assets and revenue stream and, as a result, on our ability to pay dividends.

Lending by us to third parties may

be unsecured, subordinate in interest or backed by unrealizable license assets.

In connection with certain transactions,

we may also act as lender to one or more counterparties.

Certain of these loans are unsecured, which places us at a greater risk

of not receiving repayment or the equivalent value thereof.

Even for loans that are secured, there is a risk that other lenders

may have priority interest to us or that the assets of the borrower may be insufficient to satisfy the loan.

In addition, we may

have difficulty putting liens on the assets of a borrower, as the major asset is generally the cannabis license which is not transferrable

pursuant to state law.

Any inability of a borrower to repay a loan or of the Company to realize the value of secured assets could

have a material, adverse effect on our business, financial condition, or results of operations.

Competition for the acquisition and

leasing of properties suitable for the cultivation, production, and sale of medical and adult-use cannabis may impede our ability

to make acquisitions or increase the cost of these acquisitions, which could materially, adversely affect our operating results

and financial condition.

We compete for the acquisition of properties

suitable for the cultivation, production, and sale of medical and adult-use cannabis with entities engaged in agriculture and real

estate investment activities, including corporate agriculture companies, cultivators, producers, and sellers of cannabis.

competitors may prevent us from acquiring and leasing desirable properties, may cause an increase in the price we must pay for

properties or may result in us having to lease our properties on less favorable terms than we expect.

Our competitors may have

greater financial and operational resources than we do and may be willing to pay more for certain assets or may be willing to accept

more risk than we believe can be prudently managed.

In particular, larger companies may enjoy significant competitive advantages

that result from, among other things, a lower cost of capital and enhanced operating efficiencies.

Our competitors may also adopt

transaction structures similar to ours, which would decrease our competitive advantage in offering flexible transaction terms.

In addition, due to a number of factors, including but not limited to potential greater clarity of the laws and regulations governing

medical use cannabis by state and federal governments, the number of entities and the amount of funds competing for suitable investment

properties may increase, resulting in increased demand and increased prices paid for these properties.

If we pay higher prices

for properties or enter into leases for such properties on less favorable terms than we expect, our profitability and ability to

generate cash flow and make distributions to our shareholders may decrease.

Increased competition for properties may also preclude

us from acquiring those properties that would generate attractive returns.

We face security risks related to

our physical facilities and cash transfers.

The business premises of our

operating locations are targets for theft.

While we have implemented security measures at each location and continue to

monitor and improve such security measures, our cultivation, production, processing, and dispensary facilities could be

subject to break-ins, robberies, and other breaches in security.

If there were a breach in security and we fell victim to a

robbery or theft, the loss of cannabis plants, cannabis oils, cannabis flowers, cannabis products and cultivation,

production, processing, and packaging equipment could have a material, adverse effect on our business, prospects, revenue,

results of operation and financial condition.

Our business involves the movement and

transfer of cash, which is collected from dispensaries or patients/customers and deposited into our bank.

There is a risk of theft

or robbery during the transport of cash.

We have engaged security firms to provide security in the transport and movement of large

amounts of cash.

Acquisitions involve risks that the acquired business will not perform as expected and that business judgments concerning the value, strengths and weaknesses of the acquired business will prove incorrect.

In addition, potential acquisition targets may be in states in which we do not currently operate, which could result in unforeseen operating difficulties and difficulties in coordinating geographically dispersed operations, personnel, and facilities.

In addition, if we enter new geographic markets, we may be subject to additional and unfamiliar legal and regulatory requirements.

We cannot guarantee that we will achieve synergies and cost savings in connection with completed or future acquisitions within the timing anticipated or at all.

Many of the businesses that we have acquired and may acquire in the future have unaudited financial statements that have been prepared by management and have not been independently reviewed or audited.

We cannot guarantee that such financial statements would not be materially different if such statements were independently reviewed or audited.

We cannot guarantee that we will continue to acquire businesses at valuations consistent with prior acquisitions or that we will complete future acquisitions at all.

We cannot guarantee that there will be attractive acquisition opportunities at reasonable prices, that financing will be available or that we can successfully integrate acquired businesses into existing operations.

In addition, the results of operations from these acquisitions could, in the future, result in impairment charges for any of our intangible assets, including goodwill or other long-lived assets, particularly if economic conditions worsen unexpectedly.

Our inability to effectively manage the integration of our completed and future acquisitions could prevent us from realizing expected rates of return on an acquired business and could have a material and adverse effect on our financial condition, results of operations or liquidity.

Our senior secured credit facility contains covenant restrictions that may limit our ability to operate our business.

On March 25, 2021, we entered into the Credit Facility.

The Credit Facility contains, and any of our other future debt agreements may contain, covenant restrictions that limit our ability to operate our business, including restrictions on our ability to, among other things, incur additional debt or issue guarantees, create additional liens, pay cash dividends, repurchase stock or make other restricted payments, make certain voluntary prepayments of specified debt, engage in sale-leasebacks involving certain assets, and enter into mergers or acquisitions or dispose of certain assets.

The Credit Facility also contains, and any of our other future debt agreements may contain, financial covenants regarding our liquidity, minimum consolidated adjusted EBITDA, and consolidated fixed charge coverage ratio.

As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including to obtain additional financing as needed, may be restricted.

Furthermore, our failure to comply with our debt covenants could result in a default under our debt agreements, which could permit the holders to accelerate our obligation to repay the debt.

If any of our debt is accelerated, we may not have sufficient funds available to repay it.

Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

As of December 31, 2021, we had $33,250,000 in aggregate principal indebtedness (refer to Note 15) to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K) and we entered into the Credit Facility on March 25, 2021, which provides for delayed draw term loans of up to $46 million, $26 million of which we borrowed on March 25, 2021.

On November 19, 2021, we amended the Credit Facility to borrow an additional $4.2 million and we also executed a promissory note for $2 million in favor of the seller of the Baltimore, Maryland dispensary assets.

Our substantial consolidated indebtedness may increase our vulnerability to any generally adverse economic and industry conditions.

We and our subsidiaries may, subject to the limitations in the terms of our existing and future indebtedness, incur additional debt, secure existing or future debt, or recapitalize our debt.

Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our current and future indebtedness, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.

Our business has not generated positive cash flow from operations.

If this continues in the future, we may not have sufficient cash flows to service our debt and make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance our current and future indebtedness will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

The nature of the medical and adult-use cannabis industry may result in unconventional due diligence processes and acquisition terms that could have unknown and materially detrimental consequences to us.

The uncertainty inherent in various aspects of the medical and adult-use cannabis industry may result in what otherwise would be considered to be inadequate investment due diligence information and uncertain legal consequences relative to arrangements affecting a target investment.

The reluctance of banks and other financial institutions to facilitate financial transactions in the medical and adult-use cannabis industry can result in inadequate and unverifiable financial information about target investments, as well as cash management practices that are vulnerable to theft and fraud.

The lack of established, traditional sources of financing for industry participants can result in unusual and uncertain arrangements affecting the ownership and obligations of a target investment.

The reluctance of lawyers to represent industry participants in furtherance of financing and other business transactions can result in the lack of appropriate documentation setting forth the terms of the transactions, inadequately documented transactions, and transactions that in whole or in part are illegal under applicable state law, among other detrimental consequences.

We may have invested in, and may in the future invest in, businesses and companies that are or may become party to legal proceedings, may have inadequate financial and other due diligence information, may employ vulnerable cash management practices, lack written or adequate legal documents governing significant transactions, and otherwise have known or unknown conditions that could be detrimental to our business and assets.

Our assets may be purchased with limited representations and warranties from the sellers of those assets.

We will generally acquire assets and businesses, after conducting our due diligence, with only limited representations and warranties from the seller regarding the quality of the assets and the likelihood of payment.

As a result, if defects in the assets or business are subsequently discovered, we may not be able to pursue a claim for all or any of our damages against the owners of such seller, and may be limited to asserting our claims against the seller.

The extent of damages that we may incur as a result of such matters cannot be predicted, but potentially could have a material, adverse effect on the value of our assets and revenue stream and, as a result, on our ability to pay dividends.

Lending by us to third parties may be unsecured, subordinate in interest or backed by unrealizable license assets.

In connection with certain transactions, we may also act as lender to one or more counterparties.

Certain of these loans are unsecured, which places us at a greater risk of not receiving repayment or the equivalent value thereof.

Even for loans that are secured, there is a risk that other lenders may have priority interest to us or that the assets of the borrower may be insufficient to satisfy the loan.

In addition, we may have difficulty putting liens on the assets of a borrower, as the major asset is generally the cannabis license which is not transferrable pursuant to state law.

Any inability of a borrower to repay a loan or of the Company to realize the value of secured assets could have a material, adverse effect on our business, financial condition, or results of operations.

Competition for the acquisition and leasing of properties suitable for the cultivation, production, and sale of medical and adult-use cannabis may impede our ability to make acquisitions or increase the cost of these acquisitions, which could materially, adversely affect our operating results and financial condition.

We compete for the acquisition of properties suitable for the cultivation, production, and sale of medical and adult-use cannabis with entities engaged in agriculture and real estate investment activities, including corporate agriculture companies, cultivators, producers, and sellers of cannabis.

These competitors may prevent us from acquiring and leasing desirable properties, may cause an increase in the price we must pay for properties or may result in us having to lease our properties on less favorable terms than we expect.

Our competitors may have greater financial and operational resources than we do and may be willing to pay more for certain assets or may be willing to accept more risk than we believe can be prudently managed.

In particular, larger companies may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.

Our competitors may also adopt transaction structures similar to ours, which would decrease our competitive advantage in offering flexible transaction terms.

In addition, due to a number of factors, including but not limited to potential greater clarity of the laws and regulations governing medical use cannabis by state and federal governments, the number of entities and the amount of funds competing for suitable investment properties may increase, resulting in increased demand and increased prices paid for these properties.

If we pay higher prices for properties or enter into leases for such properties on less favorable terms than we expect, our profitability and ability to generate cash flow and make distributions to our shareholders may decrease.

Increased competition for properties may also preclude us from acquiring those properties that would generate attractive returns.

We face security risks related to our physical facilities and cash transfers.

The business premises of our operating locations are targets for theft.

While we have implemented security measures at each location and continue to monitor and improve such security measures, our cultivation, production, processing, and dispensary facilities could be subject to break-ins, robberies, and other breaches in security.

If there were a breach in security and we fell victim to a robbery or theft, the loss of cannabis plants, cannabis oils, cannabis flowers, cannabis products and cultivation, production, processing, and packaging equipment could have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

Our business involves the movement and transfer of cash, which is collected from dispensaries or patients/customers and deposited into our bank.

There is a risk of theft or robbery during the transport of cash.

We have engaged security firms to provide security in the transport and movement of large amounts of cash.

Employees sometimes transport cash and/or products.

While we have taken robust steps to prevent theft or robbery

of cash and products during transport, there can be no assurance that there will not be a security breach during the transport

and the movement of cash or products, involving the theft of product or cash.

We face exposure to fraudulent or

illegal activity by employees, contractors, consultants, and agents, which may subject us to investigations and actions.

We are exposed to the risk that any of

our employees, independent contractors and consultants may engage in fraudulent or other illegal activity.

Misconduct by these

parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates

one or more of the following:

While we have taken robust steps to prevent theft or robbery of cash and products during transport, there can be no assurance that there will not be a security breach during the transport and the movement of cash or products, involving the theft of product or cash.

We face exposure to fraudulent or illegal activity by employees, contractors, consultants, and agents, which may subject us to investigations and actions.

We are exposed to the risk that any of our employees, independent contractors and consultants may engage in fraudulent or other illegal activity.

Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates one or more of the following:

(i) government regulations;

(ii) manufacturing standards;

(iii) federal or state privacy laws and

(iii) federal or state privacy laws and regulations;

(iv) laws that require the true, complete, and accurate reporting of financial information or data;

or (v) other laws

or regulations.

It may not always be possible for us to identify and prevent misconduct by our employees and other third parties,

and the precautions taken by us to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks

or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance

with such laws or regulations.

We cannot provide assurance that our internal controls and compliance systems will protect us from

acts committed by our employees, agents, or business partners in violation of U.S.

or (v) other laws or regulations.

It may not always be possible for us to identify and prevent misconduct by our employees and other third parties, and the precautions taken by us to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

We cannot provide assurance that our internal controls and compliance systems will protect us from acts committed by our employees, agents, or business partners in violation of U.S.

federal or state or local laws.

actions are instituted against us, and we are not successful in defending the Company or asserting our rights, those actions could

have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary

fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of

which could have a material, adverse effect on our business, financial condition or results of operations.

We face risks related to the novelty

of the cannabis industry, and the resulting lack of information regarding comparable companies, unanticipated expenses, difficulties

and delays, and the offering of new products and services in an untested market.

As a relatively new industry, there are

not many established players in the cannabis industry whose business model we can follow or emulate.

Similarly, there is little

information about comparable companies available for potential investors to review in deciding whether to invest in the Company.

Shareholders and investors should consider,

among other factors, our prospects for success in light of the risks and uncertainties encountered by companies, like us, that

are in their early stages.

For example, unanticipated expenses and problems or technical difficulties may occur, which may result

in material delays in the operation of our business.

We may fail to successfully address these risks and uncertainties or successfully

implement our operating strategies.

If we fail to do so, it could materially harm our business to the point of having to cease

operations and could impair the value of the Subordinate Voting Shares to the point where investors may lose their entire investments.

We have committed and expect to continue

committing significant resources and capital to develop and market existing products and services and new products and services.

These products and services are relatively untested in the marketplace, and we cannot provide assurance that we will achieve market

acceptance for these products and services, or other new products and services that we may offer in the future.

Moreover, these

and other new products and services may be subject to significant competition from offerings by new and existing competitors in

the business.

In addition, new products and services may pose a variety of challenges and require us to attract additional qualified

The failure to successfully develop and market these new products and services could materially harm our business, prospects,

revenue, results of operation and financial condition.

We are dependent on the popularity

and acceptance of our brand portfolio.

Our ability to generate revenue and be

successful in the implementation of our business plan is dependent on consumer acceptance of and demand for our products.

of and demand for our products depends on several factors, including availability, cost, ease of use, familiarity of use, convenience,

effectiveness, safety, and reliability.

If these customers do not accept our products, or if such products fail to adequately meet

customers’ needs and expectations, our ability to continue generating revenues could be reduced.

We believe that establishing and

maintaining the brand identities of products is a critical aspect of attracting and expanding a large customer base.

If any such actions are instituted against us, and we are not successful in defending the Company or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment

of our operations, any of which could have a material, adverse effect on our business, financial condition or results of operations.

We face risks related to the novelty of the cannabis industry, and the resulting lack of information regarding comparable companies, unanticipated expenses, difficulties and delays, and the offering of new products and services in an untested market.

As a relatively new industry, there are not many established players in the cannabis industry whose business model we can follow or emulate.

Similarly, there is little information about comparable companies available for potential investors to review in deciding whether to invest in the Company.

Shareholders and investors should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies, like us, that are in their early stages.

For example, unanticipated expenses and problems or technical difficulties may occur, which may result in material delays in the operation of our business.

We may fail to successfully address these risks and uncertainties or successfully implement our operating strategies.

If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of the Subordinate Voting Shares to the point where investors may lose their entire investments.

We have committed and expect to continue committing significant resources and capital to develop and market existing products and services and new products and services.

These products and services are relatively untested in the marketplace, and we cannot provide assurance that we will achieve market acceptance for these products and services, or other new products and services that we may offer in the future.

Moreover, these and other new products and services may be subject to significant competition from offerings by new and existing competitors in the business.

In addition, new products and services may pose a variety of challenges and require us to attract additional qualified employees.

The failure to successfully develop and market these new products and services could materially harm our business, prospects, revenue, results of operation and financial condition.

We are dependent on the popularity and acceptance of our brand portfolio.

Our ability to generate revenue and be successful in the implementation of our business plan is dependent on consumer acceptance of and demand for our products.

Acceptance of and demand for our products depends on several factors, including availability, cost, ease of use, familiarity of use, convenience, effectiveness, safety, and reliability.

If these customers do not accept our products, or if such products fail to adequately meet customers’ needs and expectations, our ability to continue generating revenues could be reduced.

We believe that establishing and maintaining the brand identities of products is a critical aspect of attracting and expanding a large customer base.

Promotion and enhancement of brands will depend largely on success in providing high-quality products.

If customers and end

users do not perceive our products to be of high quality, or if we introduce new products or enter into new business ventures

that are not favorably received by customers and consumers, we will risk diluting brand identities and decreasing their

attractiveness to existing and potential customers.

Moreover, in order to attract and retain customers and to promote and

maintain brand equity in response to competitive pressures, we may have to increase substantially financial commitment to

creating and maintaining a distinct brand loyalty among customers.

If we incur significant expenses in an attempt to promote

and maintain brands, this could have a material, adverse effect on our business, financial condition or results of

Our business is subject to the risks

inherent in agricultural operations.

Medical and adult-use cannabis is an agricultural

If customers and end users do not perceive our products to be of high quality, or if we introduce new products or enter into new business ventures that are not favorably received by customers and consumers, we will risk diluting brand identities and decreasing their attractiveness to existing and potential customers.

Moreover, in order to attract and retain customers and to promote and maintain brand equity in response to competitive pressures, we may have to increase substantially financial commitment to creating and maintaining a distinct brand loyalty among customers.

If we incur significant expenses in an attempt to promote and maintain brands, this could have a material, adverse effect on our business, financial condition or results of operations.

Our business is subject to the risks inherent in agricultural operations.

Medical and adult-use cannabis is an agricultural product.

There are risks inherent in the cultivation business, such as insects, plant diseases, and similar agricultural risks.

Although our cultivation is substantially completed indoors under climate-controlled conditions, some cultivation is completed

outdoors and there can be no assurance that natural elements will not have a material, adverse effect on the production of our

products and, consequentially, on our business, financial condition, or results of operations.

We may encounter increasingly strict

environmental regulation in connection with our operations and the associated permitting, which may increase the expenses for cannabis

production or subject us to enforcement actions by regulatory authorities.

Our operations will be subject to environmental

regulation in the various jurisdictions in which they operate.

These regulations mandate, among other things, the maintenance of

air and water quality standards and land reclamation.

They also set forth limitations on the generation, transportation, storage,

and disposal of solid and hazardous waste.

Environmental legislation is evolving in a manner which will require stricter standards

and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects

and a heightened degree of responsibility for companies and their officers, directors, and employees.

There is no assurance that

future changes in environmental regulation, if any, will not have a material, adverse effect on our business, financial condition,

or results of operations of the Company.

Government approvals and permits are currently,

and may in the future be, required in connection with our operations.

To the extent such approvals are required and not obtained,

we may be curtailed or prohibited from our proposed production of cannabis or from proceeding with the development of our operations

as currently proposed.

We may face potential enforcement

actions if we fail to comply with applicable laws.

Failure to comply with applicable laws,

regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or

judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,

installation of additional equipment, or remedial actions.

The subsidiaries may be required to compensate those suffering loss

or damage by reason of their operations and may have civil or criminal fines or penalties imposed for violations of applicable

laws or regulations.

Amendments to current laws, regulations

and permits governing the production of cannabis, or more stringent implementation thereof, could cause increases in expenses,

capital expenditures or production costs or reduction in levels of production or require abandonment or delays in development,

and could have a material, adverse effect on our business, financial condition, or results of operations.

We face risks related to our information

technology systems, including potential cyber-attacks and security and privacy breaches.

Our use of technology is critical in our

continued operations.

We are susceptible to operational, financial and information security risks resulting from cyber-attacks

and/or technological malfunctions.

Successful cyber-attacks and/or technological malfunctions affecting us or our service providers

can result in, among other things, financial losses, the inability to process transactions, the unauthorized release of customer

information or other confidential information and reputational risk.

We have not experienced any material losses to date relating

to cyber-attacks, other information breaches or technological malfunctions.

However, there can be no assurance that we will not

incur such losses in the future.

As cybersecurity threats continue to evolve, we may be required to use additional resources to

continue to modify or enhance protective measures or to investigate and redress security vulnerabilities.

We are subject to laws, rules and regulations

in the United States and other jurisdictions relating to the collection, production, storage, transfer and use of personal data.

Although our cultivation is substantially completed indoors under climate-controlled conditions, some cultivation is completed outdoors and there can be no assurance that natural elements will not have a material, adverse effect on the production of our products and, consequentially, on our business, financial condition, or results of operations.

We may encounter increasingly strict environmental regulation in connection with our operations and the associated permitting, which may increase the expenses for cannabis production or subject us to enforcement actions by regulatory authorities.

Our operations will be subject to environmental regulation in the various jurisdictions in which they operate.

These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation.

They also set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste.

Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees.

There is no assurance that future changes in environmental regulation, if any, will not have a material, adverse effect on our business, financial condition, or results of operations of the Company.

Government approvals and permits are currently, and may in the future be, required in connection with our operations.

To the extent such approvals are required and not obtained, we may be curtailed or prohibited from our proposed production of cannabis or from proceeding with the development of our operations as currently proposed.

We may face potential enforcement actions if we fail to comply with applicable laws.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.

The subsidiaries may be required to compensate those suffering loss or damage by reason of their operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing the production of cannabis, or more stringent implementation thereof, could cause increases in expenses, capital expenditures or production costs or reduction in levels of production or require abandonment or delays in development, and could have a material, adverse effect on our business, financial condition, or results of operations.

We face risks related to our information technology systems, including potential cyber-attacks and security and privacy breaches.

Our use of technology is critical in our continued operations.

We are susceptible to operational, financial and information security risks resulting from cyber-attacks and/or technological malfunctions.

Successful cyber-attacks and/or technological malfunctions affecting us or our service providers can result in, among other things, financial losses, the inability to process transactions, the unauthorized release of customer information or other confidential information and reputational risk.

We have not experienced any material losses to date relating to cyber-attacks, other information breaches or technological malfunctions.

However, there can be no assurance that we will not incur such losses in the future.

As cybersecurity threats continue to evolve, we may be required to use additional resources to continue to modify or enhance protective measures or to investigate and redress security vulnerabilities.

We are subject to laws, rules and regulations in the United States and other jurisdictions relating to the collection, production, storage, transfer and use of personal data.

We may store and collect personal information about customers and employees.

It is our responsibility to protect that information

from privacy breaches that may occur through procedural or process failure, information technology malfunction or deliberate, unauthorized

Any such theft or privacy breach could have a material, adverse effect on our business, prospects, revenue, results

of operation and financial condition.

Additionally, our ability to execute transactions and to possess and use personal information

and data in conducting our business subjects us to legislative and regulatory burdens that may require us to notify regulators

and customers, employees, and other individuals of a data security breach.

Evolving compliance and operational requirements under

the privacy laws, rules, and regulations of jurisdictions in which we operate impose significant costs that are likely to increase

In addition, non-compliance could result in proceedings against us by governmental entities and/or the imposition of

significant fines, could negatively impact our reputation and may otherwise materially, adversely impact our business, financial

condition, and operating results.

We may be required to disclose personal

information to government or regulatory entities.

We own, manage, or provide services to

It is our responsibility to protect that information from privacy breaches that may occur through procedural or process failure, information technology malfunction or deliberate, unauthorized intrusions.

Any such theft or privacy breach could have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

Additionally, our ability to execute transactions and to possess and use personal information and data in conducting our business subjects us to legislative and regulatory burdens that may require us to notify regulators and customers, employees, and other individuals of a data security breach.

Evolving compliance and operational requirements under the privacy laws, rules, and regulations of jurisdictions in which we operate impose significant costs that are likely to increase over time.

In addition, non-compliance could result in proceedings against us by governmental entities and/or the imposition of significant fines, could negatively impact our reputation and may otherwise materially, adversely impact our business, financial condition, and operating results.

We may be required to disclose personal information to government or regulatory entities.

We own, manage, or provide services to various U.S.

state-licensed cannabis operations.

Acquiring even a minimal and/or indirect interest in a U.S.

state-licensed cannabis

business can trigger requirements to disclose investors’ personal information.

While these requirements vary by jurisdiction,

some require interest holders to apply for regulatory approval and to provide tax returns, compensation agreements, fingerprints

for background checks, criminal history records and other documents and information.

Some states require disclosures of directors,

officers, and holders of more than a certain percentage of equity of the applicant.

While certain states include exceptions for

investments in publicly traded entities, not all states do so, and some such exceptions are confined to companies traded on a U.S.

state-licensed cannabis business can trigger requirements to disclose investors’ personal information.

While these requirements vary by jurisdiction, some require interest holders to apply for regulatory approval and to provide tax returns, compensation agreements, fingerprints for background checks, criminal history records and other documents and information.

Some states require disclosures of directors, officers, and holders of more than a certain percentage of equity of the applicant.

While certain states include exceptions for investments in publicly traded entities, not all states do so, and some such exceptions are confined to companies traded on a U.S.

securities exchange.

If these regulations were to extend to the Company, investors would be required to comply with such regulations,

or face the possibility that the relevant cannabis license could be revoked or cancelled by the state licensing authority.

We face risks related to our insurance

coverage and uninsurable risks.

Our business is subject to a number of

risks and hazards generally, including adverse environmental conditions, accidents, fires, riots, civil unrest, labor disputes,

litigation and changes in the regulatory environment.

Such occurrences could result in damage to assets, personal injury or death,

environmental damage, delays in operations, monetary losses and possible legal liability.

Although we intend to continue to maintain

insurance to protect against certain risks in such amounts as we consider to be reasonable, our insurance will not cover all the

potential risks associated with our operations.

We may also be unable to maintain insurance to cover these risks at economically

feasible premiums.

If these regulations were to extend to the Company, investors would be required to comply with such regulations, or face the possibility that the relevant cannabis license could be revoked or cancelled by the state licensing authority.

We face risks related to our insurance coverage and uninsurable risks.

Our business is subject to a number of risks and hazards generally, including adverse environmental conditions, accidents, fires, riots, civil unrest, labor disputes, litigation and changes in the regulatory environment.

Such occurrences could result in damage to assets, personal injury or death, environmental damage, delays in operations, monetary losses and possible legal liability.

Although we intend to continue to maintain insurance to protect against certain risks in such amounts as we consider to be reasonable, our insurance will not cover all the potential risks associated with our operations.

We may also be unable to maintain insurance to cover these risks at economically feasible premiums.

Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability.

Moreover, insurance against risks such as environmental pollution or other hazards encountered in our operations is not generally

available on acceptable terms.

We might also become subject to liability for pollution or other hazards which we may not be insured

against or which we may elect not to insure against because of premium costs or other reasons.

Losses from these events may cause

the Company to incur significant costs that could have a material, adverse effect upon our financial performance and results of

Our reputation and ability to do

business may be negatively impacted by our suppliers’ inability to produce and ship products.

We depend on third-party suppliers to produce

and timely ship orders to us.

Some products purchased from our suppliers are resold to our customers, while others are used in

the production or packaging of our products.

These suppliers could fail to produce products to our specifications or quality standards

and may not deliver units on a timely basis.

Any changes in our suppliers’ ability to timely resolve production issues could

impact our ability to fulfill orders and could also disrupt our business due to delays in finding new suppliers.

We are dependent on key inputs, suppliers

and skilled labor for the cultivation, extraction, and production of cannabis products.

The cultivation, extraction and production

of cannabis and derivative products is dependent on a number of key inputs and their related costs, including raw materials and

supplies related to growing operations, as well as electricity, water and other local utilities.

Any significant interruption or

negative change in the availability or economics of the supply chain for key inputs, such as the raw material cost of cannabis,

could materially impact our business, financial condition, results of operations or prospects.

Some of these inputs may only be

available from a single supplier or a limited group of suppliers.

If a sole source supplier were to go out of business, we might

be unable to find a replacement for such source in a timely manner, or at all.

If a sole-source supplier were to be acquired by

a competitor of ours, that competitor may elect not to sell to the Company in the future.

Any inability to secure required supplies

and services, or to do so on appropriate terms, could have a material, adverse effect on our business, prospects, revenue, results

of operation and financial condition.

We purchase key inputs on a purchase order basis from suppliers at market prices based on

its production requirements and anticipated demand.

We believe that we will have access to a sufficient supply of the key inputs

for the foreseeable future.

Our cannabis growing operations consume considerable energy,

which makes us vulnerable to rising energy costs.

Accordingly, rising or volatile energy costs may adversely affect our business

and our ability operate profitably.

The ability to compete and grow our business will be dependent

on our continued access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts, and components.

No assurances

can be given that we will be successful in maintaining our required supply of skilled labor, equipment, parts, and components.

Moreover, insurance against risks such as environmental pollution or other hazards encountered in our operations is not generally available on acceptable terms.

We might also become subject to liability for pollution or other hazards which we may not be insured against or which we may elect not to insure against because of premium costs or other reasons.

Losses from these events may cause the Company to incur significant costs that could have a material, adverse effect upon our financial performance and results of operations.

Our reputation and ability to do business may be negatively impacted by our suppliers’ inability to produce and ship products.

We depend on third-party suppliers to produce and timely ship orders to us.

Some products purchased from our suppliers are resold to our customers, while others are used in the production or packaging of our products.

These suppliers could fail to produce products to our specifications or quality standards and may not deliver units on a timely basis.

Any changes in our suppliers’ ability to timely resolve production issues could impact our ability to fulfill orders and could also disrupt our business due to delays in finding new suppliers.

We are dependent on key inputs, suppliers and skilled labor for the cultivation, extraction, and production of cannabis products.

The cultivation, extraction and production of cannabis and derivative products is dependent on a number of key inputs and their related costs, including raw materials and supplies related to growing operations, as well as electricity, water and other local utilities.

Any significant interruption or negative change in the availability or economics of the supply chain for key inputs, such as the raw material cost of cannabis, could materially impact our business, financial condition, results of operations or prospects.

Some of these inputs may only be available from a single supplier or a limited group of suppliers.

If a sole source supplier were to go out of business, we might be unable to find a replacement for such source in a timely manner, or at all.

If a sole-source supplier were to be acquired by a competitor of ours, that competitor may elect not to sell to the Company in the future.

Any inability to secure required supplies and services, or to do so on appropriate terms, could have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

We purchase key inputs on a purchase order basis from suppliers at market prices based on its production requirements and anticipated demand.

We believe that we will have access to a sufficient supply of the key inputs for the foreseeable future.

Our cannabis growing operations consume considerable energy, which makes us vulnerable to rising energy costs.

Accordingly, rising or volatile energy costs may adversely affect our business and our ability operate profitably.

The ability to compete and grow our business will be dependent on our continued access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts, and components.

No assurances can be given that we will be successful in maintaining our required supply of skilled labor, equipment, parts, and components.

This could have a material, adverse effect on our financial results.

Our inability to attract and retain

key personnel could materially, adversely affect our business.

Our success is dependent upon the ability,

expertise, judgment, discretion and good faith of our senior management and key personnel.

We compete with other companies both

within and outside the cannabis industry to recruit and retain competent employees.

If we cannot maintain qualified employees to

meet the needs of our anticipated growth, our business and financial condition could be materially, adversely affected.

Our sales are difficult to forecast

due to limited and unreliable market data.

As a result of recent and ongoing regulatory

and policy changes in the medical and adult use cannabis industries and the effects of the COVID-19 pandemic, the market data that

is available is limited and unreliable.

We must rely largely on our own market research to forecast sales, as detailed forecasts

are not generally obtainable from other sources in the states in which our business operates.

Additionally, any market research

and projections by the Company of estimated total retail sales, demographics, demand, and similar consumer research, are based

on assumptions from limited and unreliable market data.

A failure in the demand for our products to materialize as a result of

inaccurate research and projections may have a material, adverse effect on our business, results of operations and financial condition.

We may be subject to growth-related

Our inability to attract and retain key personnel could materially, adversely affect our business.

Our success is dependent upon the ability, expertise, judgment, discretion and good faith of our senior management and key personnel.

We compete with other companies both within and outside the cannabis industry to recruit and retain competent employees.

If we cannot maintain qualified employees to meet the needs of our anticipated growth, our business and financial condition could be materially, adversely affected.

Our sales are difficult to forecast due to limited and unreliable market data.

As a result of recent and ongoing regulatory and policy changes in the medical and adult use cannabis industries and the effects of the COVID-19 pandemic, the market data that is available is limited and unreliable.

We must rely largely on our own market research to forecast sales, as detailed forecasts are not generally obtainable from other sources in the states in which our business operates.

Additionally, any market research and projections by the Company of estimated total retail sales, demographics, demand, and similar consumer research, are based on assumptions from limited and unreliable market data.

A failure in the demand for our products to materialize as a result of inaccurate research and projections may have a material, adverse effect on our business, results of operations and financial condition.

We may be subject to growth-related risks.

including capacity constraints and pressure on our internal personnel, processes, systems, and controls.

Our ability to manage

growth effectively will require us, among other things, to continue to implement and improve our operational and financial systems

and processes, and to expand, train and manage our employee base.

Our inability to manage this growth effectively and efficiently

may have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

We are currently involved in litigation,

and there may be additional litigation in which we will be involved in the future.

We are currently involved in litigation

and may become party to litigation from time to time in the future with various counterparties, including, but not limited to,

joint venture partners and other affiliates.

An adverse decision in any litigation could have a material, adverse effect on our

business, financial condition or results of operations and could result in negative publicity and reputational harm.

even if we are successful in the litigation, we may incur substantial legal fees, which could have a material, adverse effect on

our business, financial condition, or results of operations.

We face an inherent risk of product

liability claims as a manufacturer, processor and producer of products that are intended to be ingested by people.

As a cultivator, manufacturer, processor,

and distributor of products designed to be ingested by humans, we face an inherent risk of exposure to product liability claims,

regulatory action, and litigation if our products are alleged to have caused significant loss or injury.

In addition, the manufacture

and sale of our products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination.

Previously unknown adverse reactions resulting from human consumption of our products alone or in combination with other medications

or substances could occur.

Although we will continue to have quality control procedures in place, we may be subject to various

product liability claims, including, among others, that the products produced by us, or the products that are purchased by us from

third-party licensed producers, caused injury, illness, or death, include inadequate instructions for use or include inadequate

warnings concerning possible side effects or interactions with other substances.

A product liability claim or regulatory action

against us could result in increased costs, could adversely affect our reputation with our customers and consumers generally and

could have a material, adverse effect on our business, results of operations and financial condition.

There can be no assurances

that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential

We may be subject to growth-related risks, including capacity constraints and pressure on our internal personnel, processes, systems, and controls.

Our ability to manage growth effectively will require us, among other things, to continue to implement and improve our operational and financial systems and processes, and to expand, train and manage our employee base.

Our inability to manage this growth effectively and efficiently may have a material, adverse effect on our business, prospects, revenue, results of operation and financial condition.

We are currently involved in litigation, and there may be additional litigation in which we will be involved in the future.

We are currently involved in litigation and may become party to litigation from time to time in the future with various counterparties, including, but not limited to, joint venture partners and other affiliates.

An adverse decision in any litigation could have a material, adverse effect on our business, financial condition or results of operations and could result in negative publicity and reputational harm.

Furthermore, even if we are successful in the litigation, we may incur substantial legal fees, which could have a material, adverse effect on our business, financial condition, or results of operations.

We face an inherent risk of product liability claims as a manufacturer, processor and producer of products that are intended to be ingested by people.

As a cultivator, manufacturer, processor, and distributor of products designed to be ingested by humans, we face an inherent risk of exposure to product liability claims, regulatory action, and litigation if our products are alleged to have caused significant loss or injury.

In addition, the manufacture and sale of our products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination.

Previously unknown adverse reactions resulting from human consumption of our products alone or in combination with other medications or substances could occur.

Although we will continue to have quality control procedures in place, we may be subject to various product liability claims, including, among others, that the products produced by us, or the products that are purchased by us from third-party licensed producers, caused injury, illness, or death, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances.

A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with our customers and consumers

generally and could have a material, adverse effect on our business, results of operations and financial condition.

There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities.

Such insurance is expensive and may not be available in the future on acceptable terms, or at all.

The inability to

obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could

prevent or inhibit the commercialization of our potential products and have a material, adverse effect on our business, results

of operations and financial condition.

Our intellectual property may be

difficult to protect.

We rely upon certain proprietary

intellectual property, including but not limited to brands, trademarks, trade names, patents and proprietary processes.

success will depend, in part, on our ability to maintain and enhance protection over our intellectual property, know-how and

other proprietary information.

We enter into confidentiality or non-disclosure agreements with our corporate partners,

employees, consultants, outside scientific collaborators, developers, and other advisors.

These agreements generally require

that the receiving party keep confidential and not disclose to third-parties confidential information developed by the

receiving party or made known to the receiving party by us during the course of the receiving party’s relationship with

These agreements also generally provide that inventions conceived by the receiving party in the course of

rendering services to us will be our exclusive property, and we enter into assignment agreements to perfect our rights.

confidentiality, inventions, and assignment confidentiality agreements may be breached and may not effectively assign rights

to proprietary information to us.

In addition, our proprietary information could be independently discovered by competitors,

in which case we may not be able to prevent the use of such proprietary information by our competitors.

The enforcement of a

claim alleging that a party illegally obtained and was using our proprietary information could be difficult, expensive, and

time consuming and the outcome would be unpredictable.

In addition, courts outside the United States may be less willing to

protect such proprietary information.

The failure to obtain or maintain meaningful intellectual property protection could

adversely affect our competitive position.

In addition, effective future patent, trademark,

copyright, and trade secret protection may be unavailable or limited in certain countries and may be unenforceable under the laws

of certain jurisdictions.

The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our potential products and have a material, adverse effect on our business, results of operations and financial condition.

Our intellectual property may be difficult to protect.

We rely upon certain proprietary intellectual property, including but not limited to brands, trademarks, trade names, patents and proprietary processes.

Our success will depend, in part, on our ability to maintain and enhance protection over our intellectual property, know-how and other proprietary information.

We enter into confidentiality or non-disclosure agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers, and other advisors.

These agreements generally require that the receiving party keep confidential and not disclose to third-parties confidential information developed by the receiving party or made known to the receiving party by us during the course of the receiving party’s relationship with the Company.

These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property, and we enter into assignment agreements to perfect our rights.

These confidentiality, inventions, and assignment confidentiality agreements may be breached and may not effectively assign rights to proprietary information to us.

In addition, our proprietary information could be independently discovered by competitors, in which case we may not be able to prevent the use of such proprietary information by our competitors.

The enforcement of a claim alleging that a party illegally obtained and was using our proprietary information could be difficult, expensive, and time consuming and the outcome would be unpredictable.

In addition, courts outside the United States may be less willing to protect such proprietary information.

The failure to obtain or maintain meaningful intellectual property protection could adversely affect our competitive position.

In addition, effective future patent, trademark, copyright, and trade secret protection may be unavailable or limited in certain countries and may be unenforceable under the laws of certain jurisdictions.

As long as cannabis remains illegal under U.S.

federal law as a Schedule I controlled substance pursuant

to the Controlled Substances Act, the benefit of certain federal laws and protections which may be available to most businesses,

such as federal trademark and patent protection regarding the intellectual property of a business, may not be available to us.

While many states do offer the ability to protect trademarks independent of the federal government, patent protection is wholly

unavailable on a state level, and state-registered trademarks provide a lower degree of protection than would federally registered

As a result, our intellectual property may never be adequately or sufficiently protected against the use or misappropriation

by third parties.

Our failure to adequately maintain and

enhance protection over our proprietary information, as well as over unregistered intellectual property of companies that we acquire,

could have a material, adverse effect on our business, financial condition, or results of operations.

We may be exposed to infringement

or misappropriation claims by third parties, which, if determined adversely to us, could subject us to significant liabilities

and other costs.

Our success may depend on our ability to

use and develop new extraction technologies, recipes, know-how and new strains of cannabis without infringing the intellectual

property rights of third parties.

federal law as a Schedule I controlled substance pursuant to the Controlled Substances Act, the benefit of certain federal laws and protections which may be available to most businesses, such as federal trademark and patent protection regarding the intellectual property of a business, may not be available to us.

While many states do offer the ability to protect trademarks independent of the federal government, patent protection is wholly unavailable on a state level, and state-registered trademarks provide a lower degree of protection than would federally registered marks.

As a result, our intellectual property may never be adequately or sufficiently protected against the use or misappropriation by third parties.

Our failure to adequately maintain and enhance protection over our proprietary information, as well as over unregistered intellectual property of companies that we acquire, could have a material, adverse effect on our business, financial condition, or results of operations.

We may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to us, could subject us to significant liabilities and other costs.

Our success may depend on our ability to use and develop new extraction technologies, recipes, know-how and new strains of cannabis without infringing the intellectual property rights of third parties.

We cannot assure that third parties will not assert intellectual property claims against us.

We are subject to additional risks if entities licensing intellectual property to us do not have adequate rights to the licensed

If third parties assert copyright or patent infringement or violation of other intellectual property rights against

Vireo, we will be required to defend ourselves in litigation or administrative proceedings, which can be both costly and time consuming

and may significantly divert the efforts and resources of management personnel.

An adverse determination in any such litigation

or proceedings to which we may become a party could subject us to significant liability to third parties, require us to seek licenses

from third parties, require us to pay ongoing royalties or subject us to injunctions that may prohibit the development and operation

of our applications, any of which could have a material, adverse effect on our business, results of operations and financial condition.

Our products may be subject to product

recalls, which may result in expense, legal proceedings, regulatory action, loss of sales and reputation, and diversion of management

Despite our quality control procedures,

cultivators, manufacturers, and distributors of products are sometimes subject to the recall or return of their products for a

variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other

substances, packaging safety and inadequate or inaccurate labeling disclosure.

If any of our products, or any of the products that

are purchased by us from a third-party licensed producer, are recalled due to an alleged product defect or for any other reason,

we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with

We may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin, if at

We are subject to additional risks if entities licensing intellectual property to us do not have adequate rights to the licensed materials.

If third parties assert copyright or patent infringement or violation of other intellectual property rights against Goodness Growth, we will be required to defend ourselves in litigation or administrative proceedings, which can be both costly and time consuming and may significantly divert the efforts and resources of management personnel.

An adverse determination in any such litigation or proceedings to which we may become a party could subject us to significant liability to third parties, require us to seek licenses from third parties, require us to pay ongoing royalties or subject us to injunctions that may prohibit the development and operation of our applications, any of which could have a material, adverse effect on our business, results of operations and financial condition.

Our products may be subject to product recalls, which may result in expense, legal proceedings, regulatory action, loss of sales and reputation, and diversion of management attention.

Despite our quality control procedures, cultivators, manufacturers, and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure.

If any of our products, or any of the products that are purchased by us from a third-party licensed producer, are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall.

We may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin, if at all.

In addition, a product recall may require significant management attention.

Although we have detailed procedures in place

for testing our products, there can be no assurance that any quality, potency, or contamination problems will be detected in time

to avoid unforeseen product recalls, regulatory action, or lawsuits.

Additionally, if one of our significant brands were subject

to recall for any reason, the image of that brand and the Company could be harmed.

A recall could lead to decreased demand for

our products and could have a material, adverse effect on our results of operations and financial condition.

Additionally, product

recalls may lead to increased scrutiny of our operations by the FDA or other regulatory agencies, requiring further management

attention and potential legal fees and other expenses.

We may face unfavorable publicity

or consumer perception of the safety, efficacy, and quality of our cannabis products as a result of research, investigations, litigation

and publicity.

Management believes the cannabis

industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

Consumer perception of our products may be significantly influenced by scientific research or findings, regulatory

investigations, litigation, media attention and other publicity regarding the consumption of cannabis products.

no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research

findings or publicity will be favorable to the cannabis market or any particular product, or consistent with earlier

Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that is

perceived as less favorable than, or questions earlier research reports, findings or publicity could have a material, adverse

effect on the demand for our products and our business, results of operations, financial condition, and cash flows.

dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings,

litigation, media attention or other publicity, whether or not accurate or with merit, could have a material, adverse effect

on the Company, the demand for our products and our business, results of operations, financial condition and cash flows.

Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of cannabis in

general, or our products specifically, or associating the consumption of adult use cannabis with illness or other negative

effects or events, could have such a material, adverse effect.

Adverse publicity reports or other media attention could arise

even if the adverse effects associated with such products resulted from consumers’ failure to consume such products

appropriately or as directed.

In addition, the use of vape products and

vaping may pose health risks.

According to the Centers for Disease Control, vape products may contain ingredients that are known

to be toxic to humans and may contain other ingredients that may not be safe.

Because clinical studies about the safety and efficacy

of vape products have not been submitted to the FDA, consumers currently have no way of knowing whether they are safe for their

intended uses or what types or concentrations of potentially harmful substances are found in these products.

We face intense competition in a

new and rapidly growing industry by other licensed companies with more experience and financial resources than we have and by unlicensed,

unregulated participants.

We face intense competition from other

companies, some of which have longer operating histories and more financial resources and manufacturing and marketing experience

than we have.

Increased competition by larger and better-financed competitors could materially, adversely affect our business,

financial condition, and results of operations.

Because of the early stage of the industry in which we operate, we face additional

competition from new entrants.

If the number of consumers of cannabis in the states in which we operate increases, the demand for

products will increase and we expect that competition will become more intense as current and future competitors begin to offer

an increasing number of diversified products.

To remain competitive, we will require a continued high level of investment in research

and development, facilities, marketing, and sales support.

We may not have sufficient resources to maintain research and development,

facilities, marketing, and sales support efforts on a competitive basis, which could materially, adversely affect the business,

financial condition, and results of our operations.

We also face competition from illegal dispensaries

and black market sources of cannabis and cannabis products, which are unlicensed and unregulated, and which may sell products that

are deemed more desirable than ours by certain consumers, including products with higher concentrations of active ingredients,

and using delivery methods, including edibles and extract vaporizers, that we are prohibited from offering to individuals in certain

of the states in which we operate as they are not currently permitted by the laws of such states.

Any inability or unwillingness

of law enforcement authorities to enforce existing laws prohibiting the unlicensed cultivation and sale of cannabis and cannabis-based

products could result in the perpetuation of the black market for cannabis and/or have a material, adverse effect on the perception

of cannabis use.

Any or all these events could have a material, adverse effect on our business, financial condition, and results

of operations.

There are risks associated with consolidation

of the industry by well-capitalized entrants developing large-scale operations.

Currently, the cannabis industry generally

is comprised of individuals and small to medium-sized entities, like the Company;

however, the risk remains that large conglomerates

and companies who also recognize the potential for financial success through investment in this industry could strategically purchase

or assume control of larger dispensaries and cultivation facilities.

In doing so, these larger competitors could establish price

setting and cost controls which would effectively “price out” many of the individuals and small to medium sized entities

who currently make up the bulk of the participants in the varied businesses operating within and in support of the medical and

adult-use cannabis industry.

While the trend in most state laws and regulations seemingly deters this type of takeover, this industry

remains quite nascent, so what the landscape will be in the future remains largely unknown.

Synthetic products from the pharmaceutical

industry may compete with cannabis use and products.

The pharmaceutical industry may attempt

to dominate the cannabis industry, and in particular, legal cannabis, through the development and distribution of synthetic products

that emulate the effects and treatment of organic cannabis.

If they are successful, the widespread popularity of such synthetic

products could change the demand, volume, and profitability of the cannabis industry.

This could adversely affect our ability to

secure long-term profitability and success through the sustainable and profitable operation of the anticipated businesses and investment

targets and could have a material, adverse effect on our anticipated business, financial condition, and results of operations.

Our internal controls over financial

reporting may not be effective, and our independent auditors may not be able to certify as to their effectiveness, which could

have a significant and adverse effect on our business.

Although we have detailed procedures in place for testing our products, there can be no assurance that any quality, potency, or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action, or lawsuits.

Additionally, if one of our significant brands were subject to recall for any reason, the image of that brand and the Company could be harmed.

A recall could lead to decreased demand for our products and could have a material, adverse effect on our results of operations and financial condition.

Additionally, product recalls may lead to increased scrutiny of our operations by the FDA or other regulatory agencies, requiring further management attention and potential legal fees and other expenses.

We may face unfavorable publicity or consumer perception of the safety, efficacy, and quality of our cannabis products as a result of research, investigations, litigation and publicity.

Management believes the cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy and quality of the cannabis produced.

There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the cannabis market or any particular product, or consistent with earlier publicity.

Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that is perceived as less favorable than, or questions earlier research reports, findings or publicity could have a material, adverse effect on the demand for our products and our business, results of operations, financial condition, and cash flows.

Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material, adverse effect on the Company, the demand for our products and our business, results of operations, financial condition and cash flows.

Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of cannabis in general, or our products specifically, or associating the consumption of adult use cannabis with illness or other negative effects or events, could have such a material, adverse effect.

Adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.

In addition, the use of vape products and vaping may pose health risks.

According to the Centers for Disease Control, vape products may contain ingredients that are known to be toxic to humans and may contain other ingredients that may not be safe.

Because clinical studies about the safety and efficacy of vape products have not been submitted to the FDA, consumers currently have no way of knowing whether they are safe for their intended uses or what types or concentrations of potentially harmful substances are found in these products.

We face intense competition in a new and rapidly growing industry by other licensed companies with more experience and financial resources than we have and by unlicensed, unregulated participants.

We face intense competition from other companies, some of which have longer operating histories and more financial resources and manufacturing and marketing experience than we have.

Increased competition by larger and better-financed competitors could materially, adversely affect our business, financial condition, and results of operations.

Because of the early stage of the industry in which we operate, we face additional competition from new entrants.

If the number of consumers of cannabis in the states in which we operate increases, the demand for products will increase and we expect that competition will become more intense as current and future competitors begin to offer an increasing number of diversified products.

To remain competitive, we will require a continued high level of investment in research and

development, facilities, marketing, and sales support.

We may not have sufficient resources to maintain research and development, facilities, marketing, and sales support efforts on a competitive basis, which could materially, adversely affect the business, financial condition, and results of our operations.

We also face competition from illegal dispensaries and black market sources of cannabis and cannabis products, which are unlicensed and unregulated, and which may sell products that are deemed more desirable than ours by certain consumers, including products with higher concentrations of active ingredients, and using delivery methods, including edibles and extract vaporizers, that we are prohibited from offering to individuals in certain of the states in which we operate as they are not currently permitted by the laws of such states.

Any inability or unwillingness of law enforcement authorities to enforce existing laws prohibiting the unlicensed cultivation and sale of cannabis and cannabis-based products could result in the perpetuation of the black market for cannabis and/or have a material, adverse effect on the perception of cannabis use.

Any or all these events could have a material, adverse effect on our business, financial condition, and results of operations.

There are risks associated with consolidation of the industry by well-capitalized entrants developing large-scale operations.

Currently, the cannabis industry generally is comprised of individuals and small to medium-sized entities, like the Company;

however, the risk remains that large conglomerates and companies who also recognize the potential for financial success through investment in this industry could strategically purchase or assume control of larger dispensaries and cultivation facilities.

In doing so, these larger competitors could establish price setting and cost controls which would effectively “price out” many of the individuals and small to medium sized entities who currently make up the bulk of the participants in the varied businesses operating within and in support of the medical and adult-use cannabis industry.

While the trend in most state laws and regulations seemingly deters this type of takeover, this industry remains quite nascent, so what the landscape will be in the future remains largely unknown.

Synthetic products from the pharmaceutical industry may compete with cannabis use and products.

The pharmaceutical industry may attempt to dominate the cannabis industry, and in particular, legal cannabis, through the development and distribution of synthetic products that emulate the effects and treatment of organic cannabis.

If they are successful, the widespread popularity of such synthetic products could change the demand, volume, and profitability of the cannabis industry.

This could adversely affect our ability to secure long-term profitability and success through the sustainable and profitable operation of the anticipated businesses and investment targets and could have a material, adverse effect on our anticipated business, financial condition, and results of operations.

Our internal controls over financial reporting may not be effective, and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business.

We are subject to various Canadian and U.S.

and other regulatory requirements.

We will incur expenses and, to a lesser extent, diversion of our management’s time in our efforts

to comply with the Sarbanes-Oxley Act and applicable Canadian securities laws regarding internal controls over financial reporting.

internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure

controls and procedures, are designed to prevent fraud.

Any failure to implement required new or improved controls, or difficulties encountered

in their implementation could cause us to fail to meet our reporting obligations.

In addition, any testing by us conducted in connection

with Section 404 of the Sarbanes-Oxley Act and applicable Canadian securities laws, or the subsequent testing by our independent registered

public accounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be

material weaknesses or that may require prospective or retrospective changes to our consolidated financial statements or identify other

areas for further attention or improvement.

Inadequate internal controls could also cause investors to lose confidence in our reported

financial information, which could have a negative effect on the trading price of our Subordinate Voting Shares.

The existence of any

material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate

any such material weakness or significant deficiency and management may not be able to remediate any such material weakness or significant

deficiency in a timely manner.

The existence of any material weakness in our internal control over financial reporting could also result

in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting

obligations, and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely

affect our business and share price.

We identified a significant deficiency in our

internal control over financial reporting as of December 31, 2020, which has not been remediated.

A significant deficiency is a deficiency,

or a combination of deficiencies, in internal control over financial reporting, that is less severe than a material weakness yet important

enough to merit attention by those responsible for oversight of our financial reporting.

The significant deficiency was primarily attributable

to inappropriate accruals on contractor invoices received subsequent to December 31, 2020.

Management has implemented a remediation plan

as of the date of this report, and expects the deficiency will be remediated for the year ended December 31, 2021.

If we fail to remediate

this significant deficiency or experience additional material weaknesses in the future or to otherwise maintain effective financial reporting

systems and processes, we may be unable to accurately and timely report our financial results or comply with the requirements of being

a public company, which could cause the price of our Subordinate Voting Shares to decline and harm our business.

We cannot assure you

that the measures we have taken to date, and are continuing to implement, will be sufficient to avoid potential future material weaknesses

or significant deficiencies.

Moreover, we cannot be certain that we will not in the future have additional significant deficiencies or

material weaknesses in our internal control over financial reporting, or that we will successfully remediate any that we find.

the processes and systems we have developed to date may not be adequate.

Accordingly, there could continue to be a reasonable possibility that

the significant deficiency we have identified or other material weaknesses or deficiencies could result in a misstatement of our accounts

or disclosures that would result in a material misstatement of our financial statements that would not be prevented or detected on a timely

basis, or cause us to fail to meet our obligations to file periodic financial reports on a timely basis.

Any of these failures could result

in adverse consequences that could materially and adversely affect our business, including an adverse impact on the market price of our

Subordinate Voting Shares, potential action by the SEC against us, possible defaults under our debt agreements, shareholder lawsuits,

delisting of our Shares, general damage to our reputation and the diversion of significant management and financial resources.

The elimination of monetary liability

against our directors, officers, and employees under British Columbia law and the existence of indemnification rights for our obligations

to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our

directors, officers, and employees.

Our Articles contain a provision permitting

us to eliminate the personal liability of our directors to us and our shareholders for damages incurred as a director or officer

to the extent provided by British Columbia law.

We may also have contractual indemnification obligations under any employment agreements

with our officers or agreements entered into with our directors.

The foregoing indemnification obligations could result in the

Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which

we may be unable to recoup.

These provisions and the resulting costs may also discourage the Company from bringing a lawsuit against

directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation

by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit the Company

and our shareholders.

There is doubt as to the ability

to enforce judgments in Canada or under Canadian law against U.S.

reporting and other regulatory requirements.

We will incur expenses and, to a lesser extent, diversion of our management’s time in our efforts to comply with the Sarbanes-Oxley Act and applicable Canadian securities laws regarding internal controls over financial reporting.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.

Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.

In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act and applicable Canadian securities laws, or the subsequent testing by our independent registered public accounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to our consolidated financial statements or identify other areas for further attention or improvement.

Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Subordinate Voting Shares.

The existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weakness or significant deficiency and management may not be able to remediate any such material weakness or significant deficiency in a timely manner.

The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial

statements, cause us to fail to meet our reporting obligations, and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and share price.

We identified a significant deficiency in our internal control over financial reporting as of December 31, 2020, which has been remediated as of December 31, 2021.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting, that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of our financial reporting.

The significant deficiency was primarily attributable to inappropriate accruals on contractor invoices received subsequent to December 31, 2020.

We identified a material weakness in our internal control over financial reporting as of December 31, 2021, which has not been remediated ( see Item 9A to this Form 10-K for more information ).

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness was primarily attributable to the misapplication of GAAP accounting guidance surrounding the treatment of warrants issued with a Canadian dollar denominated exercise price.

Management has implemented a remediation plan as of the date of this report, and expects the material weakness will be remediated for the year ended December 31, 2022.

If we fail to remediate this material weakness or experience additional material weaknesses in the future or to otherwise maintain effective financial reporting systems and processes, we may be unable to accurately and timely report our financial results or comply with the requirements of being a public company, which could cause the price of our Subordinate Voting Shares to decline and harm our business.

We cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to avoid potential future material weaknesses.

Moreover, we cannot be certain that we will not in the future have additional material weaknesses in our internal control over financial reporting, or that we will successfully remediate any that we find.

In addition, the processes and systems we have developed to date may not be adequate.

Accordingly, there could continue to be a reasonable possibility that the significant deficiency we have identified or other material weaknesses or deficiencies could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis, or cause us to fail to meet our obligations to file periodic financial reports on a timely basis.

Any of these failures could result in adverse consequences that could materially and adversely affect our business, including an adverse impact on the market price of our Subordinate Voting Shares, potential action by the SEC against us, possible defaults under our debt agreements, shareholder lawsuits, delisting of our Shares, general damage to our reputation and the diversion of significant management and financial resources.

The elimination of monetary liability against our directors, officers, and employees under British Columbia law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees.

Our Articles contain a provision permitting us to eliminate the personal liability of our directors to us and our shareholders for damages incurred as a director or officer to the extent provided by British Columbia law.

We may also have contractual indemnification obligations under any employment agreements with our officers or agreements entered into with our directors.

The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup.

These provisions and the resulting costs may also discourage the Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit the Company and our shareholders.

There is doubt as to the ability to enforce judgments in Canada or under Canadian law against U.S.

subsidiaries, assets, and experts.

Our subsidiaries are organized under the

laws of various U.S.

All of the assets of these entities are located outside of Canada and certain of the experts that

will be retained by us or our affiliates are residents of countries other than Canada.

As a result, it may be difficult or impossible

for our shareholders to effect service within Canada upon such persons, or to realize against them in Canada upon judgments of

courts of Canada predicated upon the civil liability provisions of applicable Canadian provincial securities laws or otherwise.

Our subsidiaries are organized under the laws of various U.S.

All of the assets of these entities are located outside of Canada and certain of the experts that will be retained by us or our affiliates are residents of countries other than Canada.

As a result, it may be difficult or impossible for our shareholders to effect service within Canada upon such persons, or to

realize against them in Canada upon judgments of courts of Canada predicated upon the civil liability provisions of applicable Canadian provincial securities laws or otherwise.

There is some doubt as to the enforceability in the U.S.

by a court in original actions, or in actions to enforce judgments of

Canadian courts, of civil liabilities predicated upon such applicable Canadian provincial securities laws or otherwise.

may refuse to hear a claim based on a violation of Canadian provincial securities laws or otherwise on the grounds

that such jurisdiction is not the most appropriate forum to bring such a claim.

by a court in original actions, or in actions to enforce judgments of Canadian courts, of civil liabilities predicated upon such applicable Canadian provincial securities laws or otherwise.

A court in the U.S.

may refuse to hear a claim based on a violation of Canadian provincial securities laws or otherwise on the grounds that such jurisdiction is not the most appropriate forum to bring such a claim.

Even if a court in the U.S.

agrees to hear a claim,

it may determine that the local law in the U.S., and not Canadian law, is applicable to the claim.

If Canadian law is found to

be applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly process.

agrees to hear a claim, it may determine that the local law in the U.S., and not Canadian law, is applicable to the claim.

If Canadian law is found to be applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly process.

Certain matters of procedure will also be governed by U.S.

law in such circumstances.

Our directors and officers reside outside

Our directors and officers reside outside of Canada.

Most or all of the assets of such persons are located outside of Canada.

Therefore, it may not be possible for Company

shareholders to collect or to enforce judgments obtained in Canadian courts predicated upon the civil liability provisions of applicable

Canadian securities laws against such persons.

Moreover, it may not be possible for Company shareholders to effect service of process

within Canada upon such persons.

Courts in the United States may refuse to hear a claim based on a violation of Canadian securities

laws on the grounds that such jurisdiction is not the most appropriate forum to bring such a claim.

Even if a United States court

agrees to hear a claim, it may determine that the local law, and not Canadian law, is applicable to the claim.

If Canadian law

is found to be applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly

Our past performance may not be indicative

of our future results.

Our prior investment and operational performance

may not be indicative of our future operating results.

There can be no assurance that the historical operating results achieved

by us or our affiliates will be achieved by us, and our performance may be materially different.

Our business, financial condition,

results of operations, and cash flow may be negatively impacted by challenging global economic conditions.

Disruptions and volatility in global financial

markets and declining consumer and business confidence, including as a result of the COVID-19 pandemic, could lead to decreased

levels of consumer spending.

Our operations could be affected by the economic context should the unemployment level, interest rates

or inflation reach levels that influence consumer spending and, consequently, impact our sales and profitability.

These macroeconomic

developments could negatively impact our business, which depends on the general economic environment and levels of consumer spending.

As a result, we may not be able to maintain our existing customers or attract new customers, or we may be forced to reduce the

price of our products.

We are unable to predict the likelihood of the occurrence, duration, or severity of such disruptions in

the credit and financial markets and adverse global economic conditions.

Any general or market-specific economic downturn could

have a material, adverse effect on our business, financial condition, results of operations, and cashflow.

Epidemics and pandemics, including

the current COVID-19 pandemic, may have a significant negative effect on our business and financial results.

In December 2019, there was an outbreak

of COVID-19 in China that has since spread to most or all other regions of the world.

The outbreak was subsequently labeled as

a global pandemic by the World Health Organization in March 2020.

Although the Company’s financial condition and results

of operations have not been materially affected by the COVID-19 pandemic thus far, the Company may be affected by business interruptions

resulting from pandemics and public health emergencies, including those related to COVID-19, in the future.

An outbreak of infectious

disease, a pandemic, or a similar public health threat, such as the COVID-19 pandemic, or a fear of any of the foregoing, could

adversely affect the Company by causing operating, manufacturing, supply chain, and project development delays and disruptions,

labor shortages, travel, and shipping disruption and shutdowns (including as a result of government regulation and prevention measures).

It is unknown whether and how the Company may be affected if such a pandemic persists for an extended period of time, including

as a result of the waiver of regulatory requirements or the implementation of emergency regulations to which we are subject.

our business has been deemed essential and/or we have been permitted to continue operating our facilities in the states in which

we cultivate, process, manufacture, and sell cannabis during the pendency of the COVID-19 pandemic, there is no assurance that

our operations will continue to be deemed essential and/or will continue to be permitted to operate.

We may incur expenses or delays

relating to such events outside of our control, which could have a material, adverse effect on our business, operating results,

financial condition, and the trading price of our Subordinate Voting Shares.

Epidemics and pandemics may have adverse

impacts on our financial condition and results of operations, including, but not limited to:

Therefore, it may not be possible for Company shareholders to collect or to enforce judgments obtained in Canadian courts predicated upon the civil liability provisions of applicable Canadian securities laws against such persons.

Moreover, it may not be possible for Company shareholders to effect service of process within Canada upon such persons.

Courts in the United States may refuse to hear a claim based on a violation of Canadian securities laws on the grounds that such jurisdiction is not the most appropriate forum to bring such a claim.

Even if a United States court agrees to hear a claim, it may determine that the local law, and not Canadian law, is applicable to the claim.

If Canadian law is found to be applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly process.

Our past performance may not be indicative of our future results.

Our prior investment and operational performance may not be indicative of our future operating results.

There can be no assurance that the historical operating results achieved by us or our affiliates will be achieved by us, and our performance may be materially different.

Our business, financial condition, results of operations, and cash flow may be negatively impacted by challenging global economic conditions.

Disruptions and volatility in global financial markets and declining consumer and business confidence, including as a result of the COVID-19 pandemic, could lead to decreased levels of consumer spending.

Our operations could be affected by the economic context should the unemployment level, interest rates or inflation reach levels that influence consumer spending and, consequently, impact our sales and profitability.

These macroeconomic developments could negatively impact our business, which depends on the general economic environment and levels of consumer spending.

As a result, we may not be able to maintain our existing customers or attract new customers, or we may be forced to reduce the price of our products.

We are unable to predict the likelihood of the occurrence, duration, or severity of such disruptions in the credit and financial markets and adverse global economic conditions.

Any general or market-specific economic downturn could have a material, adverse effect on our business, financial condition, results of operations, and cashflow.

Epidemics and pandemics, including the current COVID-19 pandemic, may have a significant negative effect on our business and financial results.

In December 2019, there was an outbreak of COVID-19 in China that has since spread to most or all other regions of the world.

The outbreak was subsequently labeled as a global pandemic by the World Health Organization in March 2020.

Although the Company’s financial condition and results of operations have not been materially affected by the COVID-19 pandemic thus far, the Company may be affected by business interruptions resulting from pandemics and public health emergencies, including those related to COVID-19, in the future.

An outbreak of infectious disease, a pandemic, or a similar public health threat, such as the COVID-19 pandemic, or a fear of any of the foregoing, could adversely affect the Company by causing operating, manufacturing, supply chain, and project development delays and disruptions, labor shortages, travel, and shipping disruption and shutdowns (including as a result of government regulation and prevention measures).

It is unknown whether and how the Company may be affected if such a pandemic persists for an extended period of time, including as a result of the waiver of regulatory requirements or the implementation of emergency regulations to which we are subject.

Although our business has been deemed essential and/or we have been permitted to continue operating our facilities in the states in which we cultivate, process, manufacture, and sell cannabis during the

pendency of the COVID-19 pandemic, there is no assurance that our operations will continue to be deemed essential and/or will continue to be permitted to operate.

We may incur expenses or delays relating to such events outside of our control, which could have a material, adverse effect on our business, operating results, financial condition, and the trading price of our Subordinate Voting Shares.

Epidemics and pandemics may have adverse impacts on our financial condition and results of operations, including, but not limited to:

● We may experience significant reductions or volatility in demand for our products as customers may not be able to purchase merchandise due to illness, quarantine or government or self-imposed restrictions placed on our stores’ operations.

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Further actions may be required to improve our cash position, including but not limited to, monetizing our asset and foregoing capital expenditures and other discretionary expenses.

The extent of the impact of the COVID-19

pandemic on our operations and financial results depends on future developments and is highly uncertain due to the unknown duration

and severity of the outbreak.

The extent of the impact of the COVID-19 pandemic on our operations and financial results depends on future developments and is highly uncertain due to the unknown duration and severity of the outbreak.

The situation continues to change, and future impacts may materialize that are not yet known.

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A return on our securities is not guaranteed.

There is no guarantee that our securities

will earn any positive return in the short term or long term.

A holding of our securities is speculative and involves a high degree

of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume such risks and

who have no need for immediate liquidity in their investment.

A holding of our securities is appropriate only for holders who have

the capacity to absorb a loss of some or all of their investment.

Our voting control is concentrated given approximately

37.2% of our voting power is held by our Chief Executive Officer.

As of March 12, 2021, the holder of our

Super Voting Shares, Dr.

Kingsley, exercises in the aggregate approximately 37.2% of the voting power in respect of our

outstanding shares.

There is no guarantee that our securities will earn any positive return in the short term or long term.

A holding of our securities is speculative and involves a high degree of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment.

A holding of our securities is appropriate only for holders who have the capacity to absorb a loss of some or all of their investment.

Our voting control is concentrated given approximately 36.7% of our voting power is held by our Chief Executive Officer.

As of March 1, 2022, the holder of our Super Voting Shares, Dr.

Kingsley, exercises in the aggregate approximately 36.7% of the voting power in respect of our outstanding shares.

As a result, Dr.

Kingsley has substantial ability to control the outcome of matters submitted to our shareholders

for approval, including the election and removal of directors and any arrangement or sale of all or substantially all our assets.

Kingsley does not retain any employment with us, he will continue to have the ability to exercise the same significant

voting power.

The concentrated control through the Super

Voting Shares could delay, defer, or prevent a change of control of the Company, an arrangement involving us or a sale of all or

substantially all our assets that our other shareholders support.

Conversely, this concentrated control could allow the holder

of the Super Voting Shares to consummate such a transaction that our other shareholders do not support.

In addition, the holder

of Super Voting Shares may make long-term strategic investment decisions and take risks that may not be successful and may seriously

harm our business.

As a director and Chief Executive Officer

of the Company, Dr.

Kingsley has control over the day-to-day management and the implementation of major strategic decisions of

the Company, subject to authorization and oversight by the Board.

Kingsley has substantial ability to control the outcome of matters submitted to our shareholders for approval, including the election and removal of directors and any arrangement or sale of all or substantially all our assets.

Kingsley does not retain any employment with us, he will continue to have the ability to exercise the same significant voting power.

The concentrated control through the Super Voting Shares could delay, defer, or prevent a change of control of the Company, an arrangement involving us or a sale of all or substantially all our assets that our other shareholders support.

Conversely, this concentrated control could allow the holder of the Super Voting Shares to consummate such a transaction that our other shareholders do not support.

In addition, the holder of Super Voting Shares may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm our business.

As a director and Chief Executive Officer of the Company, Dr.

Kingsley has control over the day-to-day management and the implementation of major strategic decisions of the Company, subject to authorization and oversight by the Board.

As a Board member, Dr.

Kingsley owes a fiduciary duty to our

shareholders and is obligated to act honestly and in good faith with a view to the best interests of the Company.

As a shareholder,

Kingsley is entitled to vote his shares, and shares over which he has voting control, in his own interests, which may not always

be in the interests of the Company or our other shareholders.

Our capital structure and voting

control may cause unpredictability.

Although other Canadian companies have

dual class or multiple voting share structures, given the concentration of voting control that is held by Dr.

Kingsley, the sole

holder of the Super Voting Shares, this structure and control could result in a lower trading price for, or greater fluctuations

in, the trading price of the Subordinate Voting Shares, adverse publicity to us or other adverse consequences.

Additional issuances of Subordinate

Voting Shares, or securities convertible into Subordinate Voting Shares, may result in dilution.

We may issue additional equity or convertible

debt securities in the future, which may dilute an existing shareholder’s holdings in the Company.

Our Articles permit the

issuance of an unlimited number of Super Voting Shares, Multiple Voting Shares and Subordinate Voting Shares, and existing shareholders

will have no pre-emptive rights in connection with such further issuances.

Our Board of Directors has discretion to determine the

price and the terms of further issuances, and such terms could include rights, preferences, and privileges superior to those existing

holders of our securities.

Moreover, additional Subordinate Voting Shares will be issued by the Company on the conversion of the

Multiple Voting Shares and Super Voting Shares in accordance with their terms.

To the extent holders of our options or other convertible

securities convert or exercise their securities and sell Subordinate Voting Shares they receive, the trading price of the Subordinate

Voting Shares may decrease due to the additional amount of Subordinate Voting Shares available in the market.

Further, the Company

may issue additional securities in connection with strategic acquisitions.

The Company cannot predict the size or nature of future

issuances or the effect that future issuances and sales of Subordinate Voting Shares (or securities convertible into Subordinate

Voting Shares) will have on the market price of the Subordinate Voting Shares.

Issuances of a substantial number of additional

Subordinate Voting Shares, or the perception that such issuances could occur, may adversely affect prevailing market prices for

the Subordinate Voting Shares.

With any additional issuance of Subordinate Voting Shares, investors will suffer dilution to their

voting power and economic interest in the Company.

Sales of substantial numbers of Subordinate

Voting Shares may have an adverse effect on their market price.

Sales of a substantial number of Subordinate

Voting Shares in the public market could occur at any time either by existing holders of Subordinate Voting Shares or, after January

1, 2021, by holders of the Multiple Voting Shares, which are convertible into Subordinate Voting Shares on the satisfaction of

certain conditions.

These sales, or the market perception that the holders of a large number of Subordinate Voting Shares or Multiple

Voting Shares intend to sell Subordinate Voting Shares, could reduce the market price of the Shares.

If this occurs and continues,

it could impair our ability to raise additional capital through the sale of securities.

The market price for the Subordinate Voting Shares may

The market prices for securities of cannabis

companies generally have been volatile.

In addition, the market price for the Subordinate Voting Shares has been and may be subject

to wide fluctuations in response to numerous factors beyond our control, including, but not limited to:

Kingsley owes a fiduciary duty to our shareholders and is obligated to act honestly and in good faith

with a view to the best interests of the Company.

As a shareholder, Dr.

Kingsley is entitled to vote his shares, and shares over which he has voting control, in his own interests, which may not always be in the interests of the Company or our other shareholders.

Our capital structure and voting control may cause unpredictability.

Although other Canadian companies have dual class or multiple voting share structures, given the concentration of voting control that is held by Dr.

Kingsley, the sole holder of the Super Voting Shares, this structure and control could result in a lower trading price for, or greater fluctuations in, the trading price of the Subordinate Voting Shares, adverse publicity to us or other adverse consequences.

Additional issuances of Subordinate Voting Shares, or securities convertible into Subordinate Voting Shares, may result in dilution.

We may issue additional equity or convertible debt securities in the future, which may dilute an existing shareholder’s holdings in the Company.

Our Articles permit the issuance of an unlimited number of Super Voting Shares, Multiple Voting Shares and Subordinate Voting Shares, and existing shareholders will have no pre-emptive rights in connection with such further issuances.

Our Board of Directors has discretion to determine the price and the terms of further issuances, and such terms could include rights, preferences, and privileges superior to those existing holders of our securities.

Moreover, additional Subordinate Voting Shares will be issued by the Company on the conversion of the Multiple Voting Shares and Super Voting Shares in accordance with their terms.

To the extent holders of our options or other convertible securities convert or exercise their securities and sell Subordinate Voting Shares they receive, the trading price of the Subordinate Voting Shares may decrease due to the additional amount of Subordinate Voting Shares available in the market.

Further, the Company may issue additional securities in connection with strategic acquisitions.

The Company cannot predict the size or nature of future issuances or the effect that future issuances and sales of Subordinate Voting Shares (or securities convertible into Subordinate Voting Shares) will have on the market price of the Subordinate Voting Shares.

Issuances of a substantial number of additional Subordinate Voting Shares, or the perception that such issuances could occur, may adversely affect prevailing market prices for the Subordinate Voting Shares.

With any additional issuance of Subordinate Voting Shares, investors will suffer dilution to their voting power and economic interest in the Company.

Sales of substantial numbers of Subordinate Voting Shares may have an adverse effect on their market price.

Sales of a substantial number of Subordinate Voting Shares in the public market could occur at any time either by existing holders of Subordinate Voting Shares or by holders of the Multiple Voting Shares, which are convertible into Subordinate Voting Shares on the satisfaction of certain conditions.

These sales, or the market perception that the holders of a large number of Subordinate Voting Shares or Multiple Voting Shares intend to sell Subordinate Voting Shares, could reduce the market price of the Shares.

If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities.

The market price for the Subordinate Voting Shares may be volatile.

The market prices for securities of cannabis companies generally have been volatile.

In addition, the market price for the Subordinate Voting Shares has been and may be subject to wide fluctuations in response to numerous factors beyond our control, including, but not limited to:

● actual or anticipated fluctuations in our results of operations;

● recommendations by securities research analysts;

changes in the economic performance or market valuations of companies in the industry in which

● changes in the economic performance or market valuations of companies in the industry in which we operate;

● addition or departure of our executive officers and other key personnel;

release or expiration of transfer restrictions on outstanding Multiple Voting Shares or Subordinate

Voting Shares;

● release or expiration of transfer restrictions on outstanding Multiple Voting Shares or Subordinate Voting Shares;

● sales or expected sales of additional Subordinate Voting Shares;

operating and financial performance that deviates from the expectations of management, securities

analysts or investors;

● operating and financial performance that deviates from the expectations of management, securities analysts or investors;

● regulatory changes affecting our industry generally and/or our business and operations;

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● fluctuations in the costs of vital production materials and services;

changes in global financial markets, global economies, and general market conditions, such as interest

rates and pharmaceutical product price volatility;

significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital

commitments by or involving us or our competitors;

operating and share price performance of other companies that investors deem comparable to us or

from a lack of market comparable companies;

news reports relating to trends, concerns, technological or competitive developments, regulatory

changes and other related issues in our industry or target markets.

Financial markets have at times historically

experienced significant price and volume fluctuations that:

(i) have especially affected the market prices of equity securities

of companies and (ii) have often been unrelated to the operating performance, underlying asset values or prospects of such companies.

Accordingly, the market price of the Subordinate Voting Shares from time to time may decline even if our operating results, underlying

asset values and prospects have not changed.

Additionally, these factors, as well as other related factors, may cause decreases

in asset values that may result in impairment losses to us.

There can be no assurance that further fluctuations in price and volume

of Subordinate Voting Shares traded will not occur.

If increased levels of volatility and market turmoil continue, our operations

could be adversely impacted, and the trading price of the Subordinate Voting Shares may be materially, adversely affected.

A decline in the price or trading

volume of the Subordinate Voting Shares could affect our ability to raise further capital and adversely impact our ability to continue

A prolonged decline in the price or trading

volume of the Subordinate Voting Shares could result in a reduction in the liquidity of the Subordinate Voting Shares and a reduction

in our ability to raise capital.

Because a significant portion of our operations have been and may continue to be financed through

the sale of equity securities, a decline in the price or trading volume of our Subordinate Voting Shares could be especially detrimental

to our liquidity and our operations.

Such reductions may force us to reallocate funds from other planned uses and may have a material,

adverse effect on our business plan and operations, including our ability to operationalize existing licenses and complete planned

capital expenditures.

If the price or trading volume of our Subordinate Voting Shares declines, there can be no assurance that

we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

If we are unable

to raise sufficient capital in the future, we may not have the resources to continue our normal operations.

If securities or industry analysts

do not publish or cease publishing research or reports or publish misleading, inaccurate, or unfavorable research about us, our

business or our market, our share price and trading volume could decline.

The trading market for our Subordinate

Voting Shares may be influenced by the research and reports that securities or industry analysts publish about us, our business,

our market, or our competitors.

If no or few securities or industry analysts cover our Company, the trading price and volume of

our Subordinate Voting Shares would likely be negatively impacted.

If one or more of the analysts who covers us downgrades our

Subordinate Voting Shares or publishes inaccurate or unfavorable research about our business, or provides more favorable relative

recommendations about our competitors, the price of our Subordinate Voting Shares would likely decline.

If one or more of these

analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Subordinate Voting Shares could decrease,

which could cause our share price or trading volume to decline.

An investor may face liquidity risks

with an investment in our Subordinate Voting Shares.

There is a significant liquidity risk associated

with an investment in our Subordinate Voting Shares.

The Subordinate Voting Shares currently trade on the Canadian Securities Exchange

and are quoted on the OTCQX tier of the OTC Markets in the United States.

We cannot predict at what prices the Subordinate Voting

Shares will continue to trade, and there is no assurance that an active trading market will be sustained.

The Subordinate Voting

Shares do not currently trade on any U.S.

● changes in global financial markets, global economies, and general market conditions, such as interest rates and pharmaceutical product price volatility;

● significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by or involving us or our competitors;

● operating and share price performance of other companies that investors deem comparable to us or from a lack of market comparable companies;

● news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in our industry or target markets.

Financial markets have at times historically experienced significant price and volume fluctuations that:

(i) have especially affected the market prices of equity securities of companies and (ii) have often been unrelated to the operating performance, underlying asset values or prospects of such companies.

Accordingly, the market price of the Subordinate Voting Shares from time to time may decline even if our operating results, underlying asset values and prospects have not changed.

Additionally, these factors, as well as other related factors, may cause decreases in asset values that may result in impairment losses to us.

There can be no assurance that further fluctuations in price and volume of Subordinate Voting Shares traded will not occur.

If increased levels of volatility and market turmoil continue, our operations could be adversely impacted, and the trading price of the Subordinate Voting Shares may be materially, adversely affected.

A decline in the price or trading volume of the Subordinate Voting Shares could affect our ability to raise further capital and adversely impact our ability to continue operations.

A prolonged decline in the price or trading volume of the Subordinate Voting Shares could result in a reduction in the liquidity of the Subordinate Voting Shares and a reduction in our ability to raise capital.

Because a significant portion of our operations have been and may continue to be financed through the sale of equity securities, a decline in the price or trading volume of our Subordinate Voting Shares could be especially detrimental to our liquidity and our operations.

Such reductions may force us to reallocate funds from other planned uses and may have a material, adverse effect on our business plan and operations, including our ability to operationalize existing licenses and complete planned capital expenditures.

If the price or trading volume of our Subordinate Voting Shares declines, there can be no assurance that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

If we are unable to raise sufficient capital in the future, we may not have the resources to continue our normal operations.

If securities or industry analysts do not publish or cease publishing research or reports or publish misleading, inaccurate, or unfavorable research about us, our business or our market, our share price and trading volume could decline.

The trading market for our Subordinate Voting Shares may be influenced by the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors.

If no or few securities or industry analysts

cover our Company, the trading price and volume of our Subordinate Voting Shares would likely be negatively impacted.

If one or more of the analysts who covers us downgrades our Subordinate Voting Shares or publishes inaccurate or unfavorable research about our business, or provides more favorable relative recommendations about our competitors, the price of our Subordinate Voting Shares would likely decline.

If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Subordinate Voting Shares could decrease, which could cause our share price or trading volume to decline.

An investor may face liquidity risks with an investment in our Subordinate Voting Shares.

There is a significant liquidity risk associated with an investment in our Subordinate Voting Shares.

The Subordinate Voting Shares currently trade on the Canadian Securities Exchange and are quoted on the OTCQX tier of the OTC Markets in the United States.

We cannot predict at what prices the Subordinate Voting Shares will continue to trade, and there is no assurance that an active trading market will be sustained.

The Subordinate Voting Shares do not currently trade on any U.S.

national securities exchange.

In the event the Subordinate Voting Shares begin trading

national securities exchange, we cannot predict at what prices the Subordinate Voting Shares will trade and there is

no assurance that an active trading market will develop or be sustained.

Trading in securities quoted on the OTC

Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have little

to do with our operations or business prospects.

This volatility could depress the market price of Subordinate Voting Shares for

reasons unrelated to operating performance.

In the event the Subordinate Voting Shares begin trading on any U.S.

national securities exchange, we cannot predict at what prices the Subordinate Voting Shares will trade and there is no assurance that an active trading market will develop or be sustained.

Trading in securities quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have little to do with our operations or business prospects.

This volatility could depress the market price of Subordinate Voting Shares for reasons unrelated to operating performance.

Moreover, the OTC Markets is not a U.S.

national securities exchange, and trading of

securities on the OTC Markets is often more sporadic than the trading of securities listed on a U.S.

national securities exchange

like the Nasdaq or the NYSE.

These factors may result in investors having difficulty reselling Subordinate Voting Shares on the

We are subject to increased costs

as a result of being a public company in Canada and the United States.

As a public company both in Canada and

the United States, we are subject to the reporting requirements, rules and regulations under the applicable Canadian and United

States securities laws and rules of stock exchange(s) on which our securities may be listed.

There are increased costs associated

with legal, accounting, and other expenses related to such regulatory compliance.

Securities legislation and the rules and policies

of the Canadian Securities Exchange require listed companies to, among other things, adopt corporate governance and related practices,

and to continuously prepare and disclose material information, all of which add to a company’s legal and financial compliance

We may also elect to devote greater resources than we otherwise would have on communication and other activities typically

considered important by publicly traded companies.

We do not intend to pay dividends

on our Shares and, consequently, the ability of investors to achieve a return on their investment will depend entirely on appreciation

in the price of our Subordinate Voting Shares.

We have never declared or paid any cash

dividend on our Shares and do not currently intend to do so in the foreseeable future.

We currently anticipate that we will retain

future earnings, if any, for the development, operation and expansion of our business and do not anticipate declaring or paying

any cash dividends in the foreseeable future.

Therefore, the success of an investment in our Subordinate Voting Shares will depend

upon any future appreciation in their value.

There is no guarantee that our Subordinate Voting Shares will appreciate in value

or even maintain the price at which they were purchased.

We are eligible to be treated as

an “emerging growth company” as defined in the JOBS Act and our election to delay adoption of new or revised accounting

standards applicable to public companies may result in our financial statements not being comparable to those of some other public

As a result of this and other reduced disclosure requirements applicable to emerging growth companies, the Subordinate

Voting Shares may be less attractive to investors.

We are an “emerging growth company,”

as defined in the JOBS Act.

Under the JOBS Act, emerging growth companies may take advantage of certain reduced disclosures and

may, as hawse have, elect to delay adopting new or revised accounting standards until such time as those standards apply to private

companies, which may result in our financial statements not being comparable to those of some other public companies.

For as long as we continue to be an emerging

growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies

that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of

Section 404 of the Sarbanes-Oxley Act of 2002, (2) reduced disclosure obligations regarding executive compensation in our periodic

reports and proxy statements, and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation

and shareholder approval of any golden parachute payments not previously approved.

We could be an emerging growth company for up

to five years, although circumstances could cause the Company to lose that status earlier, including if the market value of the

Subordinate Voting Shares held by non-affiliates exceeds $700 million as of June 30, 2022, or if we have total annual gross revenue

of $1.07 billion or more during any fiscal year before that time, in which case we would no longer be an emerging growth company

as of the following December 31.

Additionally, if we issue more than $1.0 billion in non-convertible debt during any three-year

period before June 30, 2022, we will cease to be an emerging growth company immediately.

We cannot predict if investors will find

the Subordinate Voting Shares less attractive because we may rely on these exemptions.

If some investors find the Subordinate Voting

Shares less attractive as a result, there may be a less active trading market for the Subordinate Voting Shares, and the share

price may be more volatile.

Our shareholders are subject to extensive

governmental regulation and, if a shareholder is found unsuitable by one of our licensing authorities, that shareholder would not

be able to beneficially own our securities.

Our shareholders may also be required to provide information that is requested by licensing

authorities and we have the right, under certain circumstances, to redeem a shareholder’s securities;

we may be forced to

use our cash or incur debt to fund such redemption of our securities.

The Company is, subject to certain conditions,

entitled to redeem its securities held by certain shareholders in order to permit the Company to comply with applicable licensing

The purpose of the redemption right is to provide the Company with a means of protecting itself from having a shareholder

(an “ Unsuitable Person ”) with an ownership interest of five percent (5%) or more of the Company’s issued

and outstanding shares (calculated on as-converted to Subordinate Voting Shares basis):

who a governmental authority granting licenses to the Company (including to any subsidiary) has determined to be unsuitable to own shares, or

whose ownership of our securities may result in the loss, suspension or revocation (or similar action) with respect to any licenses relating to the conduct of our business relating to the cultivation, processing or dispensing of cannabis or cannabis-derived products in the United States or in the Company being unable to obtain any new licenses in the course of its business, in each case including, but not limited to, as a result of such person’s failure to apply for a suitability review from or to otherwise fail to comply with the requirements of a governmental authority, as determined by the Board of Directors in its sole discretion after consultation with legal counsel and, if a license application has been filed, after consultation with the applicable governmental authority.

In the event a shareholder’s background

or status jeopardizes our current or proposed licensure, we may be required to redeem such shareholder’s securities in order

to continue our operations or obtain licenses in the future.

This redemption may divert our cash resources from other productive

uses and require us to obtain additional financing which, if in the form of equity financing, would be dilutive to our shareholders.

national securities exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a U.S.

national securities exchange like the Nasdaq or the NYSE.

These factors may result in investors having difficulty reselling Subordinate Voting Shares on the OTC Markets.

We are subject to increased costs as a result of being a public company in Canada and the United States.

As a public company both in Canada and the United States, we are subject to the reporting requirements, rules and regulations under the applicable Canadian and United States securities laws and rules of stock exchange(s) on which our securities may be listed.

There are increased costs associated with legal, accounting, and other expenses related to such regulatory compliance.

Securities legislation and the rules and policies of the Canadian Securities Exchange require listed companies to, among other things, adopt corporate governance and related practices, and to continuously prepare and disclose material information, all of which add to a company’s legal and financial compliance costs.

We may also elect to devote greater resources than we otherwise would have on communication and other activities typically considered important by publicly traded companies.

We do not intend to pay dividends on our Shares and, consequently, the ability of investors to achieve a return on their investment will depend entirely on appreciation in the price of our Subordinate Voting Shares.

We have never declared or paid any cash dividend on our Shares and do not currently intend to do so in the foreseeable future.

We currently anticipate that we will retain future earnings, if any, for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future.

Therefore, the success of an investment in our Subordinate Voting Shares will depend upon any future appreciation in their value.

There is no guarantee that our Subordinate Voting Shares will appreciate in value or even maintain the price at which they were purchased.

We are eligible to be treated as an “emerging growth company” as defined in the JOBS Act and our election to delay adoption of new or revised accounting standards applicable to public companies may result in our financial statements not being comparable to those of some other public companies.

As a result of this and other reduced disclosure requirements applicable to emerging growth companies, the Subordinate Voting Shares may be less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act.

Under the JOBS Act, emerging growth companies may take advantage of certain reduced disclosures and may, as hawse have, elect to delay adopting new or revised

accounting standards until such time as those standards apply to private companies, which may result in our financial statements not being comparable to those of some other public companies.

For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We could be an emerging growth company for up to five years, although circumstances could cause the Company to lose that status earlier, including if the market value of the Subordinate Voting Shares held by non-affiliates exceeds $700 million as of June 30, 2022, or if we have total annual gross revenue of $1.07 billion or more during any fiscal year before that time, in which case we would no longer be an emerging growth company as of the following December 31.

Additionally, if we issue more than $1.0 billion in non-convertible debt during any three-year period before June 30, 2022, we will cease to be an emerging growth company immediately.

We cannot predict if investors will find the Subordinate Voting Shares less attractive because we may rely on these exemptions.

If some investors find the Subordinate Voting Shares less attractive as a result, there may be a less active trading market for the Subordinate Voting Shares, and the share price may be more volatile.

Our shareholders are subject to extensive governmental regulation and, if a shareholder is found unsuitable by one of our licensing authorities, that shareholder would not be able to beneficially own our securities.

Our shareholders may also be required to provide information that is requested by licensing authorities and we have the right, under certain circumstances, to redeem a shareholder’s securities;

we may be forced to use our cash or incur debt to fund such redemption of our securities.

The Company is, subject to certain conditions, entitled to redeem its securities held by certain shareholders in order to permit the Company to comply with applicable licensing regulations.

The purpose of the redemption right is to provide the Company with a means of protecting itself from having a shareholder (an “ Unsuitable Person ”) with an ownership interest of five percent (5%) or more of the Company’s issued and outstanding shares (calculated on as-converted to Subordinate Voting Shares basis):

(i) who a governmental authority granting licenses to the Company (including to any subsidiary) has determined to be unsuitable to own shares, or

(ii) whose ownership of our securities may result in the loss, suspension or revocation (or similar action) with respect to any licenses relating to the conduct of our business relating to the cultivation, processing or dispensing of cannabis or cannabis-derived products in the United States or in the Company being unable to obtain any new licenses in the course of its business, in each case including, but not limited to, as a result of such person’s failure to apply for a suitability review from or to otherwise fail to comply with the requirements of a governmental authority, as determined by the Board of Directors in its sole discretion after consultation with legal counsel and, if a license application has been filed, after consultation with the applicable governmental authority.

In the event a shareholder’s background or status jeopardizes our current or proposed licensure, we may be required to redeem such shareholder’s securities in order to continue our operations or obtain licenses in the future.

This redemption may divert our cash resources from other productive uses and require us to obtain additional financing which, if in the form of equity financing, would be dilutive to our shareholders.

Further, any debt financing may involve additional restrictive covenants and further leveraging of our fixed assets.

The inability

to obtain additional financing to redeem an Unsuitable Person’s securities may result in the loss of a current or potential

The inability to obtain additional financing to redeem an Unsuitable Person’s securities may result in the loss of a current or potential license.

Certain Tax Risks

THE FOLLOWING IS A DISCUSSION OF CERTAIN

MATERIAL TAX RISKS ASSOCIATED WITH THE ACQUISITION AND OWNERSHIP OF SHARES.

THIS REPORT DOES NOT DISCUSS RISKS ASSOCIATED WITH

ANY APPLICABLE STATE, PROVINCIAL, LOCAL OR FOREIGN TAX LAWS.

THE TAX RELATED INFORMATION IN THIS REPORT DOES NOT CONSTITUTE TAX

ADVICE AND IS FOR INFORMATIONAL PURPOSES ONLY.

FOR ADVICE ON TAX LAWS APPLICABLE TO A SHAREHOLDER’S INDIVIDUAL TAX SITUATIONS,

SHAREHOLDERS SHOULD SEEK THE ADVICE OF THEIR TAX ADVISORS.

NO REPRESENTATION OR WARRANTY OF ANY KIND IS MADE BY US OR ANY OF THE

BOARD OF DIRECTORS, OFFICERS, LEGAL COUNSEL, OTHER AGENTS OR AFFILIATES WITH RESPECT TO THE TAX TREATMENT APPLICABLE TO ANY PERSON

WHO ACQUIRES SHARES.

EACH INVESTOR IS URGED TO REVIEW THE REPORT IN ITS ENTIRETY AND TO CONSULT HIS OR HER OWN TAX ADVISOR WITH

RESPECT TO THE FEDERAL, STATE, PROVINCIAL, LOCAL AND FOREIGN TAX CONSEQUENCES ARISING IN CONNECTION WITH THE ACQUISITION AND OWNERSHIP

We are subject to Canadian and United States tax on our

worldwide income.

We are deemed to be a resident of Canada

for Canadian federal income tax purposes by virtue of being organized under the laws of a Province of Canada.

Accordingly, we are

subject to Canadian taxation on our worldwide income, in accordance with the rules in the Tax Act generally applicable to corporations

resident in Canada.

Notwithstanding that we are deemed to be

a resident of Canada for Canadian federal income tax purposes, we are treated as a United States corporation for United States

federal income tax purposes, pursuant to Section 7874(b) of the Code, and will be subject to United States federal income tax on

our worldwide income.

As a result, we are subject to taxation both in Canada and the United States, which could have a material,

adverse effect on our business, financial condition, or results of operations.

Dispositions of Shares are subject to Canadian and/or

United States tax.

Dispositions of Shares are subject to Canadian

THE FOLLOWING IS A DISCUSSION OF CERTAIN MATERIAL TAX RISKS ASSOCIATED WITH THE ACQUISITION AND OWNERSHIP OF SHARES.

THIS REPORT DOES NOT DISCUSS RISKS ASSOCIATED WITH ANY APPLICABLE STATE, PROVINCIAL, LOCAL OR FOREIGN TAX LAWS.

THE TAX RELATED INFORMATION IN THIS REPORT DOES NOT CONSTITUTE TAX ADVICE AND IS FOR INFORMATIONAL

PURPOSES ONLY.

FOR ADVICE ON TAX LAWS APPLICABLE TO A SHAREHOLDER’S INDIVIDUAL TAX SITUATIONS, SHAREHOLDERS SHOULD SEEK THE ADVICE OF THEIR TAX ADVISORS.

NO REPRESENTATION OR WARRANTY OF ANY KIND IS MADE BY US OR ANY OF THE BOARD OF DIRECTORS, OFFICERS, LEGAL COUNSEL, OTHER AGENTS OR AFFILIATES WITH RESPECT TO THE TAX TREATMENT APPLICABLE TO ANY PERSON WHO ACQUIRES SHARES.

EACH INVESTOR IS URGED TO REVIEW THE REPORT IN ITS ENTIRETY AND TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE FEDERAL, STATE, PROVINCIAL, LOCAL AND FOREIGN TAX CONSEQUENCES ARISING IN CONNECTION WITH THE ACQUISITION AND OWNERSHIP OF SHARES.

We are subject to Canadian and United States tax on our worldwide income.

We are deemed to be a resident of Canada for Canadian federal income tax purposes by virtue of being organized under the laws of a Province of Canada.

Accordingly, we are subject to Canadian taxation on our worldwide income, in accordance with the rules in the Tax Act generally applicable to corporations resident in Canada.

Notwithstanding that we are deemed to be a resident of Canada for Canadian federal income tax purposes, we are treated as a United States corporation for United States federal income tax purposes, pursuant to Section 7874(b) of the Code, and will be subject to United States federal income tax on our worldwide income.

As a result, we are subject to taxation both in Canada and the United States, which could have a material, adverse effect on our business, financial condition, or results of operations.

Dispositions of Shares are subject to Canadian and/or United States tax.

Dispositions of Shares are subject to Canadian tax.

In addition, dispositions of Shares by U.S.

2 unchanged sentences

Holders (including, if we are treated as a USRPHC, as defined below) are subject to U.S.

For purposes of this discussion,

For purposes of this discussion, a “ U.S.

Holder ” is a holder who, for U.S.

federal income tax purposes, is a beneficial owner of the shares

and is (i) an individual who is a citizen or resident of the United States;

(ii) a corporation, or other entity taxable as a corporation,

created or organized in or under the laws of the United States, any state therein or the District of Columbia;

(iii) an estate

the income of which is subject to U.S.

federal income tax purposes, is a beneficial owner of the shares and is (i) an individual who is a citizen or resident of the United States;

(ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia;

(iii) an estate the income of which is subject to U.S.

federal income taxation regardless of its source;

or (iv) a trust if (1) a U.S.

able to exercise primary supervision over the administration of the trust and one or more U.S.

persons have authority to control

all substantial decisions of the trust or (2) the trust has a valid election in effect to be treated as a U.S.

person under applicable

Treasury regulations.

court is able to exercise primary supervision over the administration of the trust and one or more U.S.

persons have authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect to be treated as a U.S.

person under applicable Treasury regulations.

For purposes of this discussion, a “Non-U.S.

holder” is a beneficial owner of the shares other

holder” is a beneficial owner of the shares other than a U.S.

Holder or partnership.

Although we do not intend to pay

dividends on our Shares, any such dividends would be subject to Canadian and/or United States withholding tax.

It is currently not anticipated that we will pay any dividends

on any of our Shares in the foreseeable future.

To the extent dividends are paid on our

Shares, dividends received by shareholders who are residents of Canada for purposes of the Tax Act (and Non-U.S.

Holders for purposes

of the Code) will be subject to U.S.

Although we do not intend to pay dividends on our Shares, any such dividends would be subject to Canadian and/or United States withholding tax.

It is currently not anticipated that we will pay any dividends on any of our Shares in the foreseeable future.

To the extent dividends are paid on our Shares, dividends received by shareholders who are residents of Canada for purposes of the Tax Act (and Non-U.S.

Holders for purposes of the Code) will be subject to U.S.

withholding tax.

Any such dividends may not qualify for a reduced rate of withholding tax

under the Canada-United States tax treaty.

Any such dividends may not qualify for a reduced rate of withholding tax under the Canada-United States tax treaty.

In addition, a Canadian foreign tax credit or a deduction in respect of such U.S.

taxes paid may not be available.

withholding taxes paid may not be available.

Dividends received by U.S.

not be subject to U.S.

Holders will not be subject to U.S.

withholding tax but will be subject to Canadian withholding tax.

Dividends paid by us will be characterized

Dividends paid by us will be characterized as U.S.

source income for purposes of the foreign tax credit rules under the Code.

Accordingly, U.S.

Holders may not be able to

claim a credit for any Canadian tax withheld unless, depending on the circumstances, they have other foreign source income that

is subject to a low or zero rate of foreign tax.

Dividends received by shareholders that

are neither Canadian nor U.S.

Holders may not be able to claim a credit for any Canadian tax withheld unless, depending on the circumstances, they have other foreign source income that is subject to a low or zero rate of foreign tax.

Dividends received by shareholders that are neither Canadian nor U.S.

Holders will be subject to U.S.

withholding tax and will also be subject to Canadian withholding

withholding tax and will also be subject to Canadian withholding tax.

These dividends may not qualify for a reduced rate of U.S.

withholding tax under any income tax treaty otherwise applicable

to a shareholder of the Company, subject to examination of the relevant tax treaty.

These dividends may, however, qualify for a

reduced rate of Canadian withholding tax under any income tax treaty otherwise applicable to a shareholder of the Company, subject

to examination of the relevant tax treaty.

Transfers of Shares may be subject

to United States estate and generation-skipping transfer taxes.

Because the Shares are treated as shares

withholding tax under any income tax treaty otherwise applicable to a shareholder of the Company, subject to examination of the relevant tax treaty.

These dividends may, however, qualify for a reduced rate of Canadian withholding tax under any income tax treaty otherwise applicable to a shareholder of the Company, subject to examination of the relevant tax treaty.

Transfers of Shares may be subject to United States estate and generation-skipping transfer taxes.

Because the Shares are treated as shares of a U.S.

domestic corporation, the U.S.

estate and generation-skipping transfer tax rules generally may apply to a Non-U.S.

Holder of Shares.

Taxation of Non-U.S.

a disposition of Shares depends on whether we are classified as a United States real property holding corporation.

Holders upon a disposition of Shares depends on whether we are classified as a United States real property holding corporation.

We are treated as a U.S.

domestic corporation

domestic corporation for U.S.

federal income tax purposes under Section 7874 of the Code.

domestic corporation for U.S.

federal income tax

purposes, the taxation of our Non-U.S.

Holders upon a disposition of Shares generally depends on whether we are classified as a

“United States real property holding corporation” for U.S.

federal income tax purposes, the taxation of our Non-U.S.

Holders upon a disposition of Shares generally depends on whether we are classified as a “United States real property holding corporation” for U.S.

federal income tax purposes (a “ USRPHC ”).

We have not performed any analysis to determine whether we are currently, or have ever been, a USRPHC.

In addition, we have not

sought and do not intend to seek formal confirmation of our status as a Non-USRPHC from the IRS.

If we ultimately are determined

by the IRS to constitute a USRPHC, our non-U.S.

In addition, we have not sought and do not intend to seek formal confirmation of our status as a Non-USRPHC from the IRS.

If we ultimately are determined by the IRS to constitute a USRPHC, our non-U.S.

Holders may be subject to U.S.

federal income tax on any gain associated with the

disposition of the Shares.

Changes in tax laws may affect the Company and holders

There can be no assurance that the Canadian

federal income tax treatment of the Company or an investment in the Company will not be modified, prospectively or retroactively,

by legislative, judicial, or administrative action, in a manner adverse to us or holders of our Shares.

federal income tax on any gain associated with the disposition of the Shares.

Changes in tax laws may affect the Company and holders of Shares.

There can be no assurance that the Canadian and U.S.

federal income tax treatment of the Company or an investment in the Company will not be modified, prospectively or retroactively, by legislative, judicial, or administrative action, in a manner adverse to us or holders of our Shares.

ERISA imposes additional obligations on certain investors.

In considering an investment in the Shares,

trustees, custodians, investment managers, and fiduciaries of retirement and other plans subject to the fiduciary responsibility

provisions of the Employee Retirement Income Security Act of 1974 (“ ERISA ”) and/or Section 4975 of the Code,

should consider, among other things:

(i) whether an investment in the Company shares is in accordance with plan documents and satisfies

the diversification requirements of Sections 404(a)(1)(C) and 404(a)(1)(D) of ERISA, if applicable;

(ii) whether an investment

in our Shares will result in unrelated business taxable income to the plan;

(iii) whether an investment in the Shares is prudent

under Section 404(a)(1)(B) of ERISA, if applicable, given the nature of an investment in, and the compensation structure of, the

Company and the potential lack of liquidity of Shares during the lock-up period following the RTO;

(iv) whether the Company or

any of our affiliates is a fiduciary or party in interest to the plan;

and (v) whether an investment in the Shares complies with

the “indicia of ownership” requirement set forth in ERISA Section 404(b).

Fiduciaries and other persons responsible

for the investment of certain governmental and church plans that are subject to any provision of federal, state, or local law that

is substantially similar to the fiduciary responsibility provisions of Title I of ERISA or Section 4975 of the Code that are considering

the investment in the Shares should consider the applicability of the provisions of such similar law and whether the Shares would

be an appropriate investment under such similar law.

The responsible fiduciary must take into account all of the facts and circumstances

of the plan and of the investment when determining if a particular investment is prudent.

In considering an investment in the Shares, trustees, custodians, investment managers, and fiduciaries of retirement and other plans subject to the fiduciary responsibility provisions of the Employee Retirement Income Security Act of 1974 (“ ERISA ”) and/or Section 4975 of the Code, should consider, among other things:

(i) whether an investment in the Company shares is in accordance with plan documents and satisfies the diversification requirements of Sections 404(a)(1)(C) and 404(a)(1)(D) of ERISA, if applicable;

(ii) whether an investment in our Shares will result in unrelated business taxable income to the plan;

(iii) whether an investment in the Shares is prudent under Section 404(a)(1)(B) of ERISA, if applicable, given the nature of an investment in, and the compensation structure of, the Company and the potential lack of liquidity of Shares during the lock-up period following the RTO;

(iv) whether the Company or any of our affiliates is a fiduciary or party in interest to the plan;

and (v) whether an investment in the Shares complies with the “indicia of ownership” requirement set forth in ERISA Section 404(b).

Fiduciaries and other persons responsible for the investment of certain governmental and church plans that are subject to any provision of federal, state, or local law that is substantially similar to the fiduciary responsibility provisions of Title I of ERISA or Section 4975 of the Code that are considering the investment in the Shares should consider the applicability of the provisions of such similar law and whether the Shares would be an appropriate investment under such similar law.

The responsible fiduciary must take into account all of the facts and circumstances of the plan and of the investment when determining if a particular investment is prudent.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors