ACRDF Acreage Holdings Inc (QX)

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The Acreage Board has fixed February 10, 2023 as the Record Date for the determination of the ‎Floating Shareholders entitled to receive the Notice of Meeting. Shareholders of record at the close of business on the Record Date ‎will be entitled to vote at the Meeting ‎or at any adjournment or postponement thereof on the basis of one vote for each ‎Floating Share ‎held.‎‎

To be adopted, the Arrangement Resolution must be approved by: (i) not less than 66⅔% of the votes cast on the Arrangement Resolution by Floating Shareholders present virtually or represented by proxy and entitled to vote at the Meeting; and (ii) not less than a simple majority of votes cast by the holders of Floating Shares, present virtually or represented by proxy and entitled to vote at the Meeting‎, excluding the votes of the Interested Parties pursuant to MI 61-101. Abstentions and broker non-votes will not have any effect on the approval of the Arrangement Resolution.

‎The votes attaching to the Floating Shares held by the Interested Parties will be excluded for the purposes of determining ‎whether “minority approval” has been obtained for the purposes of MI 61-101.‎‎ See “The Floating Share Arrangement – Required Approvals” and “Securities Law Matters – Canadian Securities Laws – Multilateral Instrument 61-101”.

The authorized share structure of the Company consists of an unlimited number of Fixed Shares, an ‎unlimited number of Floating Shares and 117,600 Fixed Multiple Shares. As of the date of this Circular, the Company had: (i) 79,046,738 ‎Fixed Shares outstanding; (ii) 34,114,596‎ Floating Shares outstanding; and (iii) 117,600 Fixed Multiple Shares outstanding.

As of the date hereof, neither Canopy, Canopy USA nor any of their respective affiliates owns, or controls or directs, directly or indirectly, any Floating Shares.

Additional information concerning the rights attaching to the Floating Shares can be found in the Acreage Annual Report, a copy of which has been filed on SEDAR at www.sedar.com under the Company’s profile and with the SEC and available on EDGAR at www.sec.gov/edgar.

As of the date of this Circular, to the knowledge of the directors and executive officers of the Company, except as set out ‎below, no Person beneficially owns, or controls or directs, directly or indirectly, Acreage Shares carrying 10% ‎or more of the voting rights attached to any class of Acreage Shares.‎

Notes:‎

‎(1) 195,000 Floating Shares are registered in the name of Murphy Capital, LLC, an entity over which Kevin Murphy exercises ‎direction or control.

‎(2) 455,000 Fixed Shares are registered in the name of Murphy Capital, LLC, an entity over which Kevin Murphy exercises direction or control.

(3) Kevin Murphy also holds 15,957,908 High Street Units, which are redeemable or exchangeable, as applicable, subject to contractual restrictions, for an aggregate of up to 11,170,535 Fixed Shares and 4,787,372 Floating Shares.

THE FLOATING SHARE ARRANGEMENT‎

At the Meeting, Floating Shareholders will be asked to consider and, if thought advisable, to pass, with or without amendment, the Arrangement Resolution to approve, (i) the Floating Share Arrangement, (ii) the Floating Share Arrangement Agreement; and (iii) the Floating Share ‎Plan of Arrangement. The Floating Share Arrangement, the Floating Share Plan of Arrangement, the terms of the Floating Share Arrangement Agreement and related agreements are summarized below. This summary does not purport to be complete and is qualified in its entirety by reference to the Floating Share Arrangement Agreement and the Floating Share Plan of Arrangement. A copy of the Floating Share Arrangement Agreement, including the schedules thereto, has been ‎filed on the ‎Company’s SEDAR profile at www.sedar.com ‎and with the SEC and is available on ‎EDGAR at www.sec.gov/edgar. The Floating Share Plan of Arrangement is attached as a ‎schedule to the Floating Share Arrangement Agreement and ‎is also attached as Appendix “C” of this Circular.

To be adopted, the Arrangement Resolution must be approved by: (i) not less than 66⅔% of the votes cast on the Arrangement Resolution by Floating Shareholders present virtually or represented by proxy and entitled to vote at the Meeting; and (ii) not less than a simple majority of votes cast by Floating Shareholders, present virtually or represented by proxy and entitled to vote at the Meeting, excluding the votes of the Interested Parties pursuant to MI 61-101.

The votes cast by each of Kevin Murphy and Peter Caldini, each of whom is an Interested Party, will not be counted for purposes of ‎determining whether “minority approval” has been obtained pursuant to MI 61-101. ‎See “The Floating Share Arrangement – Required Shareholder Approvals”, “Securities Law Matters – Canadian Securities Laws – Multilateral Instrument 61-101”, and “Interests of Certain Persons in ‎the Floating Share Arrangement”. A copy of the Arrangement Resolution is set out in Appendix “B” of this Circular.‎

After consulting with Acreage’s management and receiving advice and assistance from its financial and legal advisors, and after careful consideration of alternatives and a number of factors, including, among others, receipt of the unanimous recommendation from the Special Committee, the Fairness Opinions and the factors set out below under the heading “Reasons for the Floating Share Arrangement”, the members of the Acreage Board unanimously (with the exception of Kevin Murphy, John Boehner, Brian Mulroney, and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement and the connected transactions and abstained from voting in respect thereof) determined that the Floating Share Arrangement and entry into the Floating Share Arrangement Agreement are in the best interests of Acreage ‎and are fair to the Floating Shareholders and recommend that Floating Shareholders vote FOR the Arrangement Resolution.

Unless otherwise directed in properly completed forms of proxy, it is the intention of the Persons named in the ‎enclosed form of proxy to vote FOR the Arrangement Resolution. If you do not specify how you want your Floating Shares to be ‎voted at the Meeting, the Persons named as proxyholders in the enclosed form of proxy will cast the votes ‎represented by your proxy at the Meeting FOR the Arrangement Resolution.‎

If the Arrangement Resolution is adopted at the Meeting, the Final Order approving the Floating Share Plan of Arrangement is issued by the Court, the conditions to the completion of the Floating Share Arrangement are satisfied or waived, the Fixed Call Option Conditions are satisfied and the Acquisition Closing Conditions are satisfied or, if permitted, waived (excluding conditions that by their terms cannot be satisfied until the Acquisition Effective Time), the Floating Share Arrangement is expected to take effect in the second half of 2023, or such other date as may be ‎agreed by Canopy, Canopy USA and the Company.‎

Principal Steps of the Floating Share Arrangement‎

It is a condition to closing of the Floating Share Arrangement that all Acquisition Closing Conditions, being conditions precedent to the completion of the Acquisition set forth in the Existing Arrangement Agreement, shall have been satisfied or, if permitted, waived, excluding conditions that by their terms cannot be satisfied until the Acquisition Effective Time.

Pursuant to the Floating Share Plan of Arrangement attached as a schedule to the Floating Share Arrangement Agreement, which is attached to this Circular at Appendix “C”, commencing at the Effective Time, the following principal steps shall occur and shall be deemed to occur in the following order without any further act or formality:

Pursuant to the terms of the Floating Share Arrangement Agreement, the Fixed Call Option pursuant to the Existing Arrangement to acquire all of ‎the issued and outstanding Fixed Shares (following the automatic conversion of the Fixed Multiple Shares) is required to be exercised no later than five Business Days following the exchange of all Canopy Shares held by CBG and Greenstar into Exchangeable Canopy Shares. See the Existing Arrangement and Acreage’s proxy statement and management information circular dated August 17, 2020 in connection with a special meeting held to approve the Existing Arrangement for further details with respect to the steps of the Existing Arrangement, a copy of each of which is available under Acreage’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

Description of the Floating Share Arrangement

On October 24, 2022, Acreage, Canopy and Canopy USA entered into the Floating Share Arrangement Agreement‎, which sets out, among other things, the terms and conditions upon which the Floating Share Arrangement will be completed, including the terms of the Floating Share Plan of Arrangement. The completion of the Floating Share Plan of Arrangement is subject to satisfaction or, if permitted, waiver of the Acquisition Closing Conditions, excluding conditions that by their terms cannot be satisfied until the Acquisition Effective Time, and the ‎conditions precedent set out in the Floating Share Arrangement Agreement, including, among others, completion of the Canopy Capital Reorganization on or prior to the Exercise Outside Date and obtaining Shareholder Approval and the ‎Final Order‎. Upon receipt of Shareholder Approval and the ‎Final Order and the satisfaction or waiver of all other conditions set out in the Floating Share Arrangement Agreement, the Parties will complete the Floating Share Plan of Arrangement. See “Transaction ‎Agreements – The Floating Share Arrangement Agreement‎”. ‎

Pursuant to the Floating Share Plan of Arrangement, among other things, Canopy will acquire all of the issued and outstanding Floating Shares for consideration equal to 0.45 of a Canopy Share in exchange for each Floating Share held, which represents a premium of 17.2% to the Floating Shares based on the volume weighted average prices of the Floating Shares and the Canopy Shares for the 30-day trading period ending October 24, 2022, on the CSE and the Nasdaq, respectively. As of the Record Date, the maximum number of Canopy Shares that may be received by the Floating Shareholders ‎pursuant to the terms of the Floating Share Arrangement, and assuming all securities convertible, exchangeable or ‎exercisable for Floating Shares are so converted, exchanged or exercised prior to the closing of the Floating Share ‎Arrangement, is approximately [t] Canopy Shares.‎ See “Transaction ‎Agreements – Floating Share Arrangement Agreement”. ‎

Pursuant to the Floating Share Arrangement Agreement, Canopy irrevocably waived its Floating Call Option. Subject to the provisions of the Floating Share Arrangement Agreement, the Fixed Call Option pursuant to the Existing Arrangement to acquire all of the issued and outstanding Fixed Shares (following the automatic conversion of the Fixed Multiple Shares), representing approximately 70% of the total issued and outstanding Acreage Shares as at the date hereof, at a fixed exchange ratio of 0.3048 of a Canopy Share for each Fixed Share, is required to be exercised no later than five Business Days following the exchange of all Canopy Shares held by CBG and Greenstar into Exchangeable Canopy Shares.

Upon completion of: (i) the acquisition of the Floating Shares pursuant to the Floating Share Arrangement; and (ii) the Acquisition of the Fixed Shares following the exercise of the Fixed Call Option pursuant to the Existing Arrangement, Canopy USA will own 100% of the issued and outstanding Acreage Shares.

Canopy intends to amend the Canopy Articles to create a new class of Exchangeable Canopy Shares in the capital of Canopy and to add a right to convert Canopy Shares into Exchangeable Canopy Shares, which Canopy Amendment Proposal is subject to the approval of Canopy Shareholders at the Canopy Meeting.

Pursuant to the terms of the Floating Share Arrangement Agreement, the Fixed Call Option is required to be exercised within five Business Days of the Fixed Call Option Conditions being satisfied, being: (i) the approval of the Canopy Amendment Proposal at the Canopy Meeting; and (ii) CBG and Greenstar each electing (in their sole discretion) to exchange the Canopy Shares they currently hold for Exchangeable Canopy Shares.

The Canopy Amendment Proposal must be approved by at least 66⅔% of the votes cast on a special resolution ‎by ‎Canopy Shareholders present in person or represented by proxy at the Canopy Meeting. Greenstar and CBG, each ‎of which are indirect, wholly owned ‎subsidiaries of CBI, have entered into a ‎voting and ‎support agreement with Canopy pursuant to which they have agreed, among other things, to vote in favour of the ‎‎Canopy Amendment Proposal‎. Pursuant to the early warning report filed under Canopy’s profile on SEDAR by ‎CBG and Greenstar dated October 26, 2022, CBG and Greenstar have disclosed that, subject to a final decision in ‎their sole discretion, it is their current intention to exchange all of the Canopy Shares which they currently hold for ‎Exchangeable Canopy Shares if the Reorganization is completed and the Canopy Amendment Proposal is ‎approved at the Canopy Meeting. The Reorganization was completed on October 24, 2022.‎

If the Canopy Capital Reorganization is not completed prior to the Exercise Outside Date, or CBG or Greenstar do ‎not exchange all Canopy Shares held by CBG and Greenstar into Exchangeable Canopy Shares prior to the ‎Exercise Outside Date, Canopy will be obliged to pay Acreage $2.0 ‎million as an expense reimbursement. Acreage ‎may terminate the Floating Share ‎Arrangement Agreement in the event that the ‎Fixed Call Option is not exercised by the Exercise Outside Date, or the Canopy Capital Reorganization is not completed prior to the ‎Exercise Outside Date.

The Fixed Call Option

The Fixed Call Option is embedded in the special rights and restrictions of the Fixed Shares provided for in Acreage’s ‎Articles. Pursuant to the terms of the Existing Arrangement Agreement, Canopy will be required to exercise the Fixed Call Option after the Triggering Event Date and complete the Acquisition unless any of the Canopy Acquisition Closing Conditions is not satisfied or waived by Canopy. In addition, pursuant to the terms of the Existing Arrangement Agreement, Acreage will not be required to complete the Acquisition unless each of the Acreage Acquisition Closing Conditions is satisfied or waived by Acreage.

The Canopy Acquisition Closing Conditions, which may be waived by Canopy, include, but are not limited to, the following:

The Acreage Acquisition Closing Conditions, which may be waived by Acreage. include, but are not limited to, the following:

Pursuant to the terms of the Existing Arrangement Agreement, the Fixed Call Option may be exercised prior to the Triggering Event Date and before the Fixed Call Option Expiry Date by delivering to the Depositary (with a copy to Acreage) a Fixed Call Option Exercise Notice stating that the Fixed Call Option is being exercised with respect to all (but not less than all) of the Fixed Shares and specifying the Acquisition Date on which the closing of the purchase and sale of the Fixed Shares is to occur.

Pursuant to the terms of the Existing Arrangement Agreement, a material adverse effect will have been deemed to occur in the event of a Failure to Perform. Under such circumstances, Canopy will retain the right, but not be required, to complete the Acquisition.

Canopy USA

On October 24, 2022, Canopy completed the Reorganization. Following the implementation of the Reorganization, Canopy USA holds the U.S. cannabis investments previously held by Canopy, including the Wana Option and the Jetty Option. The transfer of Canopy’s U.S. cannabis investments to Canopy USA is expected to enable Canopy USA, following, among other things, the Meeting, to acquire Acreage, Wana and Jetty. In addition, as of December 9, 2022, Canopy USA controls approximately 25.3% of the issued and outstanding common shares of TerrAscend on a partially-diluted basis, assuming the conversion of 63,492,037 exchangeable shares of TerrAscend into common shares of TerrAscend and the exercise of 22,474,130 common share purchase warrants and an option to acquire 1,072,450 common shares of TerrAscend‎.

Canopy holds Canopy USA Non-Voting Shares, representing approximately 99.3% of the issued and outstanding shares of Canopy USA on an as-converted basis. The Canopy USA Non-Voting Shares do not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy USA, but are exchangeable into Canopy USA Common Shares. As of the date hereof, VCo Ventures, a former shareholder of Jetty, holds all of the outstanding Canopy USA Common Shares. Canopy USA retains a call right (the “Canopy USA Repurchase Right”) to repurchase all shares of Canopy USA that have been issued to VCo Ventures at a price per Canopy USA Common Share equal to the greater of fair market value as determined by an appraiser appointed by Canopy USA and $2 million in the aggregate; provided that if the repurchase occurs prior to March 31, 2023, the Canopy USA Repurchase Right can be exercised at the initial subscription price. Canopy has the right to appoint two of the four members of the Canopy USA board of managers. VCo Ventures has the right to appoint one member to the Canopy USA board of managers, and a put right following Canopy’s conversion of the Canopy USA Non-Voting Shares into Canopy USA Common Shares on the same terms and conditions as the Canopy USA Repurchase Right.

Upon closing of Canopy USA’s acquisition of Acreage, Canopy will receive additional Canopy USA Non-Voting Shares from Canopy USA in consideration for the issuance of Canopy Shares that shareholders of Acreage will receive in accordance with the terms of the Existing Arrangement Agreement and the Floating Share Arrangement Agreement.

Please refer to Appendix “G” – “Information Concerning Canopy” for additional information with respect to the Reorganization and Canopy USA.

Historical Arrangements

On April 18, 2019, the Company and Canopy entered into the Initial Arrangement Agreement and on June 27, 2019, the Company and Canopy implemented the Initial Plan of Arrangement contemplated by the Initial Arrangement Agreement. Pursuant to the Initial Plan of Arrangement, Canopy was granted an option to acquire all of the issued and outstanding shares of Acreage in exchange for the payment of 0.5818 of a Canopy Share for each Former SVS held (with the Former PVS and Former MVS being automatically converted to Former SVS immediately prior to consummation of the acquisition by Canopy of all of the issued and outstanding Former SVS), which original exchange ratio was subject to adjustment in accordance with the Initial Arrangement Agreement. Canopy was required to exercise the option to acquire the Former SVS pursuant to the Initial Plan of Arrangement upon a Triggering Event and, subject to the satisfaction or waiver of certain closing conditions set out in the Initial Arrangement Agreement, Canopy was required to acquire all of the issued and outstanding Former SVS (following the automatic conversion of the Former PVS and Former MVS into Former SVS).

On June 24, 2020, Canopy and Acreage entered into the Proposal Agreement to, among other things, amend the terms of the Initial Arrangement Agreement and the terms of the Initial Plan of Arrangement to implement the Existing Arrangement, which, among other things, proposed to reduce the exchange ratio to 0.3048 of a Canopy Share for each Fixed Share (from 0.5818 of a Canopy Share for each Former SVS), subject to adjustment in accordance with the Initial Arrangement Agreement and provide for an option to acquire all of the ‎‎Floating Shares at a price to be determined based upon the 30 day volume-‎weighted ‎average trading price of the Floating ‎Shares, subject to a minimum price of $6.41, payable, at the option of Canopy, in ‎cash, ‎Canopy Shares or a combination thereof. On September 23, 2020, Acreage and Canopy entered into the second amendment to the Initial Arrangement Agreement and implemented the Existing Arrangement. Pursuant to the Existing Arrangement, on September 23, 2020, the Company’s articles were amended to create the Fixed Shares (which included an option for Canopy to acquire all of the issued and outstanding Fixed Shares in exchange for the payment of 0.3048 of a Canopy Share for each Fixed Share held following the automatic conversion of the Fixed Multiple Shares into Fixed Shares immediately prior to consummation of the acquisition by Canopy of all of the issued and outstanding Fixed Shares), the Floating Shares (which included an option for Canopy to acquire all of the ‎‎Floating Shares at a price to be determined based upon the 30 day volume-‎weighted ‎average trading price of the Floating ‎Shares, subject to a minimum price of $6.41) and the Fixed Multiple Shares (to be automatically converted into Fixed Shares on a one-for-one basis immediately prior to consummation of the acquisition by Canopy of all of the issued and outstanding Fixed Shares). Each then outstanding Former SVS was exchanged for 0.7 of a Fixed Share and 0.3 of a Floating Share, each then outstanding Former PVS was exchanged for 28 Fixed Shares and 12 Floating Shares, and each then outstanding Former MVS was exchanged for 0.7 of a Fixed Multiple Share and 0.3 of a Floating Share. Pursuant to the Existing Arrangement, Canopy is required to exercise the option to acquire the Fixed Shares upon a Triggering Event and, subject to the satisfaction or waiver of certain closing conditions set out in the Existing Arrangement Agreement, Canopy is required to acquire all of the issued and outstanding Fixed Shares (following the automatic conversion of the Fixed Multiple Shares into Fixed Shares). Pursuant to the Existing Arrangement, Canopy was not obligated to acquire the Floating Shares but rather Canopy held an option to acquire the Floating Shares; however, pursuant to the Floating Share Arrangement Agreement, Canopy irrevocably waived its Floating Call Option.

Please refer to “Transaction Agreements - The Existing Arrangement Agreement” for additional information with respect to the Existing Arrangements.

Background to the Floating Share Arrangement‎

The Existing Arrangement Agreement includes certain covenants, rights and restrictions in favour of Canopy, which include, among ‎others, the right to nominate a majority of the Acreage Board, consent rights on Acreage director and officer appointments, pre-emptive rights, top-up rights, certain audit and inspection rights and restrictions on certain activities, including, but, not limited to, dividend payments, M&A ‎activity, acquisitions, divestitures, debt incurrence, securities issuances and capital raising, in each case without obtaining Canopy’s consent. Acreage is restricted in its pursuit of strategic and other business opportunities under the Existing Arrangement Agreement without obtaining Canopy’s consent. These restrictions, coupled with timing uncertainty with which U.S. federal cannabis legislative initiatives will proceed, impeded both Acreage’s and Canopy’s opportunities in the world’s largest cannabis market. Additionally, the price of the Acreage Shares had the potential to become a barrier to future Acreage capital-raising initiatives over the term of the Existing Arrangement Agreement particularly in light of the various restrictions contained therein.

In light of the foregoing and other strategic considerations that the Acreage Board considered to be relevant, coupled with Acreage’s improved performance since the Existing Arrangement became effective, the Acreage Board determined to communicate its desire to make changes to the terms of the Existing Arrangement Agreement in order to remove certain restrictions imposed on Acreage by the restrictive covenants contained in the Existing Arrangement Agreement. On March 4, 2022, Acreage director, Bill Van Faasen, communicated that message during a phone call with David Klein, Canopy’s Chief Executive Officer. Mr. Van Faasen emailed Mr. Klein on March 4, 2022 setting out the rationale for such changes. The Acreage Board sought to obtain waivers of certain covenants that it believed would be beneficial for Acreage stakeholders, including Canopy, over the long-term. Acreage reiterated its position that it would be in both parties’ interest to enable the Acreage team to realize on the strategic U.S. market and growth opportunities rather than continuing to spend a disproportionate amount of the Acreage management team’s attention on, management of, and compliance with, the covenants in favour of Canopy contained in the Existing Arrangement Agreement.

Mr. Peter Caldini, Acreage’s Chief Executive Officer and Mr. Steve Goertz, Acreage’s Chief Financial Officer, met on March 9, 2022, via teleconference, with Mr. Klein, Mr. Chris Edwards, Canopy’s Chief Strategy Officer, and Canopy’s former U.S. General Counsel, to discuss potential mutually beneficial amendments to the terms of the Existing Arrangement Agreement. At this meeting it was agreed that both Acreage and Canopy would independently develop a list, for discussion purposes, of proposed amendments to the Existing Arrangement Agreement.

On March 17, 2022, certain members of Canopy’s legal team presented, to Mr. James Doherty, Acreage’s General Counsel at the time, a proposal (the “Initial SPV Proposal”) wherein the terms of the Existing Arrangement and related agreements would be amended to allow Canopy to assign its right to acquire the Fixed Shares, and if applicable, the Floating Shares to a special purpose vehicle (the “SPV”) established by Canopy. Pursuant to the Initial SPV Proposal, the Fixed Call Option would be exercised, and the Fixed Shares would be exchanged for Canopy Shares at the agreed ratio under the Existing Arrangement Agreement of 0.3048 of a Canopy Share for each Fixed Share. Canopy indicated at this meeting that the expectation was that the Floating Share Option would not be exercised but a final determination would not be made until the Fixed Call Option was exercised or alternatively that the SPV would make an alternative offer to Floating Shareholders in due course.

Mr. Caldini, Mr. Goertz and Mr. Doherty considered the details of the Initial SPV Proposal and, following consultation with DLA Piper (Canada) LLP, Acreage’s external legal counsel, requested additional information from Canopy to better understand the Initial SPV Proposal. On March 21, 2022, Mr. Klein met with Mr. Caldini by teleconference, to discuss the Initial SPV Proposal in depth and the approvals required to move forward prior to presentation of the Initial SPV Proposal to the Acreage Board.

After further consideration of the Initial SPV Proposal, on March 29, 2022, Mr. Caldini and Mr. Goertz, met, via teleconference, with Mr. Klein and Canopy’s former U.S. General Counsel to discuss proposed modifications to the Initial SPV Proposal (the “Modified SPV Proposal”), which would involve Canopy exercising the Fixed Call Option and immediately assigning the Fixed Shares to the SPV.

On March 31, 2022, Mr. Caldini, Mr. Goertz and Mr. Doherty met with Mr. Klein and Canopy’s former U.S. General Counsel, via teleconference, to discuss the Modified SPV Proposal and identify potential challenges that would need to be addressed in order to effect the proposed transaction. Representatives of Canopy indicated that Canopy would require additional time to review, consider and finalize the various elements of the Modified SPV Proposal and identify and obtain the necessary approvals from CBI, the stock exchanges upon which the Canopy Shares are listed and any other applicable third-parties and regulatory authorities.

On April 1, 2022, Mr. Caldini, Mr. Goertz and Mr. Doherty, of Acreage, Mr. Klein and Canopy’s former U.S. General Counsel, and the parties’ internal legal counsel along with ‎a representative of CBI, via teleconference, to discuss the Modified SPV Proposal.

On April 5, 2022, Canopy’s former U.S. General Counsel provided Acreage with an indicative proposed timeline to reach an agreement with respect to the Modified SPV Proposal, including the timeline to obtain all necessary regulatory approvals. The external legal teams for both Canopy and Acreage held several conference calls to discuss the terms and mechanics of the Modified SPV Proposal and identify the necessary actions and documentation that would be required to proceed. Following consultation with Mr. Caldini, Mr. Goertz and Mr. Doherty and legal counsel, a brief update of these developments was provided to the Acreage Board on April 5, 2022, who determined that the Modified SPV Proposal merited further consideration and directed the Acreage executive team to continue engagement with Canopy and to periodically report to the Acreage Board as to the status of the discussions.

Subsequent thereto, Canopy undertook an internal evaluation of the Modified SPV Proposal, including procuring feedback from the applicable third-parties whose consent would be required.

Mr. Doherty ceased to be an officer of Acreage on April 18, 2022.

On June 13, 2022, Mr. Caldini, Mr. Goertz and Mr. Doherty of Acreage met with Mr. Klein, Mr. Edwards, Mr. Andy Lytwynec, Vice President of Canopy and Canopy’s former U.S. General Counsel, to discuss the Modified SPV Proposal. The representatives in attendance executed a confidentiality agreement in order to ensure the protection of all information that was shared during the meeting. Pursuant to the Existing Arrangement, Canopy retained the right to force the holders of High Street Units and USCo2 Shares to exchange their interests in such entities for Canopy Shares and/or Floating Shares, as applicable, on or following the third anniversary of the Acquisition Effective Time. To facilitate Canopy’s desire to acquire 100% of Acreage, at that meeting, Acreage proposed and the Parties discussed a structure for the elimination of the TRA and Bonus Plans that would also see the holders of High Street Units and USCo2 Shares accelerate the exchange of such securities for Acreage Shares on the Acquisition Effective Date. Canopy agreed with Acreage’s suggestion and requested that Acreage provide a proposal.

On July 12, 2022, Canopy’s financial advisors, Greenhill & Co. Canada Ltd., and legal advisors, Cassels Brock & Blackwell LLP, consolidated the Modified SPV Proposal and the various discussions to date with respect to the Modified SPV Proposal into a summary document to serve as a basis for further discussions.

Over the course of the summer months of 2022, Mr. Klein and Canopy’s former U.S. General Counsel advised Mr. Caldini that they were working to secure the various approvals required in order to proceed with the structure of the Modified SPV Proposal.

The parties re-engaged discussions on August 17, 2022 to determine a structure and proposed timeline within the context of Canopy’s plan to create the SPV to hold its structured investments in the United States.

From June 2022 through the end of August, Mr. Goertz engaged in negotiations with the Lenders regarding amendments to the Credit Agreement to, among other things: (i) waive various covenants for Q3 and Q4 2022; (ii) reset the financial covenants for 2023; and (iii) provide for access to additional borrowing facilities. The proposed amendments to the Credit Agreement would require consent from Canopy pursuant to the Existing Arrangement Agreement.‎ In order to provide the Lenders with visibility into the potential transaction structure being discussed with Canopy, Acreage arranged for a meeting between representatives of the Lenders and Canopy to discuss the Modified SPV Proposal.

On August 26, 2022, Acreage delivered a proposal (the “TRA Elimination Proposal”) to Canopy to eliminate the obligations under the TRA and Bonus Plans and concurrently accelerate the exchange of the High Street Units and USCo2 Shares for Fixed Shares and Floating Shares. The TRA Elimination Proposal would require Canopy to negotiate and agree to terms with Mr. Kevin Murphy, Acreage’s Chairman, as he was the largest and controlling participant under the TRA and the administrator of the Bonus Plans. On August 26, 2022 Acreage also proposed that Canopy acquire the Floating Shares and provided a framework, excluding valuations, for such an arrangement. Over the course of the next several weeks, the TRA Elimination Proposal and the acquisition of the Floating Shares was considered by Acreage, the TRA participants and Canopy.

From August 31, 2022 through September 7, 2022, Mr. Doherty, who was then a consultant to the Acreage Board, at the request of the Acreage Board, and Mr. Klein held a number of discussions in an attempt to arrive at a fulsome set of terms that could be presented to the Acreage Board for further consideration.

On September 7, 2022, management of Acreage and Mr. Doherty provided an update to the Acreage Board on the status of the continuing discussions with Canopy. At that time, management of Acreage and Mr. Doherty indicated that they believed that a formal proposal from Canopy would be received within the next few weeks. Given the expectation that certain members of management and the Acreage Board may be entitled to payments under any potential transaction with Canopy (including in connection with the elimination of the TRA and Bonus Plans pursuant to the TRA Elimination Proposal), the Acreage Board discussed the formation of a special committee comprised of independent directors to evaluate, consider and, if applicable, recommend, any proposed transaction involving Canopy, including, the Modified SPV Proposal. The Acreage Board also discussed the need to appoint independent legal and financial advisors for a special committee, if formed.

From September 8, 2022 through September 12, 2022, Mr. Goertz had several discussions with Canaccord Genuity ‎to discuss a potential engagement of Canaccord Genuity as Acreage’s financial advisor‎.

On September 11, 2022, Mr. Klein delivered a non-binding proposal (the “Initial Floating Share Proposal”) to Mr. Doherty, which provided that, assuming the satisfaction of certain conditions, including, among other things, exercise of the Fixed Call Option by a specified outside date, the SPV would: (i) acquire the Floating Shares on the basis of 0.388 of a Canopy Share for each Floating Share, (ii) all obligations under the TRA (including the Bonus Plans) would be terminated in exchange for an aggregate payment of $50 million to be paid in Canopy Shares in two installments and not subject to completion of the acquisition of the Floating Shares.

By written resolution dated September 12, 2022,‎ the Acreage Board established the Special Committee, the mandate of the Special Committee and appointment of independent directors, Steven Strom, Patricia Lopez and William Van Faasen, as the members thereof. Subsequent thereto, the Special Committee retained independent counsel.

Following review and consideration of the Initial Floating Share Proposal by the Special Committee, Acreage and Kevin Murphy (in his capacity as a party to the TRA) and their respective legal counsel, Acreage through Mr. Caldini, Mr. Goertz and Mr. Corey Sheahan, Acreage’s General Counsel, sought clarification of various deal points and, on the instructions of the Special Committee, requested an increase in the proposed exchange ratio to acquire the Floating Shares, mandatory exercise of the Fixed Call Option and a break fee if Canopy failed to complete the Canopy Capital Reorganization or if the holders of the Floating Shares failed to approve the proposed transaction.

On September 16, 2022, Canopy’s counsel circulated initial drafts of Floating Share Arrangement Agreement, Floating Share Plan of Arrangement and form of Voting Agreement based upon the Initial Floating Share Proposal, which initial drafts were reviewed and considered by Acreage, the Special Committee and their respective counsel.

By September 16, 2022, Acreage had substantially completed commercial negotiations of a term sheet to amend the Credit Agreement with the Lenders. On September 16, 2022, Mr. Goertz provided Canopy with a draft term sheet containing the proposed amendments to the Credit Agreement and communicated Acreage’s need (as directed by the Special Committee) to have these amendments in place as soon as possible.

On September 19, 2022, Ms. Judy Hong, Canopy’s Chief Financial Officer, together with Greenhill & Co. Canada Ltd., commenced negotiations with the Lenders with respect to the ‎Modified SPV Proposal, the “change of control” of Acreage resulting in an acceleration of the maturity of the ‎Acreage Debt and an option for Canopy to acquire the Acreage Debt. Negotiation of the Credit Agreement ‎amendment continued over the next several weeks. During this period, Acreage had not yet received consent from ‎Canopy to Acreage’s proposed Credit Agreement amendments.‎

On September 19, 2022, legal counsel and the financial advisors of Acreage and Canopy exchanged due diligence information requests. Over the next few weeks the parties and their representatives and financial advisors conducted mutual due diligence, including Acreage’s review of draft documentation relating to the proposed Canopy Capital Reorganization and SPV formation, capitalization and proposed transactions. Acreage’s counsel also circulated revised drafts of the principal transaction documents, reflecting the Special Committee’s input.

Concurrently, Mr. Doherty and Mr. Goertz of Acreage, Ms. Hong and Mr. Jeridean Young, Canopy’s Vice President, Head of Tax and Treasury, of Canopy, and together with their external counsel, considered issues arising under the TRA Elimination Proposal. On September 23, 2022, Acreage proposed an alternative to the TRA Elimination Proposal (the “TRA Assignment Proposal”), pursuant to which the TRA participants would assign their rights under the TRA to Canopy and the payments under the TRA the Bonus Plans would be satisfied by the issuance of Canopy Shares.

On September 27, 2022, the Special Committee held a meeting to receive an update from Acreage management, to receive a briefing from Acreage’s external counsel and counsel to the Special Committee, and to discuss a number of aspects of the transaction, including the premium to be paid by Canopy for the Floating Shares and the status of the Credit Agreement amendments. At this meeting, the Special Committee instructed Acreage management to ensure that the Financial Advisors received sufficient information regarding the proposed Canopy Capital Reorganization to enable them to complete their financial analysis with respect to Canopy following the formation of the SPV, the completion of the transactions contemplated by the Modified SPV Proposal and the other acquisitions contemplated by the SPV. Additionally, the Special Committee was focused on ensuring that Canopy’s consent to the Credit Agreement would not be an impediment to reaching an agreement on a proposed transaction.

Over the course of the next few weeks, Mr. Doherty and Mr. Goertz, on the instructions of the Special Committee, continued to negotiate the commercial terms of the transaction as well as (i) fiduciary protections to respond to and accept a superior proposal; (ii) the waiver by Canopy of certain covenants contained in the Existing Arrangement Agreement and the financial performance-related closing conditions; (iii) a covenant to exercise the Fixed Call Option; and (iv) an expense reimbursement in the event that the Canopy Capital Reorganization was not effected prior to an agreed outside date.

On September 28, 2022, a representative of Greenhill & Co. Canada Ltd. informed Acreage, on behalf of Canopy, that based upon its ongoing due diligence review, Canopy proposed to reduce the exchange ratio from 0.388 to 0.35 and that all obligations under the TRA (including the Bonus Plans) would be assigned to Canopy, as contemplated in the TRA Assignment Proposal, in exchange for an aggregate payment of $40 million rather than $50 million (the “Revised Terms”).

At this point, Acreage advised Eight Capital on the status of the proposed transaction and to advance Eight Capital’s engagement as financial advisor to the Special Committee.

On September 29, 2022, the Special Committee held a meeting to review the Revised Terms with Acreage’s management, external legal counsel to Acreage and the Special Committee and the Financial Advisors. The Special Committee reiterated the need for Acreage and its advisors to obtain more information on the SPV and the Canopy Capital Reorganization and the need to prioritize the amendments to the Credit Agreement given Acreage’s financial position. The Special Committee also instructed Canaccord Genuity to contact Canopy’s financial advisor to communicate that the Revised Terms were not acceptable.

From September 29, 2022 through to mid-October 2022, the Special Committee met several times to review the proposed transactions and to provide instructions to Acreage management, legal counsel and Canaccord Genuity including the status of Canopy’s prospective consent to the proposed amendments to the Credit Agreement while Canopy continued to negotiate with the Lenders. The Special Committee was concerned that Canopy might not provide consent to the proposed Credit Agreement amendments until an agreement had been reached on the proposed Floating Share Arrangement. Legal counsel to Acreage exchanged various drafts of the Floating Share Arrangement Agreement and the ancillary agreements with Canopy’s legal counsel.

In an attempt to resolve the remaining non-economic deal points relating to ‎the proposed transaction and advance the transaction documents, Acreage and Canopy instructed their counsel and Special Committee counsel to meet on October 17, 2022.

On October 18, 2022, Acreage received a further revised non-binding proposal from Canopy (the “Updated Canopy Proposal”). The Updated Canopy Proposal included the following key terms: (i) the proposed acquisition by Canopy USA of the Floating Shares at an exchange ratio of 0.388; (ii) amendments to High Street’s and USCo2’s constating documents to facilitate redemption of the High Street Units and the USCo2 Shares immediately preceding closing of the proposed transaction; and (iii) an aggregate of $50 million payable in Canopy Shares to unitholders of High Street that are parties to the TRA as follows: (A) an immediate upfront payment of $16 million payable to the unitholders of High Street that are parties to the TRA; (B) a further $16 million payable to the unitholders of High Street that are parties to the TRA upon the earlier of: (1) the approval of the Floating Share Arrangement by the Floating Shareholders; or (2) six months following execution of the definitive agreements in respect of the proposed transaction; and (C) the remainder payable to participants under the Bonus Plans upon closing of the proposed transaction.

On October 19, 2022, the Special Committee met with members of Acreage’s management, Mr. Doherty, external counsel to Acreage and the Special Committee and the Financial Advisors to review and consider the Updated Canopy Proposal, including the proposed exchange ratio. During this meeting, the Special Committee and its advisors discussed the current state of the relationship with Canopy vis-à-vis the Existing Arrangement Agreement, alternatives to the proposed transaction, including maintaining the status quo, as well as the benefits of proceeding with the proposed transaction as contemplated by the Updated Canopy Proposal. The Special Committee also discussed the risks of not proceeding with the proposed transaction including, in particular, the cash requirements for Acreage’s business and opportunities for growth. The Special Committee instructed Canaccord Genuity to communicate to Canopy’s financial advisor that the proposed consideration to Floating Shareholders was considered insufficient.

On October 20, 2022, a representative of Greenhill & Co. Canada Ltd. provided Acreage, on behalf of Canopy, with a final non-binding proposal (the “Final Floating Share Proposal”) to acquire all issued and outstanding Floating Shares. The Final Floating Share Proposal included the following terms:‎ ‎(i) the proposed acquisition by Canopy USA of the Floating Shares at an exchange ratio of 0.45; (ii) ‎amendments to High Street’s and USCo2’s constating documents to facilitate redemption of the High Street Units and the ‎USCo2 Shares immediately preceding closing of the proposed transaction; (iii) an aggregate of $32 ‎million payable in Canopy Shares in order to acquire the interests of High Street unitholders in the TRA as follows: (A) an immediate upfront ‎payment of $16 million; and (B) a further $16 million upon the earlier of: (1) the approval of the Floating Share Arrangement by the Floating Shareholders; or (2) six months following execution of the definitive agreements in respect of the ‎proposed transaction; and (iv) an aggregate of $18 ‎million payable in Canopy Shares in order to satisfy Acreage’s obligations under the Bonus Plans upon closing of the proposed transaction.

Eight Capital was formally engaged as financial advisor to the Special Committee pursuant to an engagement letter dated September 28, 2022 and accepted by Acreage on October 17, 2022. Canaccord Genuity was formally engaged as Acreage’s financial advisor pursuant to an engagement letter dated October 20, 2022.

On October 21, 2022, the Special Committee met, via teleconference, with members of Acreage’s executive, external counsel to Acreage and the Special Committee and the Financial Advisors to review and consider the Final Floating Share Proposal.‎

From October 21, 2022 through to and including October 24, 2022, the parties negotiated and revised drafts of the Floating Share Arrangement Agreement, the Floating Share Arrangement, the form of Voting Agreement, the Third Amendment and amendments to the Bonus Plans, the High Street Operating Agreement and the USCo2’s Constating Documents. In addition, the parties negotiated and revised drafts of the Amended Credit Agreement.

On October 24, 2022, the Special Committee and the Acreage Board met to receive (i) an update and transaction ‎‎overview from Acreage management; (ii) a presentation from Eight Capital on the Floating Share ‎Arrangement, ‎‎followed by a verbal opinion of Eight Capital to the effect that, as of the date thereof, and based upon and subject ‎to the assumptions, ‎qualifications and limitations contained in the Eight Capital ‎Fairness Opinion, the number of ‎Canopy Shares per Floating Share to be received by the Floating ‎Shareholders (other than Canopy USA, Canopy ‎and/or their respective affiliates) pursuant to the Floating Share ‎Arrangement is fair, ‎from a financial point of view, ‎to the Floating Shareholders (other than Canopy USA, Canopy ‎and/or their respective affiliates); and (iii) a ‎presentation from Canaccord Genuity on the Floating Share ‎Arrangement, followed by a verbal opinion from ‎Canaccord Genuity to the effect that, as of the date of such ‎opinion, and based upon and subject to the ‎assumptions, qualifications, ‎explanations and limitations set forth ‎therein, and such other matters as Canaccord ‎Genuity considered ‎relevant, the number of Consideration Shares to ‎be received by Floating Shareholders (other ‎than Canopy ‎USA, ‎Canopy, and/or their ‎respective affiliates) pursuant ‎to the Floating Share Arrangement‎ is fair, ‎‎from a ‎financial point ‎of view, to the Floating Shareholders (other than ‎‎Canopy, Canopy USA and/or their ‎‎respective affiliates)‎. Following the Canaccord Genuity presentation, Kevin ‎Murphy, John Boehner, Brian Mulroney ‎and Peter Caldini, each of whom declared his interest in the transactions ‎‎contemplated by the Floating Share ‎Arrangement Agreement and the connected transactions, recused themselves ‎from the meeting. The Special ‎Committee and the Acreage Board then received a presentation from Acreage’s U.S. ‎external counsel on the Third ‎Amendment and the proposed amendments to the Bonus Plans and the consideration ‎to be received by the ‎unitholders of High Street pursuant to the amendments to the TRA and the participants under ‎the Bonus Plans. ‎Acreage’s Canadian external counsel then presented to the Special Committee and the Acreage ‎Board and ‎provided an overview of the Floating Share Arrangement and summary of the near-final terms of the ‎Floating ‎Share Arrangement Agreement, Floating Share Plan of Arrangement and form of Voting Agreement, an ‎overview of ‎the risks to completion of the Floating Share Arrangement, a summary of potential criticism of the ‎proposed ‎transaction and a summary of the progress made by Acreage and the Special Committee in the course of ‎‎negotiating the Floating Share Arrangement. John Boehner, Brian Mulroney and Peter Caldini were then invited to ‎‎return to the meeting and Mr. Goertz presented to the Special Committee and the Acreage Board (with Kevin ‎‎Murphy continuing to recuse himself from the meeting given his interest in the Credit Agreement Amendment) ‎on ‎‎the proposed Credit Agreement Amendment (including the favourable covenant waivers). Mr. Goertz noted that Ms. Hong had indicated that Canopy’s consent to the Credit Agreement Amendment would be delivered ‎‎concurrently with the execution of the Floating Share Arrangement Agreement‎.

The Special Committee, after consultation with Acreage management and ‎receipt of advice and assistance of its and Acreage’s ‎financial and legal ‎advisors and the Special Committee’s legal advisors, and after careful consideration of ‎ alternatives and factors including, among others, the Eight Capital Fairness Opinion ‎and the factors set out below under the ‎heading ‎‎“Reasons for the Floating Share Arrangement”, by written resolution, unanimously ‎resolved that the Floating Share Arrangement, including the entering into of the Floating Share Arrangement Agreement and the related ‎agreements, were in the best interests of Acreage and the Floating Shareholders, and recommended to the Acreage ‎Board that it approve and authorize Acreage to enter ‎into ‎the Floating Share Arrangement Agreement and related agreements.‎

The Acreage Board unanimously (with Kevin Murphy abstaining from voting thereon), by written resolution dated October 24, 2022, authorized and approved the Credit Agreement Amendment and authorized Acreage and High Street to enter into, execute, deliver and perform its obligations under the Credit Agreement Amendment.

Following receipt of advice and assistance of its financial and ‎legal advisors, and after consideration of alternatives and factors including, among others, ‎the ‎receipt of the unanimous recommendation of the Special ‎‎Committee, the Eight Capital Fairness Opinion, the Canaccord Genuity Fairness Opinion and the factors ‎set out below under the ‎heading ‎‎“Reasons for the Floating Share Arrangement”, by written resolution dated October 24, 2022, the Acreage Board unanimously (with ‎the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared his interest ‎in the transactions ‎contemplated by the Floating Share Arrangement Agreement and the connected ‎transactions and abstained therefrom), among other things: (i) resolved that the Floating Share Arrangement is fair to the Floating Shareholders, and that the Floating Share Arrangement and ‎the entering into the Floating Share Arrangement Agreement is in the best interests of Acreage; (ii) approved and authorized Acreage to enter into the Floating Share Arrangement Agreement and related agreements;‎ (iii) approved the Third Amendment and directed that High Street and Acreage Holdings America, Inc. enter into the Third Amendment; (iv) approved, authorized, established and adopted the amended Bonus Plans; and (v) recommended that Floating Shareholders vote FOR the Arrangement ‎Resolution. ‎

On October 24, 2022, Canopy, CBG and Greenstar entered into the Consent Agreement and the Canopy Voting Support Agreement. Canopy, 11065220 Canada Inc. and Canopy USA also entered into the Protection Agreement.

On the evening of October 24, 2022, Canopy consented to the Credit Agreement Amendment, Acreage entered into the Credit Agreement Amendment and the Lenders and the Acreage Debt Optionholder entered into the Letter Agreement. Later that evening, (i) Acreage, Canopy and Canopy USA entered into the Floating Share Arrangement Agreement, (ii) Canopy, Canopy USA and the Acreage Locked-Up Shareholders entered into the Voting Agreements; and (iii) Canopy, Canopy USA, High Street, Acreage Holdings America, Inc. and certain individuals party to the TRA, ‎amended the TRA by entering into the Third Amendment.

Subsequent thereto, on October 24, 2022, Canopy USA entered into a share purchase agreement with a third-party investor and in accordance with the terms of the Canopy USA LLC operating agreement, all of Canopy’s interests in Canopy USA were automatically converted into non-voting and non-participating shares.

On October 25, 2022, Canopy announced the formation of Canopy USA and both Canopy and Acreage announced the entering into of the Floating Share Arrangement Agreement, the Third Amendment, the Voting Agreements and the other related agreements.

On January 18, 2023, the Court granted the Interim Order, which was varied on [t], 2023 to amend the Record Date, the date of the Meeting, the date of the hearing for the Final Order approving the Floating Share Arrangement and any related timelines, attached as Appendix “F” to this Circular.

On December 2, 2022, the Acreage Board approved the contents and mailing of this Circular to Floating Shareholders and such other securityholders entitled to receive it, all in accordance with the Interim Order.

Reasons for the Floating Share Arrangement‎

In evaluating the Floating Share Arrangement and in making their respective recommendations, the Special Committee and the Acreage Board each consulted with Acreage management, received the advice and assistance of their respective legal and financial advisors and gave careful consideration to certain constraining terms and conditions imposed upon Acreage pursuant to the Existing Arrangement Agreement, alternatives available to Acreage, the current and expected future financial position of Acreage and all terms of the Floating Share Arrangement Agreement, the Floating Share Plan of Arrangement, and the proposed amendments contemplated pursuant to the Credit Agreement. The Special Committee and the Acreage Board considered alternatives and a number of factors, including, among others, the following in determining that the Floating Share Arrangement and entry into the Floating Share Arrangement Agreement are in the best interests of Acreage and are fair to Floating ‎Shareholders and authorizing Acreage to enter into the Floating Share Arrangement Agreement‎ and related agreements:

² MJBiz market forecast dated June 2022 of total US cannabis market by 2026.

The Special Committee and the Acreage Board also considered a number of potential risks, potential negative factors and potentially adverse implications relating to the Floating Share Arrangement, including the following:

The Acreage Board (with the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement‎ and the connected transactions and abstained from voting in respect thereof‎) unanimously approved the execution of the Floating Share Arrangement‎ Agreement‎. The process of evaluating the Floating Share Plan of Arrangement was led by the Special Committee, which is ‎comprised of independent members of the Acreage Board who are not members of management. The members of ‎the Special Committee met regularly with its and Acreage’s legal and financial advisors and members ‎of management and communicated directly with representatives of Canopy throughout the ‎process of negotiating the Floating Share Arrangement‎.

The reasons of the Special Committee and the Acreage Board for recommending the Floating Share Arrangement include certain assumptions relating to forward-looking information, and such information and assumptions are subject to certain risks. See “Cautionary Statement Regarding Forward-Looking Information” and “Risk Factors” in this Circular. The Acreage Board and the Special Committee believe that, overall, the anticipated benefits of the Floating Share Arrangement to Acreage outweigh the potential risks, potential negative factors and potentially adverse implications.

The Special Committee and the Acreage Board evaluated all the factors summarized above based on their knowledge of the business and operations of Acreage, Canopy and Canopy USA and taking into account the advice and assistance of financial and legal advisors to the Special Committee and legal and financial advisors to the Acreage Board as well as the Eight Capital Fairness Opinion and the Canaccord Genuity Fairness Opinion and exercised their business judgment. However, the foregoing summary of the information and factors considered by the Special Committee and the Acreage Board is not intended to be exhaustive. In view of the variety of factors and the amount of information considered in connection with its evaluation of the Floating Share Arrangement Agreement‎ and Floating Share Plan of Arrangement, the Special Committee and the Acreage Board did not find it practicable to, and did not, quantify, rank or otherwise attempt to assign relative weights to the foregoing factors considered in their deliberations. In addition, in considering the factors described above, individual members of the Special Committee and the Acreage Board may have given different weights to various factors and may have applied different analysis to each of the material factors considered by the Special Committee and the Acreage Board.

Approval of the Arrangement Resolution

At the Meeting, Floating Shareholders will be asked to approve the Arrangement Resolution, the full text of which is set out in Appendix “B” to this Circular. In order for the Floating Share Arrangement‎ to become effective, as provided in the Interim Order and by the BCBCA, the Arrangement Resolution must be approved by: (i) not less than 66⅔% of the votes cast on the Arrangement Resolution by Floating Shareholders present virtually or represented by proxy and entitled to vote at the Meeting; and (ii) not less than a simple majority of votes cast by Floating Shareholders present virtually or represented by proxy and entitled to vote at the Meeting, excluding the votes of the Interested Parties pursuant to MI 61-101. Should Floating Shareholders fail to approve the Arrangement Resolution by the requisite majorities, the Floating Share Arrangement will not be completed.

After consulting with Acreage management and receiving advice and assistance of its ‎financial ‎and legal ‎advisors, and after careful consideration of alternatives and a number of factors, including, among ‎others, receipt of the unanimous recommendation from the Special Committee, the ‎Fairness Opinions and the factors set out above under the heading “Reasons for the Floating Share Arrangement”, ‎the members of the Acreage Board unanimously (with the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement‎ and the connected transactions and abstained from voting in respect thereof) determined that the Floating Share Arrangement and entry into the Floating Share Arrangement Agreement‎ are in the best interests of Acreage and are fair to Floating Shareholders and recommend ‎that ‎Floating Shareholders vote FOR the Arrangement Resolution‎.

Eight Capital Fairness Opinion

Eight Capital was formally engaged by the Special Committee pursuant to the Eight Capital Engagement ‎‎Agreement dated September 28, 2022 and accepted by Acreage on October 17, 2022, to provide an opinion as to ‎the fairness, from a financial point of view, of the number of Canopy Shares per Floating Share to be received by ‎Floating Shareholders (other than Canopy USA, Canopy and/or their ‎respective affiliates) pursuant to the Floating ‎Share Arrangement. On October 24, 2022‎, Eight Capital verbally ‎delivered ‎its opinion to the Special Committee, ‎which opinion was subsequently confirmed in writing and in which Eight Capital stated that, as of the date thereof, ‎and based upon and subject to the assumptions, qualifications and limitations contained therein, the number of ‎Canopy Shares per Floating Share to be received by the Floating ‎Shareholders (other than Canopy USA, Canopy ‎and/or their respective affiliates) pursuant to the Floating Share ‎Arrangement‎ is fair, from a financial point of view, ‎to the Floating Shareholders (other than Canopy USA, Canopy ‎and/or their respective affiliates). ‎

Pursuant to the Eight Capital Engagement Agreement, Acreage has agreed to pay Eight Capital a fixed fee for the ‎delivery of the Eight Capital Fairness Opinion. In addition, Acreage has agreed to reimburse Eight ‎Capital for its ‎reasonable out-of-pocket expenses and to indemnify Eight Capital against certain liabilities in connection with its ‎engagement, ‎as further described in the indemnity that forms part of the Eight Capital Engagement Agreement. The ‎fee payable to Eight ‎Capital by Acreage in respect of the delivery of the Eight Capital Fairness Opinion is not ‎contingent upon the conclusions ‎reached by Eight Capital in the Eight Capital Fairness Opinion or the ‎consummation of the Floating Share Arrangement‎.‎‎

In considering the fairness, from a financial point of view, of the number of Canopy Shares per Floating Share to be received by Floating Shareholders (other than Canopy USA, Canopy and/or their respective affiliates) pursuant to the Floating Share Arrangement‎, Eight Capital reviewed, considered and relied upon or carried ‎out, among other things, the following: (i) the historical trading value and ranges of the Floating Shares and the Canopy Shares over a relevant ‎time period; (ii) the 12-month price targets of equity research analysts covering Acreage and Canopy‎; (iii) the implied public market value of Acreage and Canopy based on publicly available ‎business and financial data and derived valuation multiples of certain publicly traded companies in the ‎cannabis sector that were deemed comparable and relevant; and (iv) the implied public market value of ‎Acreage from an “en bloc” perspective based on premiums paid for certain publicly traded companies ‎that were deemed comparable and relevant (“Precedent Transaction Analysis”). Specifically with respect ‎to the Precedent Transaction Analysis, Eight Capital considered the following three distinct groups of transactions: (A) ‎acquisitions of certain publicly traded companies in the U.S. cannabis sector; (B) to account for Canopy’s option to purchase a 70% ownership interest in Acreage pursuant to the Fixed Option, which in ‎Eight Capital’s view limits any “control premium” that would otherwise be payable to Floating Shareholders, Eight Capital ‎considered a group of related-party transactions whereby a large or controlling shareholders acquired the ‎balance of the outstanding ownership interest of certain publicly traded companies; and (C) Eight Capital also ‎considered a group of transactions resulting in the acquisition of a group of publicly traded companies ‎experiencing some level of financial and operational distress, to account for certain challenges being ‎experienced by Acreage, including its inability to access additional capital to execute its business plan, its ‎inability to maintain certain financial covenants set out in the Credit Agreement, and ‎financial and operational limitations set out in the Existing Arrangement that have been a burden on ‎Acreage’s ability to successfully grow and operate its business. All financial analyses were conducted ‎with information available as of market close on October 21, 2022‎‎.

The selection of comparable companies and Precedent Transaction Analysis involved ‎considerable subjectivity, in particular among companies engaged in an emerging industry, operating in a ‎rapidly evolving regulatory environment, and having low or negative EBITDA, earnings or free cash flows and significant stock price ‎volatility. Further, Eight Capital noted that while none of the comparable companies or precedent transactions are identical to Acreage or ‎Canopy (as applicable) or the Floating Share Arrangement and certain of them may have ‎characteristics that are materially different from that of Acreage or Canopy (as applicable) and the ‎Floating Share Arrangement, Eight Capital believes that they share certain business, financial, operational ‎and/or structural characteristics with those of Acreage or Canopy (as applicable) and the Floating ‎Share Arrangement and Eight Capital used its professional judgment in selecting such comparable ‎companies and precedent transactions.‎

Eight Capital considered the three month high and low share price of the Floating Shares, being US$0.83 and US$1.59, respectively, and the 10 and 20-day volume weighted average trading price of the Canopy Shares, being US$2.46 and US$2.82, respectively.

Eight Capital considered the 12-month price targets of equity research analysts¹ covering Acreage and Canopy, which are within a range of US$1.50 to US$5.00 (five analysts with target prices) for Acreage, and are within a range of C$2.00 to C$14.00 (18 analysts with target prices) for Canopy.

Eight Capital performed an analysis of comparable company metrics by applying a range of both EV to revenue and EV to EBITDA multiples to Acreage’s 2022 and 2023 fiscal year estimates of US$242.6 million and US$309.6 million in revenue in 2022 and 2023, respectively, and US$42.1 million and US$64.4 million in EBITDA in 2022 and 2023, respectively. Comparable companies that were considered relevant were Planet 13 Holdings, Inc., TerrAscend, 4Front Ventures Corp., Ayr Wellness, Inc., MariMed Inc. and Cansortium, Inc. Eight Capital compared the trading multiples observed for the selected comparable companies with Acreage, taking into account a number of factors including market capitalization, revenue and EBITDA profile and other financial metrics that Eight Capital considered relevant. Based on analyst consensus estimates of the selected comparative companies, Eight Capital observed a range of EV to revenue multiples of 1.4 to 3.6 times revenue for 2022, and 1.1 to 2.5 times revenue for 2023; and a range of EV to EBITDA multiples of 4.4 to 23.6 times EBITDA for 2022 and 3.2 to 13.9 times EBITDA for 2023. In light of the foregoing and based on Eight Capital’s professional judgement and experience, Eight Capital applied selected ranges of multiples to Acreage’s estimated revenue and EBITDA for 2022 and 2023, in order to determine implied equity value ranges for Acreage.

Eight Capital performed an analysis of comparable company metrics by applying a range of EV to revenue to analyst consensus estimates for Canopy’s 2022 and 2023 revenue. Comparable companies that were considered relevant were Tilray Brands, Inc., Aurora Cannabis Inc. and Cronos Group Inc. Eight Capital compared the trading multiples observed for the selected comparable companies with Canopy, taking into account a number of factors including market capitalization, revenue and EBITDA profile and other financial metrics that Eight Capital considered relevant. Based on analyst consensus estimates of the selected comparative companies, Eight Capital observed a range of EV to revenue multiples of 1.5 to 3.4 times revenue for 2022 and 1.1 to 3.3 times revenue for 2023. In light of the foregoing and based on Eight Capital’s professional judgement and experience, Eight Capital applied selected ranges of multiples to Canopy’s estimated revenue for 2022 and 2023 in order to determine implied equity value ranges for Canopy.

Eight Capital reviewed a number of transactions involving participants in the U.S. cannabis sector and calculated the mean and median premium paid by the acquirors in such transactions, based on the closing price of the shares of the acquirer and the acquired company (mean of 35.3% and median of 28.2%), the 10-day VWAP of the shares of the acquirer and the acquired company (mean of 40.2% and median of 28.8%), and the 20-day VWAP of the shares of the acquirer and the acquired company (mean of 43.6% and median of 42.5%). In light of the foregoing and based on Eight Capital’s professional judgement and experience, Eight Capital applied a selected range of premiums to the 10-day VWAP and 20-day VWAP of the Floating Shares.

In addition, Eight Capital reviewed a number of transactions involving the acquisition of a company by an existing significant and/or controlling shareholder of the Company and calculated the mean and median premium paid by the acquirors in such transactions, based on the closing price of the shares of the acquirer and the acquired company (mean of 25.6% and median of 26.2%), the 10-day VWAP of the shares of the acquirer and the acquired company (mean of 28.8% and median of 35.3%), and the 20-day VWAP of the shares of the acquirer and the acquired company (mean of 32.7% and median of 33.2%). In light of the foregoing and based on Eight Capital’s professional judgement and experience, Eight Capital applied a selected range of premiums to the 10-day VWAP and 20-day VWAP of the Floating Shares.

Eight Capital also reviewed a number of transactions involving the acquisition of a company facing operational and/or financial distress and calculated the mean and median premium paid by the acquirors in such transactions, based on the closing price of the shares of the acquirer and the acquired company (mean of negative 39.8% and median of negative 37.5%), the 10-day VWAP of the shares of the acquirer and the acquired company (mean of negative 34.2% and median of negative 32.4%), and the 20-day VWAP of the shares of the acquirer and the acquired company (mean of negative 32.5% and median of negative 32.5%). In light of the foregoing and based on Eight Capital’s professional judgement and experience, Eight Capital applied a selected range of premiums to the 10-day VWAP and 20-day VWAP of the Floating Shares.

Eight Capital based its conclusion in the Eight Capital Fairness Opinion upon a number of quantitative and qualitative factors including, but not limited to: ‎

¹ Source: FactSet.

The full text of the Eight Capital Fairness Opinion, setting out the assumptions made, matters considered and limitations and qualifications on the review undertaken in connection with the Eight Capital Fairness Opinion, is attached as Appendix “D” to this Circular. The summary of the Eight Capital Fairness Opinion described in this Circular is qualified in its entirety by, and should be read in conjunction with, the full text of the Eight Capital Fairness Opinion.

None of Eight Capital, its affiliates or associates, is an insider, associate or affiliate of Acreage, Canopy or Canopy USA, or any of their respective ‎ affiliates or associates. Eight Capital has neither provided financial advisory services nor participated in any financings involving ‎ Acreage, Canopy or Canopy USA, or any of their respective ‎ affiliates or associates over the past 24 months, other than services provided under the Eight Capital Engagement Agreement and as otherwise disclosed in the Eight Capital Fairness Opinion. Eight Capital may, however, in the ordinary course of its business, provide ‎financial advisory or investment banking services to one or more of Acreage, Canopy or Canopy USA or any of their respective affiliates or associates from time to ‎time. ‎Eight Capital advised the Special Committee that it has no conflicts of interest ‎(real or perceived)‎ with regard to Acreage, Canopy or Canopy USA or any of their respective affiliates or associates in providing the Eight Capital Fairness Opinion.

The Eight Capital Fairness Opinion does not address the relative merits of the Floating Share Arrangement as compared to any ‎strategic alternatives that may be available to Acreage, or the Floating Share Arrangement as compared to the ‎ Existing Arrangement, nor does it address the relative merits of any transactions entered into ‎by Acreage in connection with the Floating Share Arrangement. The Eight Capital Fairness Opinion is limited to the fairness, as of ‎the date thereof, of the number of Canopy Shares per Floating Share to be received by Floating Shareholders (other than Canopy USA, Canopy and/or their respective affiliates) pursuant to the Floating Share Arrangement‎, and does not express any opinion as to any decision which Acreage, ‎the Acreage Board or the Special Committee may make regarding the Floating Share Arrangement.‎

The Eight Capital Fairness Opinion is not intended to be and does not constitute a recommendation to the Special Committee, ‎the Acreage Board or to any Floating Shareholder, securityholder or creditor. The Eight Capital Fairness Opinion should not be construed as, advice as to the price at which securities ‎of either Acreage or Canopy may trade or ‎be valued at any future date‎. The Eight Capital Fairness Opinion was one of a number of factors taken into consideration by the Acreage Board and the Special Committee in considering the Floating Share Arrangement. The Acreage Board urges Floating Shareholders to read the Eight Capital Fairness Opinion carefully in its entirety. The Eight Capital Fairness Opinion is reproduced in its entirety in Appendix “D” of this Circular.

Based upon and subject to the assumptions, qualifications and limitations contained therein, Eight Capital ‎is of the opinion that, as of the date of the Eight Capital Fairness Opinion, the number of Canopy Shares per Floating Share to be received by Floating Shareholders (other than Canopy USA, Canopy and/or their respective affiliates) pursuant to the Floating Share Arrangement‎ is fair, from a financial point of view, to the Floating Shareholders (other than Canopy USA, Canopy and/or their respective affiliates).

Recommendation of the Special Committee

The Special Committee, after consultation with Acreage management and receipt of advice and assistance of its and Acreage’s ‎financial and legal ‎‎advisors and after careful consideration of alternatives and a number of factors, including, among others, the Eight Capital Fairness Opinion ‎and the factors set out below ‎under the heading “Reasons for the Floating Share Arrangement”, ‎unanimously ‎determined that the Floating Share Arrangement ‎and entry into the Floating Share Arrangement Agreement‎ and related agreements are in the best interests of Acreage and the Floating Shareholders and recommended to the Acreage Board that it approve and authorize Acreage to enter into the ‎Floating Share Arrangement Agreement‎ and related agreements.‎

Canaccord Genuity Fairness Opinion

Canaccord Genuity was formally engaged by Acreage through the Canaccord Genuity Engagement Agreement ‎dated October 20, 2022. The Canaccord Genuity Engagement Agreement provides the terms upon which ‎Canaccord Genuity has agreed to act as a financial advisor to Acreage in connection with the Floating Share ‎Arrangement during the term of the Canaccord Genuity Engagement Agreement.‎

On October 24, 2022, Canaccord Genuity verbally delivered its opinion to the Acreage Board, which was ‎subsequently confirmed in writing, that, as at the date of such opinion and based upon and subject to the ‎assumptions, qualifications, explanations and limitations set forth therein, and such other matters as Canaccord ‎Genuity considered relevant, the number of Consideration Shares to be received by Floating Shareholders (other ‎than Canopy USA, Canopy and/or their respective affiliates) pursuant to the Floating Share Arrangement is fair, ‎from a financial point of view, to Floating Shareholders (other than Canopy USA, Canopy and/or their respective ‎affiliates). Canaccord Genuity’s opinion was one of many factors considered by the Acreage Board in its ‎evaluation of the Floating Share Arrangement and should not be viewed as determinative of the views of the ‎Acreage Board in its evaluation with respect to the Floating Share Arrangement or the consideration to be received ‎by Floating Shareholders pursuant to the Floating Share Arrangement. The full text of the Canaccord Genuity ‎Fairness Opinion is attached to this Circular as Appendix “E”. The full text of the Canaccord Genuity Fairness ‎Opinion sets forth the assumptions made, procedures followed, matters considered and limitations on the review ‎undertaken in connection with such opinion, and the summary provided in this Circular is qualified in its entirety by ‎the full text of such opinion. Floating Shareholders are encouraged to read the Canaccord Genuity Fairness Opinion ‎carefully and in its entirety for a description of the procedures followed, assumptions made, matters considered and ‎qualifications and limitations on the review undertaken by Canaccord Genuity in connection with its verbal and written opinion. The ‎Canaccord Genuity Fairness Opinion was addressed to the Acreage Board and only addresses the fairness to ‎Floating Shareholders (other than Canopy USA, Canopy and/or their respective affiliates), from a financial point ‎of view, of the number of Consideration Shares to be received by Floating Shareholders (other than Canopy USA, Canopy and/or their respective affiliates) pursuant to the Floating Share Arrangement, and did not and does not ‎address the relative merits of the Floating Share Arrangement as compared to other transactions or business ‎strategies that might be available to Acreage, nor does it address the underlying business decision of Acreage to ‎enter into the Floating Share Arrangement, or any views on any other terms or aspects of the Floating Share ‎Arrangement, or any potential implication of the Floating Share Arrangement or the Transactions. The Canaccord ‎Genuity Fairness Opinion has been provided to members of the Acreage Board (solely in their capacity as directors ‎of Acreage) for their sole use and benefit in connection with, and for the purpose of, their consideration of the ‎Floating Share Arrangement and is not intended to, and should not, be relied upon by any other person or entity ‎‎(including, without limitation, securityholders, creditors or other constituencies of Acreage) or used for any other ‎purpose.‎

The Canaccord Genuity Fairness Opinion does not constitute a recommendation as to how the Acreage Board (or ‎any director), management, any Floating Shareholder or any securityholder should vote or otherwise act with ‎respect to any matters relating to the Floating Share Arrangement, or whether to proceed with the Floating Share ‎Arrangement or any related transaction. Furthermore, the Canaccord Genuity Fairness Opinion is not, and should ‎not be construed as, a formal valuation or independent appraisal of Acreage or Canopy or any of their respective ‎securities, assets or liabilities (whether accrued, absolute, contingent, derivative, off-balance sheet or otherwise), or ‎advice as to the price at which any securities of Acreage or Canopy may trade at any future date.‎

As provided for in the Canaccord Genuity Engagement Agreement, Canaccord Genuity has relied upon and ‎assumed, without attempting to independently verify, the completeness, accuracy and fair presentation of all of the ‎financial and other information, data, documents, advice, opinions or representations, whether in written, electronic, ‎graphic, oral or any other form or medium, including as it relates to Acreage and Canopy, obtained by it from ‎public sources, or provided to it by Acreage, Canopy and their respective associates, affiliates, agents, consultants ‎and advisors, including, among other things: (i) estimated financial information for the Company, as provided by Acreage’s management, for the fiscal years ending ‎December 31, 2022 and December 31, 2023‎; (ii) selected public market ‎trading statistics and other public / non-public relevant financial information in respect of both Acreage and ‎Canopy, as well as other comparable public entities considered by Canaccord Genuity to be relevant; and (iii) ‎certain other internal financial, operational and corporate information prepared or provided by Acreage’s and ‎Canopy’s respective management teams. With respect to the financial information provided to Canaccord Genuity ‎used in the analysis supporting the Canaccord Genuity Fairness Opinion, Canaccord Genuity assumed that they ‎were reasonably prepared on bases reflecting, at the time, the best available estimates and judgements of ‎management of Acreage and Canopy, as applicable, as to the matters covered thereby and which, in the opinion of ‎Acreage, are (and were at the time of preparation and continue to be) reasonable in the circumstances. By rendering ‎the Canaccord Genuity Fairness Opinion, Canaccord Genuity expresses no view as to the reasonableness of any financial information or the assumptions on which they are based.‎

In preparing the Canaccord Genuity Fairness Opinion, Canaccord Genuity made several assumptions, including ‎that all of the conditions required to implement the Transactions will be met, that the final versions of the ‎Transaction Agreements will be identical to the most recent versions thereof reviewed by Canaccord Genuity, that ‎all of the representations and warranties contained in the Transaction Agreements are true and correct as of the ‎date of the Canaccord Genuity Fairness Opinion that the Transactions will be completed substantially in ‎accordance with their terms and all applicable laws, that the accompanying proxy statements in connection with the Floating Share Arrangement and Canopy Capital Reorganization, respectively, including this Circular, will disclose all material facts relating thereto and will satisfy all applicable legal requirements, and that Acreage and Canopy will each disclose all material facts relating to the Floating Share Arrangement and Canopy Capital Reorganization, respectively, to their respective shareholders. Additionally, Canaccord Genuity assumed that the Transactions will be consummated in a manner that complies with all applicable securities laws and regulations in Canada and the United States.

In support of the Canaccord Genuity Fairness Opinion, Canaccord Genuity performed such analyses as Canaccord Genuity considered necessary and appropriate at the time and in the circumstances for the purposes of arriving at its opinion. The summary below does not purport to ‎be a complete description of the factors considered or financial analyses performed by Canaccord Genuity, nor ‎does the order of analyses described represent relative importance or weight given to those analyses by Canaccord ‎Genuity. In performing its analyses, Canaccord Genuity made numerous assumptions with respect to industry ‎performance, general business and economic conditions and other matters, which Canaccord Genuity believes to be ‎reasonable and appropriate in the exercise of its professional judgement, many of which are beyond the control of ‎Canaccord Genuity or any party involved in the Transactions. These analyses did not and do not purport to be appraisals, nor ‎did they or do they necessarily reflect the prices at which businesses or securities may actually be sold. Any estimates were, by their nature, not necessarily indicative of actual values or predictive of future results or values, which may ‎be significantly more or less favourable than as set out herein‎.

In preparing and arriving at the Canaccord Genuity Fairness Opinion, Canaccord Genuity considered the following principal methodologies and factors:

For greater clarity, Capex Adjusted EBITDA was calculated as Adjusted EBITDA less capital ‎expenditures in the respective year for which such Capex Adjusted EBITDA was being compared to ‎TEV, and, more specifically, as it relates to the estimated calendar year (i) 2022 (“2022E”), Capex ‎Adjusted EBITDA was calculated as 2022E estimated Adjusted EBITDA less 2022E estimated capital expenditures; (ii) ‎‎2023 (“2023E”), Capex Adjusted EBITDA was calculated as 2023E estimated Adjusted EBITDA less 2023E estimated ‎capital expenditures; and (iii) 2024 (“2024E”), Capex Adjusted EBITDA was calculated as 2024E estimated ‎Adjusted EBITDA less 2024E estimated capital expenditures. For greater clarity, Capex Adjusted TEV was ‎calculated as TEV plus cumulative capital expenditures from January 1 to December 31 of the ‎respective year for which such Capex Adjusted TEV was being compared to Adjusted EBITDA, and, ‎more specifically, as it relates to the estimated calendar year (i) 2022E, Capex Adjusted TEV was ‎calculated as estimated TEV plus 2022E estimated capital expenditures; (ii) 2023E, Capex Adjusted TEV was calculated ‎as estimated TEV plus the sum of 2022E and 2023E estimated capital expenditures; and (iii) 2024E, Capex Adjusted TEV ‎was calculated as estimated TEV plus the sum of 2022E, 2023E and 2024E estimated capital expenditures‎.

With respect to Acreage, Canaccord Genuity observed the following ranges of multiples for the primary set of publicly-traded cannabis companies which were reviewed by Canaccord Genuity and determined to be the most comparable to Acreage (in each case and as applicable, including Acreage itself, excluding select outliers, and to the extent information was available). More specifically, the ranges below encompass the set of U.S. publicly-traded cannabis companies ‎which, as at October 21, 2022, had a TEV between US$200 million and US$1 billion, and includes Ayr ‎Wellness Inc., TerrAscend, Ascend Wellness Holdings Inc., Jushi Holdings Inc., 4Front Ventures ‎Corp., Planet 13 Holdings Inc., MariMed Inc., and Acreage.

After reviewing such ranges of multiples, in conjunction with Acreage’s estimated Adjusted EBITDA ‎margins and estimated growth rates in respect of revenue and Adjusted EBITDA, Canaccord Genuity applied a ‎selected range of multiples, in each case as it relates to Acreage, to (i) the financial information with ‎respect to Acreage, as provided by Acreage’s management, for the calendar years ending December ‎‎31, 2022 and December 31, 2023; and (ii) research analysts’ estimates, for the calendar years ending ‎December 31, 2022, December 31, 2023, and December 31, 2024, respectively. A typical en-bloc or ‎control premium was not considered by Canaccord Genuity to be relevant in the circumstances, as the ‎Floating Shareholders previously received cash payments from Canopy as consideration for the ‎option to acquire control of Acreage pursuant to the amended and restated plan of arrangement ‎implemented on September 23, 2020 and pursuant to the Existing Arrangement Agreement. Such cash ‎payments are reflective of a typical en-bloc or control premium, and, as such, the trading price of the ‎Floating Shares already embeds such premium. Based upon the above analysis, Canaccord Genuity ‎then determined a range of implied values per Floating Share (“Floating Share Range”).‎

With respect to Canopy, Canaccord Genuity observed the following ranges of multiples for the ‎primary set of publicly-traded cannabis companies which were reviewed by Canaccord Genuity and ‎determined to be the most comparable to Canopy (in each case and as applicable, including Canopy ‎itself, excluding select outliers, and to the extent information was available). More specifically, the ‎ranges below encompass the set of Canadian publicly-traded cannabis companies which, as at ‎October 21, 2022, had a TEV over US$500 million, and includes Tilray Brands, Inc., Canopy, and ‎SNDL Inc.‎

_______________

After reviewing such ranges of multiples, ‎Canaccord Genuity applied a selected range of multiples, in ‎each case as it relates to Canopy, to research analysts’ estimates, for the calendar years ending ‎December 31, 2022, December 31, 2023, and December 31, 2024, respectively. Multiples of Adjusted EBITDA were not considered, as the ‎majority of Canadian cannabis companies, including Canopy, do not have positive Adjusted ‎EBITDA. Based upon the above analysis, Canaccord Genuity then determined a range of implied ‎values per Canopy Share (“Canopy Share Range”).‎

Canaccord Genuity then compared the Floating Share Range to the Canopy Share Range to determine an exchange ratio range (“Exchange Ratio Range”), as shown below, and compared such Exchange Ratio Range to the exchange ratio implied by the number of Consideration Shares to be received by Floating Shareholders for each Floating Share held.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Any attempt to do so could lead to undue emphasis on any particular factor or analysis. Selecting portions of the analyses or of the summary of the Canaccord Genuity Fairness Opinion, without considering the analyses as a whole, could create a misleading view of the processes underlying the Canaccord Genuity Fairness Opinion. In arriving at its fairness determination, Canaccord Genuity considered the results of all of its analyses, as a whole, and did not attribute any particular weight to any factor or analysis considered by it. Rather, Canaccord Genuity made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses, taken as a whole. Given that Canaccord Genuity’s analyses is inherently subject to uncertainty, being based upon numerous factors or events beyond the control of any party involved in the Transactions, including their respective advisors, none of Canaccord Genuity, Acreage, Canopy or any other person assumes any responsibility if future results are materially different from those used by Canaccord Genuity in rendering the Canaccord Genuity Fairness Opinion.

The Canaccord Genuity Fairness Opinion was given as at October 24, 2022, and it should be understood that: (i) subsequent developments may affect the conclusions expressed in the Canaccord Genuity Fairness Opinion, if such opinion were to be rendered as of a later date; and (ii) Canaccord Genuity disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Canaccord Genuity Fairness Opinion which may come, or be brought, to the attention of Canaccord Genuity after the date of such opinion. Without limiting the foregoing, in the event that there is any material change in any fact or matter affecting the Canaccord Genuity Fairness Opinion after the date of such opinion, including, without limitation, the terms and conditions of the Floating Share Arrangement, or if Canaccord Genuity learns that the information relied upon in rendering the Canaccord Genuity Fairness Opinion was inaccurate, incomplete or misleading in any material respect, Canaccord Genuity reserves the right to change, modify or withdraw the Canaccord Genuity Fairness Opinion. Canaccord Genuity are not legal, tax or accounting experts, had not been engaged to review any legal, tax or accounting aspects of the Transactions and expresses no opinion concerning any legal, tax or accounting matters concerning the Transactions. Without limiting the generality of the foregoing, Canaccord Genuity has not reviewed and did not opine upon the tax treatment under the Transactions.

The Canaccord Genuity Fairness Opinion represents the views and opinions of Canaccord Genuity, and the form and content of the Canaccord Genuity Fairness Opinion have been approved for release by a committee of Canaccord Genuity’s managing directors, each of whom is experienced in merger, acquisition, divestiture, fairness opinion, and capital markets matters.

Neither Canaccord Genuity nor any of its affiliates (as such term is defined in the Securities Act) is an insider, associate, or affiliate of Acreage or Canopy. Canaccord Genuity and its affiliates had not been engaged to provide any financial advisory services, had not acted as lead or co-lead manager on any offering of securities of Acreage, Canopy or their respective affiliates during the 24 months preceding the date on which Canaccord Genuity was first contacted by Acreage in respect of the Transactions, other than the services provided pursuant to the Canaccord Genuity Engagement Agreement or as otherwise described herein. Canaccord Genuity acted as investment advisor to Acreage in connection with the investment of a portion of the proceeds received by Universal Hemp, LLC, an affiliate of Acreage, on September 28, 2020, as well as investment advisor to Acreage pursuant to its 7.50% loan due April 2026, which closed on September 28, 2020.

In addition, Canaccord Genuity and its affiliates act as a trader and dealer, both as principal and agent, in major financial markets and, as such, may have had and may in the future have long or short positions in the securities of Acreage, Canopy or any of their respective associates or affiliates and, from time to time, may have executed or may execute transactions on behalf of such companies or clients for which it receives or may receive commission(s). As an investment dealer, Canaccord Genuity and its affiliates conduct research on securities and may, in the ordinary course of their business, provide research reports and investment advice to their clients on investment matters, including with respect to Acreage, Canopy and the Transactions. In addition, Canaccord Genuity and its affiliates may, in the ordinary course of their business, provide other financial services to Acreage, Canopy or any of their associates or affiliates, including financial advisory, investment banking and capital market activities such as raising debt or equity capital. In addition, Canaccord Genuity and/or certain employees of Canaccord Genuity may currently own or may have owned securities of Acreage and/or Canopy.

Except as otherwise described in this summary, Acreage and the Acreage Board imposed no other instructions or limitations on Canaccord Genuity with respect to the investigations made or procedures followed by Canaccord Genuity in rendering the Canaccord Genuity Fairness Opinion. Canaccord Genuity did not recommend any specific consideration to Acreage or the Acreage Board, or that any specific amount or type of consideration constituted the only appropriate consideration for the Floating Share Arrangement.

Canaccord Genuity acted as financial advisor to Acreage in connection with the Floating Share Arrangement and, ‎pursuant to the Canaccord Genuity Engagement Agreement, Canaccord Genuity is to be paid certain fees for its ‎services, including (i) a fee of $500,000, which became payable upon the delivery of the Canaccord Genuity ‎Fairness Opinion, no part of which is contingent upon the Canaccord Genuity Fairness Opinion being favourable or ‎upon the successful completion of the Floating Share Arrangement or any alternative transaction; plus (ii) a fee of ‎‎$4,500,000, which is contingent upon the successful completion of the Floating Share Arrangement and the Acquisition or any ‎alternative transaction, of which $2,500,000 is payable in cash and $2,000,000 is payable in ‎Floating Shares, based on the five-day volume weighted average price of the Floating Shares on the OTC ending on ‎the day immediately prior to the Effective Date, payable upon completion of the Floating Share Arrangement or ‎any alternative transaction, subject to a maximum fee of $5,000,000. In addition, Acreage has agreed to reimburse ‎Canaccord Genuity for its reasonable out-of-pocket expenses and to indemnify Canaccord Genuity in respect of ‎certain liabilities that might arise in connection with its engagement under the Canaccord Genuity Engagement ‎Agreement (all as further set out therein).

Certain Financial Projections

As a matter of course, Acreage does not publicly disclose forecasts or projections as to future performance, earnings or other results due to the inherent unpredictability of the underlying assumptions, estimates and projections. In connection with the evaluation of the Floating Share Arrangement, Acreage’s management prepared and provided to the Acreage Board and Special Committee forecasts of certain financial information (the “Management Forecasts”). The Management Forecasts should not be construed, or utilized, as public guidance and the Management Forecasts have not been updated or revised to reflect information or results after the date they were prepared or as of the date of this Circular.

Acreage is including a summary of the Management Forecasts solely to provide Floating Shareholders with access to information that was used in connection with the evaluations of the Floating Share Arrangement and the Consideration Shares and should not be regarded as an indication that the Acreage Board, the Special Committee or management considered, or now considers, this information to be predictive of actual future results. The Management Forecasts were made available to Eight Capital and Canaccord Genuity in connection with the rendering of their respective Fairness Opinions, as more fully described under the heading “The Floating Share Arrangement – Eight Capital Fairness Opinion” and “The Floating Share Arrangement – Canaccord Genuity Fairness Opinion.” The summary of the Management Forecasts may not be appropriate for other purposes and is not being included in this Circular to influence a Floating Shareholder’s decision whether to vote in favor of the Arrangement Resolution or any other proposal. Please read the information set forth in this section below under the heading “Important Information Regarding the Management Forecasts.”

The following table presents a summary of the Management Forecasts.

The following tables provide publicly available research analysts’ estimates² for each of Acreage and Canopy, each for the calendar years ending December 31, 2022, December 31, 2023, and December 31, 2024, respectively, that were reviewed and relied upon by Canaccord Genuity in connection with the Canaccord Genuity Fairness Opinion.

² Source: S&P Capital IQ.

Important Information Regarding the Management Forecasts

Acreage’s Management prepared the Management Forecasts based on historical financial statements, as ‎well as a series of assumptions and estimates related to future results that it believed to be reasonable at the time, ‎including assumptions and estimates related to revenue growth, gross margin percentages, selling, general and ‎administrative expenses, capital expenditures and related depreciation and amortization, and other relevant ‎factors relating to expected regulatory developments and Acreage’s long-range operating plan, as well as how certain of these assumptions and ‎estimates may change over time.

The Management Forecasts did not give effect to any changes or expenses as a result of the Floating Share ‎Arrangement Agreement, the Floating Share Arrangement or the Existing Arrangement or other transactions ‎contemplated by thereby, or any other effects of such matters. The Management Forecasts were developed by Acreage’s management on a standalone basis without giving effect to the Floating Share Arrangement and the Existing Arrangement. Furthermore, the Management Forecasts do not take into account the effect of any failure of the transactions contemplated by the Floating Share Arrangement and the Existing Arrangement to be completed and should not be viewed as accurate or continuing in that context. Although the Management Forecasts are presented with numerical specificity, they were based on numerous variables and assumptions that are inherently uncertain, although considered reasonable by Acreage’s management as of the date of their preparation. These variables and assumptions are inherently uncertain for any number of reasons, including general economic, industry, regulatory and business conditions and the other risks, including, but not limited to, the factors set forth under “Cautionary Note Regarding Forward-Looking Information” and the various risks set forth under “Risk Factors.” There will be differences between actual and projected results, and actual results may be significantly higher or lower than the Management Forecasts. The Management Forecasts will be affected by Acreage’s ability to achieve strategic goals, objectives and targets over the applicable periods. The Management Forecasts reflect assumptions as to certain business decisions and regulatory developments that are subject to change and cannot, therefore, be considered a guarantee of future operating results, and this information should not be relied on as such. The inclusion of the Management Forecasts‎ in this Circular should not be deemed an admission or ‎representation by Acreage that they are viewed by Acreage as material information of Acreage, and should not be regarded as an indication that Acreage, Eight Capital, Canaccord Genuity, their respective officers, directors, affiliates, advisors, or other representatives or anyone who received this information in connection with the delivery of the Fairness Opinions then considered, or now considers, them a reliable prediction of future events, and this information should not be relied upon as such. The inclusion of the Management Forecasts in this Circular should not be regarded as an indication that the Management Forecasts will be necessarily predictive of actual future events. No representation is made by Acreage or any other person regarding the Management Forecasts or Acreage’s ultimate performance compared to such information. Some or all of the assumptions which have been made regarding, among other things, the timing of certain ‎occurrences or impacts, may change or may have changed since the date the Management Forecasts were prepared. ‎The Management Forecasts also reflect assumptions as to ‎ certain business decisions that are subject to change ‎and, in many respects, subjective judgment, and thus are susceptible to multiple interpretations and periodic ‎revisions based on actual experience and further or future business developments. ‎The Management Forecasts should be evaluated, if at all, in conjunction with the historical financial statements and other information about Acreage contained in Acreage’s public filings with the SEC and Canadian Securities Regulators. For more information, please see “Where You Can Find More Information.” In light of the foregoing factors, and the uncertainties inherent in the Management Forecasts, Floating Shareholders are cautioned not to place undue, if any, reliance on the Management Forecasts.

The Management Forecasts are not being included in this Circular to influence the decision of the Floating ‎Shareholders whether to vote for the Floating Share Arrangement, but rather because such Management Forecasts, ‎or portions of such Management Forecasts, were provided to the Acreage Board, the Special Committee, ‎Eight Capital and Canaccord Genuity. ‎The Management Forecasts were not prepared with a view toward public disclosure or with a view toward complying with the published guidelines of the SEC or Canadian Securities Regulators regarding projections or U.S. GAAP, or the guidelines established by the American Institute of Certified Public Accountants with respect to the preparation or presentation of prospective financial information, but, in the view of Acreage’s management, were prepared on a reasonable basis, reflected the best available estimates and judgments at the time of preparation, and presented as of the time of preparation, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Acreage. Although Acreage’s management believes there is a reasonable basis for the Management Forecasts, Acreage cautions Floating Shareholders that future results could be materially different from the Management Forecasts.

The Management Forecasts included in this Circular have been prepared by, and are the responsibility of, Acreage’s management. Marcum LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying Management Forecasts and, accordingly, Marcum LLP does not express an opinion or any other form of assurance with respect thereto. The Marcum LLP report incorporated by reference into this Circular relates to Acreage’s previously issued financial statements. It does not extend to the Management Forecasts and should not be read to do so.

Adjusted EBITDA contained in the Management Forecasts is a “non-U.S. GAAP financial measure,” which is a financial performance measure that is not calculated in accordance with U.S. GAAP. The non-U.S. GAAP financial measures used in the Management Forecasts were relied upon by Eight Capital and Canaccord Genuity, as applicable, for purposes of their respective Fairness Opinions and by the Acreage Board and Special Committee in connection with their respective evaluations of the Floating Share Arrangement. The SEC rules which would otherwise require a reconciliation of a non-U.S. GAAP financial measure to a U.S. GAAP financial measure do not apply to non-U.S. GAAP financial measures included in disclosures relating to a proposed business combination such as the Floating Share Arrangement if the disclosure is included in a document such as this Circular. In addition, reconciliations of non-U.S. GAAP financial measures were not relied upon by Eight Capital or Canaccord Genuity for purposes of their respective Fairness Opinions or by the Acreage Board or Special Committee in connection with their respective evaluations of the Floating Share Arrangement. Accordingly, Acreage has not provided a reconciliation of the financial measures included in the Management Forecasts to the relevant U.S. GAAP financial measures. Non-U.S. GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP, and non-U.S. GAAP financial measures as used by Acreage may not be comparable to similarly titled amounts used by other companies. Furthermore, there are limitations inherent in non- U.S. GAAP financial measures because they exclude charges and credits that are required to be included in a U.S. GAAP presentation. Accordingly, this non-U.S. GAAP financial measure should be considered together with, and not as an alternative to, financial measures prepared in accordance with U.S. GAAP.

The summary of such information above is included solely to give Floating Shareholders access to the information that was made available to Eight Capital and Canaccord Genuity, and is not included in this Circular to influence any Floating Shareholder to vote their shares in favor of the Floating Share Arrangement. In addition, the Management Forecasts have not been updated or revised to reflect information or results after the date they were prepared or as of the date of this Circular, and except as required by applicable securities laws, Acreage does not intend to update or otherwise revise the Management Forecasts or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the underlying assumptions are shown to be in error.

In light of the foregoing factors and the uncertainties inherent in financial projections, Floating Shareholders are cautioned not to place undue reliance, if any, on the Management Forecasts.

By including a summary of the Management Forecasts in this Circular, the Company undertakes no obligations to update, or publicly disclose any update to, the Management Forecasts to reflect circumstances or events, including unanticipated events, that may have occurred or that may occur after the preparation of the Management Forecasts, even in the event that any or all of the assumptions underlying the Management Forecasts are shown to be in error or change, except and only to the extent that may be otherwise required by applicable law.

Recommendation of the Acreage Board

The Acreage Board‎, after consultation with Acreage management and receipt of advice and assistance from its financial and legal advisors, and after careful consideration of alternatives and a number of factors, including, among others, the receipt of the unanimous recommendation of the Special Committee, the Fairness Opinions and the factors set out below under the heading “Reasons for the Floating Share Arrangement”, unanimously (with the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement‎ and the connected transactions and abstained from voting in respect thereof) determined that the Floating Share Arrangement and entry into the Floating Share Arrangement Agreement‎ are in the best interests of Acreage and are fair to Floating Shareholders and approved and authorized Acreage to enter into the Floating Share Arrangement Agreement‎ and related agreements. Accordingly, the Acreage Board unanimously (with the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement‎ and the connected transactions and abstained from voting in respect thereof) recommends that Floating Shareholders vote FOR the Arrangement Resolution.

All of the Acreage Locked-Up Shareholders are required to vote all of their Floating Shares in favour of the Arrangement Resolution, subject to the terms of the Floating Share Arrangement Agreement and the Voting ‎Agreements. See “Transaction Agreements – Voting ‎Agreements”.

Treatment of High Street Holders and USCo2 Holders

Concurrently with the execution of the Floating Share Arrangement Agreement, Acreage amended the High ‎Street Operating Agreement to (i) allow Canopy USA to have a call right on the High Street Units effective immediately prior to the earlier of the closing of the ‎Floating Share Arrangement or the closing of the Existing Arrangement (rather than the three year anniversary of the closing of the Existing Arrangement) thereby requiring each holder of High Street Units ‎to exchange their High Street Units for Canopy Shares as described in further detail in such amendment and (ii) ‎make ‎other non-substantive changes agreed upon by Acreage and Canopy which were advisable or ‎‎necessary in order to carry out the purpose and intention of the transactions contemplated in the Floating Share ‎Arrangement. ‎

The USCo2 Constating Documents will be amended prior to the closing of the Floating Share Arrangement to: (i) allow Canopy USA to ‎have a call right on the USCo2 floating ‎shares effective immediately prior to the earlier of the closing of the ‎Floating Share Arrangement or the closing of the Existing Arrangement (rather than the three year anniversary of the closing of the Existing Arrangement) thereby requiring each shareholder to exchange their floating shares for Canopy Shares; and (ii) make ‎other ‎non-substantive changes agreed upon by Acreage and Canopy which were advisable or ‎necessary in ‎order to carry out the purpose and intention of the transactions contemplated in the Floating Share Arrangement. ‎

Immediately following the Effective Time, all High Street Units and USCo2 Shares may be exchanged for Floating ‎Shares and Fixed Shares, which will then be exchanged for Canopy Shares on the basis of the Exchange Ratio and ‎the Fixed Exchange Ratio, as applicable. Upon the closing of the Floating Share Arrangement, or if the Floating ‎Share Arrangement does not close but the ‎Existing Arrangement closes, all High Street Units and USCo2 Shares will ‎be exercisable, convertible or ‎exchangeable for Canopy Shares and Floating Shares in accordance with the ‎provisions of such ‎amendments.‎

Timing for Completion of the Floating Share Arrangement

Subject to the satisfaction or waiver of the conditions in the Floating Share Arrangement Agreement‎, the Floating Share Arrangement will become effective at 12:00 a.m. (Vancouver time) on the Effective Date, being the date upon which all of the conditions to the completion of the Floating Share Arrangement as set out in the Floating Share Arrangement Agreement‎ have been satisfied or waived in accordance with the Floating Share Arrangement Agreement‎ and all documents agreed to be delivered thereunder have been delivered to the satisfaction of the recipient, acting reasonably.

Although Acreage’s, Canopy’s and Canopy USA’s objective is to have the Effective Date occur as soon as possible after the Meeting, the Effective Date could be delayed for several reasons, including, but not limited to, any delay in obtaining any required Floating Share Arrangement Regulatory Approvals or Regulatory Approvals. In addition, any delay in satisfaction of the Acquisition Closing Conditions under the Existing Arrangement Agreement will result in a corresponding delay in completion of the Floating Share Arrangement.

The Effective Date will be the date upon which Acreage, Canopy and Canopy USA agree in writing following the satisfaction or waiver of all conditions to the completion of the Floating Share Arrangement as set out in the Floating Share Arrangement Agreement‎ (excluding any conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction or waiver of those conditions). The completion ‎ of the Floating Share Arrangement is‎ expected to occur in the second half of 2023; however, it is possible that completion may be delayed beyond this date if the conditions to the completion of the Floating Share Arrangement cannot be met on a timely basis.

Acreage, Canopy and Canopy USA may determine not to complete the Floating Share Arrangement without prior notice to, or action on the part of, Floating Shareholders, Canopy Shareholders or Canopy USA members. See “Transaction Agreements – Floating Share Arrangement Agreement”.

Pursuant to the terms of the Floating Share Arrangement Agreement, the Fixed Call Option pursuant to the Existing Arrangement to acquire all of ‎the issued and outstanding Fixed Shares (following the automatic conversion of the Fixed Multiple Shares) is required to be exercised no later than five Business Days following the exchange of all Canopy Shares held by CBG and Greenstar into Exchangeable Canopy Shares. See the Existing Arrangement and Acreage’s proxy statement and management information circular dated August 17, 2020 in connection with a special meeting held to approve the Existing Arrangement for further details with respect to the steps of the Existing Arrangement, a copy of each of which is available under Acreage’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

Required Shareholder Approvals

For the Arrangement Resolution, you may vote “FOR” or “AGAINST”. Pursuant to the Interim Order and the BCBCA, in order to be adopted, the Arrangement Resolution must be ‎approved, with ‎or without variation, by the affirmative vote of at least 66⅔% of the votes cast by holders of ‎Floating Shares, present virtually or represented by proxy and entitled to vote at the Meeting. Abstentions and broker non-votes will not have any effect on the approval of the Arrangement Resolution.

Pursuant to MI 61-101, the Arrangement ‎Resolution must also be approved by not less than a simple majority of votes cast by the holders of Floating Shares, present virtually or represented by proxy and entitled to vote at the Meeting‎, excluding the votes of the Interested Parties pursuant to MI 61-101. The votes attaching to the Floating Shares held by the Interested Parties will be excluded for the purposes of determining ‎whether “minority approval” has been obtained for the purposes of MI 61-101.‎

Shareholder Approval must be received in order for Acreage to seek the Final Order and complete the Floating Share Arrangement on the Effective Date. See “Securities Law Matters – Canadian Securities Laws – Multilateral Instrument 61-101”.

Should Floating Shareholders fail to approve the Arrangement Resolution by the requisite majorities, the Floating Share Arrangement will not be completed. Notwithstanding the foregoing, the Arrangement Resolution authorizes the Acreage Board, without further notice to or approval of Floating Shareholders, subject to the terms of the Floating Share Arrangement ‎Agreement, not to proceed with the Floating Share Arrangement ‎and related transactions‎.

The Acreage Board (with the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement‎ and the connected transactions and abstained from voting in respect thereof) has approved the terms of the Floating Share Arrangement and entry into the Floating Share Arrangement Agreement‎ and related agreements and unanimously (with the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement‎ and the connected transactions and abstained from voting in respect thereof) recommends that Floating Shareholders vote FOR the Arrangement Resolution. See “The Floating Share Arrangement – Recommendation of the Acreage Board” and “The Floating Share Arrangement – Reasons for the Floating Share Arrangement”.

‎Interests of Certain Persons in the Floating Share Arrangement

In considering the Floating Share Arrangement and the unanimous recommendation of the Acreage Board (with the exception of Kevin Murphy, John Boehner, Brian Mulroney and Peter Caldini, each of whom declared their interest in the transactions contemplated by the Floating Share Arrangement Agreement‎ and the connected transactions and abstained from voting in respect thereof) with respect to the Floating Share Arrangement, Floating Shareholders should be aware that ‎certain directors and certain executive officers of Acreage have interests in connection with the Floating Share Arrangement that may ‎present them with actual or potential conflicts of interest in connection with the Floating Share Arrangement and the connected transactions. The Acreage Board and the Special Committee are aware of these interests and considered them along with other matters described above ‎under “The Floating Share Arrangement – Reasons for the Floating Share Arrangement”. These interests and benefits are described below.‎

Except as otherwise disclosed below or elsewhere in this Circular, all benefits received, or to be received, by directors or ‎executive officers of Acreage as a result of the Floating Share Arrangement are, and will be, solely in connection with their services as ‎directors or employees of Acreage. Except as disclosed below, no benefit has been, or will be, conferred for the purpose of ‎increasing the value of consideration payable to any such Person for Floating Shares, nor is it, or will it be, conditional on the ‎Person supporting the Floating Share Arrangement.‎

Floating Shares

As of the Record Date, the directors and executive officers of Acreage beneficially owned, or exercised control or direction, directly or indirectly, over [t] Floating Shares, representing in the aggregate approximately [t]% of all issued and outstanding Floating Shares. All of the Floating Shares held by such directors and executive officers of Acreage will be treated in the same fashion under the Floating Share Plan of Arrangement as Floating Shares held by all other Floating Shareholders (other than Canopy and Canopy USA). See “The Floating Share Arrangement – Principal Steps of the Floating Share Arrangement”.

Pursuant to the Voting Agreements, all of the directors and certain senior officers of Acreage have agreed to, among other things, vote their Floating Shares, as applicable, FOR the Arrangement Resolution. The Floating Shares held by each individual director and executive officer of Acreage are set out in the table below under the heading “Ownership of Acreage Shares, Acreage Options and Acreage Share Units”.

Floating Options

As of the Record Date, the directors and executive officers of Acreage owned an aggregate of [t] Floating Options granted pursuant to the Amended Equity Incentive Plan. At the Effective Time, the outstanding Floating Options will be exchanged for Replacement Options in accordance with the terms of the Floating Share Arrangement. See “The Floating Share Arrangement – Principal Steps of the Floating Share Arrangement”.

Except as provided in the Floating Share Plan of Arrangement, all terms and conditions of a Replacement ‎Option, including the term to expiry, conditions to and manner of ‎exercising, will be the same as the Floating Option for which it ‎was exchanged, and will be governed by the terms of the Canopy Equity ‎Incentive Plan, and the exchange will not provide any optionee with any ‎additional benefits as compared to those under his or her original ‎ Floating Option‎. Notwithstanding the foregoing, the terms and conditions of ‎any Replacement Options exchanged for ‎Executive Floating ‎Options will be deemed to ‎provide that such Replacement Options will continue to vest according to ‎the terms of the Executive Floating Options as at the date of the Floating Share ‎Arrangement Agreement, regardless of the resignation of the Company ‎Executives from their positions or ‎offices with Acreage, provided ‎that such Company Executives retain a position of employment with ‎Acreage or an affiliate thereof‎. See “The Floating Share Arrangement – Principal Steps of the Floating Share Arrangement”.

The Floating Options held by each individual director and executive officer of Acreage are set out in the table below under the heading “Ownership of Acreage Shares, Acreage Options and Acreage Share Units”.

Floating Share Units

As of the Record Date, the directors and executive officers of Acreage owned an aggregate of [t] Floating Share Units granted pursuant to the Amended Equity Incentive Plan. At the Effective Time, the outstanding Floating Share Units will be exchanged for Replacement Share Units in accordance with the terms of the Floating Share Arrangement. See “The Floating Share Arrangement – Principal Steps of the Floating Share Arrangement”.

Except as provided in the Floating Share Plan of Arrangement, all terms and conditions of a Replacement ‎Share Unit, including the term to expiry, conditions to and manner of ‎exercising, will be the same as the Floating Share Unit for which it ‎was exchanged, and the exchange will not provide any holder with any ‎additional benefits as compared to those under his or her original ‎ Floating Share Unit‎. Notwithstanding the foregoing, the terms and conditions of ‎those Replacement Share Units exchanged for Executive Floating Share Units will be deemed to ‎provide that such Replacement Share Units will continue to vest according to ‎the terms of the Executive Floating Share Units as at the date of the Floating Share ‎Arrangement Agreement, regardless of the resignation of the Company ‎Executives from their positions or ‎offices with Acreage, provided ‎that such Company Executives retain a position of employment with ‎Acreage or an affiliate thereof‎. See “The Floating Share Arrangement – Principal Steps of the Floating Share Arrangement”.

The Floating Share Units held by each individual director and executive officer of Acreage are set out in the table below under the heading “Ownership of Acreage Shares, Acreage Options and Acreage Share Units”.

Floating Warrants

As of the Record Date, none of the directors and executive officers of Acreage own any Floating Warrants.

Ownership of Acreage Shares, Acreage Options and Acreage Share Units

The following table sets forth the information with respect to the beneficial ownership of securities of Acreage for (i) ‎each director, (ii) each executive officer, (iii) all current directors and executive officers as a group, and (iv) to the ‎knowledge of the directors and officers of Acreage, the Persons or companies beneficially owning, directly or ‎indirectly, or exercising control or direction over, more than 5% of the outstanding Floating Shares, in each case as at the Record Date. Except as noted and to the knowledge of Acreage, the beneficial owners listed below have sole voting ‎and investment power with respect to Floating Shares beneficially owned. ‎None of the directors and executive officers of Acreage nor, to the knowledge of Acreage after reasonable enquiry: (a) their respective associates and affiliates; (b) any insider of Acreage (other than the directors and executive officers) and their respective associates and affiliates; (c) any associate or affiliate of Acreage; and (d) any Person acting jointly or in concert with Acreage, beneficially own, or exercise control or direction over, securities of Acreage except as set forth below and which will be affected by the Floating Share Arrangement as described under “The Floating Share Arrangement – Principal Steps of the Floating Share Arrangement”:

Notes:

‎(1) ‎‎195,000 of the Floating Shares and 455,000 Fixed Shares registered in the name of Murphy Capital, LLC, an entity over which Mr. ‎Murphy exercises ‎direction or ‎control‎‎.

To the knowledge of Acreage, there are no agreements, commitments or understandings to acquire securities of Acreage, Canopy or Canopy USA by any of the Persons referred to above, except for Canopy Shares that may be acquired upon the completion of the Floating Share Arrangement and closing of the Acquisition, and upon exercise or vesting, as applicable, of Acreage Options, Acreage Share Units, Replacement Options and Replacement Share Units, as the case may be, or as otherwise disclosed herein. None of the Persons referred to above hold any Floating Warrants or Fixed Warrants as of the date hereof.

Court Approval of the Floating Share Arrangement and Completion of the Floating Share Arrangement

The Floating Share Arrangement requires Court approval under Division 5 of Part 9 of the BCBCA. On January 18, 2023, prior to the mailing of this Circular, Acreage obtained the Interim Order, which was varied on [t], 2023 to amend the Record Date, the date of the Meeting, the date of the hearing for the Final Order approving the Floating Share Arrangement and any related timelines. The Interim Order provides for the calling and holding of the Meeting, the Dissent Rights and other procedural matters. A copy of the Interim Order is attached as Appendix “F” to this Circular.

Subject to obtaining the Shareholder Approval, the hearing in respect of the Final Order is currently expected to take place on or about [t], 2023, in Vancouver, British Columbia. Under the terms of the Interim Order, any Floating Shareholder, Floating Optionholder, Floating Share Unit Holder, Floating Warrantholder or other Person who wishes to appear, or to be represented, and to present evidence or arguments must file and serve a Response to Petition (“Response”) no later than 4:00 p.m. (Vancouver time) on [t], 2023, along with any other documents required, all as set out in the Interim Order and the Notice of Hearing of Application (for Final Order), the text of which are attached as Appendix “F” to this Circular, and satisfy any other requirements of the Court. The Court will consider, among other things, the substantive and procedural fairness and reasonableness of the Floating Share Arrangement. The Court may approve the Floating Share Arrangement in any manner the Court may direct, subject to compliance with any terms and conditions, if any, as the Court deems fit. Depending upon the nature of any required amendments, Acreage, Canopy and/or Canopy USA may determine not to proceed with the Floating Share Arrangement. In the event that the hearing is postponed, adjourned or rescheduled then, subject to further order of the Court, only those Persons having previously filed and served a Response will be given notice of the postponement, adjournment or rescheduled date. A copy of the Notice of Application (Final Order Hearing) is attached as Appendix “F” to this Circular.

The Court has been advised that the Court’s approval of the Floating Share Arrangement (including the fairness thereof), if granted, will form a basis for the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof (the “Section 3(a)(10) Exemption”) with respect to the issuance and distribution of the Floating Share Arrangement Issued Securities to be issued by Canopy to the Floating Shareholders, the Floating Optionholders, the Floating Share Unit Holders and the Floating Warrantholders, as applicable, upon completion of the Floating Share Arrangement pursuant to the Floating Share Plan of Arrangement. Consequently, if the Final Order is granted, the Floating Share Arrangement Issued Securities issuable pursuant to the Floating Share Arrangement will not require registration under the U.S. Securities Act. See “Securities Law Matters – U.S. Securities Laws”.

Effects of the Floating Share Arrangement on Shareholders’ Rights

The rights of Floating Shareholders are currently governed by the BCBCA and by Acreage’s Articles. Floating Shareholders receiving Canopy Shares pursuant to the Floating Share Arrangement will become shareholders of Canopy, which is governed by the CBCA and the articles of incorporation, as amended, and by-laws of Canopy. Although the rights and privileges of shareholders under the CBCA are in many instances comparable to those under the BCBCA, there are several differences. See Appendix “I”– “Comparison of Shareholder Rights under the BCBCA and CBCA” for a comparison of certain of these rights. This summary is not intended to be exhaustive and Floating Shareholders should consult their legal advisors regarding all of the implications of the effects of the Floating Share Arrangement on such Floating Shareholders’ rights.

TRANSACTION AGREEMENTS

The Existing Arrangement Agreement

Acreage and Canopy are parties to the Existing Arrangement Agreement. In accordance with the Existing Arrangement Agreement, on September 23, 2020, Acreage implemented the Existing Arrangement pursuant to which, among other things, Acreage completed a capital reorganization whereby: (i) each existing Former SVS was exchanged for 0.7 of a Fixed Share and 0.3 of a Floating Share; (ii) each issued and ‎outstanding Former PVS was exchanged for 28 Fixed Shares and 12 Floating Shares; and (iii) each issued and outstanding Former MVS‎ was ‎exchanged for 0.7 of a Fixed Multiple Share and 0.3 of a Floating Share‎.

Pursuant to the Existing Arrangement Agreement, upon the occurrence or waiver (at Canopy’s discretion) of the ‎Triggering Event, Canopy, subject to the satisfaction or waiver of certain closing ‎conditions set out in the Existing Arrangement Agreement: (i) would be obligated to a acquire all of the issued and outstanding Fixed Shares (following the ‎mandatory conversion of the Fixed Multiple Shares into Fixed Shares) in accordance with the Fixed Call Option on the basis of 0.3048 of a Canopy ‎Share for each Fixed Share at the ‎time of the acquisition of the Fixed Shares, subject to adjustment in accordance with the terms of the ‎Existing Arrangement Agreement; and (ii) would have the Floating Call Option, exercisable for a period of 30 days following the Triggering Event Date, to acquire all of the issued and outstanding ‎Floating Shares in accordance with the Floating Option at a price to be determined based upon the 30-day VWAP of the Floating ‎Shares, subject to a minimum price of $6.41, as may be adjusted in accordance with the terms of the Existing ‎Arrangement Agreement, to be payable, at the option of Canopy, in cash, Canopy Shares or a combination thereof. The Fixed Call Option and the Floating Option expire on September ‎23, 2030. Pursuant to the terms of the Floating Share Arrangement Agreement, Canopy has irrevocably waived its right to exercise the Floating Call Option pursuant to the Existing Arrangement‎.

It is a condition to closing of the Floating Share Arrangement that all Acquisition Closing Conditions, being conditions precedent to the completion of the Acquisition set forth in the Existing Arrangement Agreement, shall have been satisfied or, if permitted, waived, excluding conditions that by their terms cannot be satisfied until the Acquisition Effective Time. See “The Floating Share Arrangement – Principal Steps of the Floating Share Arrangement” for a summary of the Acquisition Closing Conditions set forth in the Existing Arrangement Agreement.

The foregoing is qualified in its entirety by reference to the Existing Arrangement Agreement. See the Existing Arrangement Agreement and Acreage’s proxy statement and management information circular dated August 17, 2020 in connection with a special meeting held to approve the Existing Arrangement for further details with respect to the steps of the Existing Arrangement, a copy of each of which has been filed by Acreage with the SEC and is available on EDGAR at www.sec.gov/edgar and on Acreage’s SEDAR profile at www.sedar.com.

The Floating Share Arrangement Agreement

The following summarizes the material provisions of the Floating Share Arrangement Agreement. This summary may not contain all of the information about the Floating Share Arrangement Agreement that is important to Floating Shareholders. The rights and obligations of the Parties are governed by the express terms and conditions of the Floating Share Arrangement Agreement and not by this summary or any other information contained in this Circular. This summary is qualified in its entirety by reference to the Floating Share Arrangement Agreement, which has been filed by Acreage on its SEDAR profile at www.sedar.com and with the SEC and is available on EDGAR at www.sec.gov/edgar.

In reviewing the Floating Share Arrangement Agreement and this summary, please remember that they have been included to provide Floating Shareholders with information regarding the terms of the Floating Share Arrangement Agreement and are not intended to provide any other factual information about Acreage, Canopy, Canopy USA or any of their Subsidiaries or affiliates. The Floating Share Arrangement Agreement contains representations and warranties and covenants by each of the Parties to the Floating Share Arrangement Agreement, which are summarized below. These representations and warranties have been made solely for the benefit of the other Parties to the Floating Share Arrangement Agreement and:

Moreover, information concerning the subject matter of the representations and warranties in the Floating Share Arrangement Agreement and described below may have changed since the Announcement Date and subsequent developments or new information qualifying a representation or warranty may have been included in this Circular. Accordingly, the representations and warranties and other provisions of the Floating Share Arrangement Agreement should not be read alone, but instead should be read together with the information provided elsewhere in this Circular and in the documents incorporated by reference into this Circular.

Representations and Warranties

The Floating Share Arrangement Agreement contains certain customary representations and warranties provided by Acreage, Canopy and Canopy USA. The assertions embodied in those representations and warranties are solely for the purposes of the Floating Share Arrangement Agreement and are subject to important qualifications and limitations agreed to by Acreage, Canopy and Canopy USA in connection with negotiating its terms.

The representations and warranties made by Acreage, Canopy and Canopy USA relate to, among other things: organization and qualification; authority relative to the Floating Share Arrangement Agreement; no violation; governmental approvals; and capitalization.

The Floating Share Arrangement Agreement also contains certain representations and warranties made solely by Canopy with respect to, among other things: authority relative to the Consent Agreement and Protection Agreement; Consideration Shares; Replacement Securities; assets; financial statements, public disclosure records; no disputes; and certain representations and warranties made solely by Acreage with respect to fairness opinions and directors’ approvals; public disclosure records; no disputes.

Covenants

Covenants Regarding the Floating Share Arrangement

Acreage, Canopy and Canopy USA have each agreed to (and agreed to cause their respective affiliates to) use commercially reasonable efforts to take, or cause to be taken, all actions and to do or cause to be done all things required or advisable under applicable Law to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by the Floating Share Arrangement Agreement and the Floating Share Plan of Arrangement, including using commercially reasonable efforts to:

Further, Acreage has covenanted and agreed that, other than as specifically disclosed to Canopy and Canopy USA, during the period from the date of the Floating Share Arrangement Agreement until the earlier of the Effective Time and the time that the Floating Share Arrangement Agreement is terminated in accordance with its terms, except with Canopy’s prior written consent, Acreage will not:

In addition, Acreage has covenanted and agreed to promptly notify Canopy of:

Canopy USA and Canopy have covenanted and agreed to promptly notify Acreage in writing of any notice or other communication from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of such Person is required in connection with the Floating Share Arrangement Agreement or the Floating Share Arrangement.

Canopy has covenanted and agreed that, prior to the exchange of all Canopy Shares held by CBG and Greenstar into Exchangeable Canopy Shares, Canopy will not amend, modify, supplement, restate or terminate: (i) the Consent Agreement; or (ii) the Protection Agreement, in each case, without the prior written consent of Acreage, such consent not to be unreasonably withheld, conditioned or delayed;

Canopy USA has covenanted and agreed that:

Covenants Regarding Pre-Acquisition Reorganizations

Acreage has agreed that, upon written request of Canopy, at Canopy’s sole expense, Acreage will: (i) effect one or ‎more Pre-Acquisition Reorganizations; and (ii) cooperate with Canopy and their respective advisors to determine ‎the nature of the Pre-Acquisition Reorganizations that might be undertaken and the manner in which they would ‎most effectively be undertaken. Neither Acreage or its affiliates will be obligated to participate in any Pre-‎Acquisition Reorganization unless such Pre-Acquisition Reorganization: (a) can be implemented prior to the ‎Effective Date; (b) is not prejudicial to Acreage, its affiliates, any of Acreage’s shareholders or certain other securityholders as specified in the Floating Share Arrangement Agreement in any material respect; (c) does not ‎unreasonably interfere with the ongoing operations of Acreage or any of its Subsidiaries; (d) does not result in (i) ‎any material breach by Acreage of any existing Contract (as defined in the Floating Share Arrangement Agreement) ‎or commitment of Acreage; or (ii) a breach of any Law; (e) does not require the approval of any or all of the ‎holders of the Fixed Shares, the Floating Shares or the Fixed Multiple Shares; (f) would not reasonably be expected ‎to impede or delay the completion of the Floating Share Arrangement on the Effective Date in any material respect; ‎and (g) would not result in any Taxes (as defined in the Floating Share Arrangement Agreement) being imposed on, ‎or any adverse Tax or other adverse consequences to, any shareholder of Acreage or certain other securityholders ‎as specified in the Floating Share Arrangement Agreement, incrementally greater than the Taxes or other ‎consequences to such party in connection with the Floating Share Arrangement in the absence of any Pre-‎Acquisition Reorganization, unless Canopy reimburses the shareholders of Acreage or any direct or indirect holders ‎of certain other securities as specified in the Floating Share Arrangement Agreement for all such Taxes or ‎consequences‎.

Dissent Rights Payments

Canopy has agreed that, to the extent that a Floating Shareholder exercises its Dissent Rights and a payment is required to be made to such Dissenting Shareholder, Canopy will immediately, upon the transfer of such Floating Shares held by a Dissenting Shareholder to Canopy USA, make all such payments in respect of Dissent Rights, on behalf of Canopy USA, to the Dissenting Shareholder when due and payable.

Canopy Covenants Regarding Capital Reorganization

Canopy has agreed to duly take all lawful action to call, give notice of, convene and conduct a special meeting of Canopy Shareholders in accordance with Canopy’s constating documents and applicable Law, including TSX and Nasdaq policies, and use commercially reasonable efforts to schedule the meeting as promptly as practicable and, in any event, on or before the Exercise Outside Date.

Further, Canopy has agreed not to terminate, amend or waive, in whole or in part, the CBG Support Agreement, without the prior written consent of Acreage.

Additionally, not later than five Business Days following the exchange of all Canopy Shares held by CBG and Greenstar into Exchangeable Canopy Shares, the Fixed Call Option is required to be exercised.

Canopy Covenant Relating to the Replacement Options, Replacement Warrants and Replacement Share Units

To the extent permitted by applicable Law, Canopy has agreed to, as promptly as practicable following the Effective Time, cause a registration statement on Form S-8 to be filed with the SEC to register the issuance of Canopy Shares issuable upon exercise of the Replacement Options or the Replacement Warrants and the vesting of the Replacement Share Units. If Canopy is not permitted by applicable Law to file a Form S-8 to register the issuance of Canopy Shares issuable upon exercise or vesting, as applicable, of the Replacement Options, Replacement Warrants and Replacement Share Units, Canopy will promptly file a registration statement on an appropriate form to register the resale of the Canopy Shares issuable upon exercise or vesting, as applicable, of the Replacement Options, Replacement Warrants and Replacement Share Units, or otherwise take all necessary actions to cause the Canopy Shares issuable upon exercise or vesting, as applicable, of the Replacement Options, Replacement Warrants and Replacement Share Units, to be issued free of resale restrictions and without restrictive legends to the extent permitted by applicable Law.

Regulatory Approvals

Acreage, Canopy and Canopy USA have each agreed:

Acreage has also agreed not to make any submissions or filings, participate in any meetings or any material conversations with any Governmental Entity in respect of any filings, investigations or other inquiries related to the Floating Share Arrangement or the Floating Share Arrangement Agreement, unless it affords Canopy a reasonable opportunity to consult with it in advance and, to the extent not precluded by such Governmental Entity, gives Canopy the reasonable opportunity to review drafts of any submissions or filings, or attend and participate in any communications or meetings.

Conditions for Completion of the Floating Share Arrangement

Mutual Conditions Precedent

The respective obligations of the Parties to complete the Floating Share Arrangement are subject to the satisfaction, of the following conditions, each of which may be waived, in whole or in part, by the mutual consent of the Parties:

Conditions Precedent in Favour of Canopy and Canopy USA

The obligation of Canopy and Canopy USA to complete the Floating Share Arrangement are subject to the satisfaction of each of the following conditions, each of which is for the exclusive benefit of Canopy and Canopy USA and which may be waived by Canopy and Canopy USA at any time, in whole or in part, in their sole discretion and without prejudice to any other rights that Canopy and Canopy USA may have:

If, at any time prior to the Effective Time, Canopy or Canopy USA becomes aware of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure results in the failure of the ability of Acreage to satisfy any condition set forth above, Canopy or Canopy USA, as applicable, has agreed to promptly notify Acreage of such occurrence, or failure to occur in accordance with the Floating Share Arrangement Agreement, which notification will specify in reasonable detail such event or state of facts.

Conditions Precedent in Favour of Acreage

The obligation of Acreage to complete the Floating Share Arrangement is subject to the satisfaction of each of the following conditions, each of which is for the exclusive benefit of Acreage and which may be waived by Acreage at any time, in whole or in part, in its sole discretion and without prejudice to any other rights that Acreage may have:

If, at any time prior to the Effective Time, Acreage becomes aware of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure results in the failure of the ability of Canopy or Canopy USA to satisfy any condition set forth above, Acreage has agreed to promptly notify Canopy of such occurrence, or failure to occur in accordance with the Floating Share Arrangement Agreement, which notification will specify in reasonable detail such event or state of facts.

Notification Provisions

the Floating Share Arrangement Agreement provides that each Party will promptly notify the other Parties of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would, or would be reasonably likely to: (i) cause any of the representations or warranties of such Party contained in the Floating Share Arrangement Agreement to be untrue or inaccurate in any material respect at any time from the date of the Floating Share Arrangement Agreement to the Effective Time; or (ii) result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party under the Floating Share Arrangement Agreement.

Additional Covenants Regarding Non-Solicitation

Acreage has agreed that, except as expressly provided in the Floating Share Arrangement Agreement, Acreage and its Subsidiaries, will not, directly or indirectly, through any Representative, or otherwise, and will not permit any such Person to:

provided, however, that nothing contained in the Floating Share Arrangement Agreement will prevent Acreage from, and Acreage will be permitted to: (i) engage in discussions or negotiations with, or respond to enquiries from any Person that has made a bona fide unsolicited written Acquisition Proposal after the date of the Floating Share Arrangement Agreement and prior to the Meeting, that did not result from a breach of the non-solicitation provisions of the Floating Share Arrangement Agreement and subject to Acreage’s compliance with the notification provisions provided in the Floating Share Arrangement Agreement, that the Acreage Board has determined constitutes or could reasonably be expected to result in a Superior Proposal; or (ii) provide information and access to properties, facilities, books or records of Acreage pursuant to the requirements set forth in the Floating Share Arrangement Agreement to any Person where such requirements are met. See “Transaction Agreements – The Floating Share Arrangement Agreement – Responding to an Acquisition Proposal”.

Acreage has agreed that it will, and will cause its Subsidiaries and Representatives to, immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiations, or other activities commenced prior to the date of the Floating Share Arrangement Agreement with any Person (other than Canopy USA) with respect to any inquiry, proposal or offer that constitutes, or could reasonably be expected to constitute or lead to, an Acquisition Proposal, and in connection therewith, Acreage has agreed to:

Acreage has covenanted and agreed that (i) it will take all necessary action to enforce each confidentiality, standstill, use, business purpose or similar agreement or restriction to which Acreage or any Subsidiary is a party; and (ii) neither Acreage, nor any Subsidiary nor any of their respective Representatives will, without the prior written consent of Canopy USA (which consent may be withheld or delayed in Canopy USA’s sole and absolute discretion), release any Person from, or waive, amend, suspend or otherwise modify such Person’s obligations respecting Acreage, or any of its Subsidiaries, under any confidentiality, standstill, use, business purpose or similar agreement or restriction to which Acreage or any Subsidiary is a party, it being acknowledged and agreed that the automatic termination of any standstill provisions of any such agreement or restriction as a result of the entering into and announcement of the Floating Share Arrangement Agreement by Acreage pursuant to the express terms of any such agreement or restriction, will not be a violation of the Floating Share Arrangement Agreement and that Acreage will not be prohibited from considering a Superior Proposal from a party whose obligations so terminated automatically upon the entering into and announcement of the Floating Share Arrangement Agreement.

Notification of Acquisition Proposal

Acreage has agreed that if it or any of its Subsidiaries or any of their respective Representatives, receives or otherwise becomes aware of any inquiry, proposal or offer that constitutes or could reasonably be expected to constitute or lead to an Acquisition Proposal, or any request for copies of, access to, or disclosure of, confidential information relating to Acreage or any of its Subsidiaries, including but not limited to information, access or disclosure relating to the properties, facilities, books or records of Acreage or any Subsidiary, Acreage: (a) will promptly notify Canopy USA, at first orally, and then, and in any event within 24 hours of writing, of such Acquisition Proposal, inquiry, proposal, offer or request, including a description of its material terms and conditions, the identity of all Persons making the Acquisition Proposal, inquiry, proposal, offer or request, and will provide Canopy USA with copies of any and all documents, correspondence or other material received in respect of the Acquisition Proposal, from or on behalf of any such Person and such other details of such Acquisition Proposal, inquiry, proposal, offer or request as Canopy USA may reasonably request; and (b) may contact the Person making such Acquisition Proposal, inquiry, proposal, offer or request and its Representatives solely for the purpose of clarifying the terms and conditions of such Acquisition Proposal, inquiry, proposal, offer or request so as to determine whether such Acquisition Proposal, inquiry, proposal, offer or request is, or would reasonably be expected to lead to, a Superior Proposal.

Acreage has agreed to keep Canopy USA promptly and fully informed on a current basis of the status of developments and negotiations with respect to any Acquisition Proposal, inquiry, proposal, offer or request, including any changes, modifications or other amendments to any such Acquisition Proposal, inquiry, proposal, offer or request and to provide to Canopy USA copies of all correspondence if in writing or electronic form, and if not in writing or electronic form, a description of the material terms of such correspondence sent or communicated to Acreage by or on behalf of any Person making such Acquisition Proposal, inquiry, proposal, offer or request.

Responding to an Acquisition Proposal

If, prior to obtaining the Shareholder Approval, Acreage receives an unsolicited written Acquisition Proposal, Acreage may engage in or participate in discussions or negotiations with such Person regarding such Acquisition Proposal and may provide copies of, access to or disclosure of confidential information, properties, facilities, books or records of Acreage or any Subsidiaries of Acreage, if and only if:

provided however, that Acreage may only provide the Person making the Acquisition Proposal with access to and disclosure of information for a period of 10 Business Days. On the tenth Business Day after such Person is first afforded access to the books, records and personnel of Acreage, Acreage will discontinue access to and disclosure of all information, including the Acreage Data Room and any confidential information, properties, facilities, books and records of Acreage or any Subsidiary of Acreage.

Right to Match

If Acreage receives an Acquisition Proposal that constitutes a Superior Proposal prior to obtaining the Shareholder Approval, the Acreage Board may make a Change in Recommendation and approve, recommend or enter into a definitive agreement with respect to such Superior Proposal, if and only if:

Acreage has agreed that, during the Matching Period, or such longer period as Acreage may approve in writing for such purpose: (a) the Acreage Board will review any offer made by Canopy USA to amend the terms of the Floating Share Arrangement Agreement and the Floating Share Arrangement in good faith in order to determine whether such proposal would, upon acceptance, result in the Acquisition Proposal previously constituting a Superior Proposal ceasing to be a Superior Proposal; and (b) Acreage will, and will cause its Representatives to, negotiate in good faith with Canopy USA to make such amendments to the terms of the Floating Share Arrangement Agreement and the Floating Share Arrangement as would enable Canopy USA to proceed with the transactions contemplated by the Floating Share Arrangement Agreement on such amended terms. Acreage has agreed that, subject to Acreage’s disclosure obligations under applicable Securities Laws, the fact of the making of, and each of the terms of, any such proposed amendments will be kept strictly confidential and will not be disclosed to any Person (including without limitation, the Person having made the Superior Proposal), other than Acreage’s Representatives, without Canopy USA’s prior written consent. If the Acreage Board determines that such Acquisition Proposal would cease to be a Superior Proposal, Acreage will promptly so advise Canopy USA and the Parties will amend the Floating Share Arrangement Agreement to reflect such offer made by Canopy USA, and will take and cause to be taken all such actions as are necessary to give effect to the foregoing.

Each successive amendment or modification to any Acquisition Proposal that results in an increase in, or modification of, the consideration (or value of such consideration) to be received by the Floating Shareholders or other material terms or conditions thereof will constitute a new Acquisition Proposal for the purposes of the Floating Share Arrangement Agreement, and Canopy USA will be afforded a new five Business Day Matching Period from the date on which Canopy USA has received each of (i) the Superior Proposal Notice; and (ii) a copy of the proposed definitive agreement for the new Superior Proposal from Acreage.

If Acreage provides a Superior Proposal Notice to Canopy USA after a date that is less than 10 Business Days before the Meeting, Acreage will either proceed with or will postpone or adjourn the Meeting, as directed by Canopy USA acting reasonably, to a date that is not more than 10 Business Days after the scheduled date of the Meeting, but in any event to a date that is not less than five Business Days prior to the Exercise Outside Date. Nothing contained in the Floating Share Arrangement Agreement will limit in any way the obligation of Acreage to convene and hold the Meeting in accordance with the Floating Share Arrangement Agreement while the Floating Share Arrangement Agreement remains in force.

Nothing contained in the Floating Share Arrangement Agreement will prevent the Acreage Board from complying with Section 2.17 of NI 62-104 and similar provisions under Securities Laws relating to the provision of a directors’ circular in respect of an Acquisition Proposal that is not a Superior Proposal.

Termination of the Floating Share Arrangement Agreement

The Floating Share Arrangement Agreement is effective until the earlier of (i) the Effective Time; and (ii) the termination of the Floating Share Arrangement Agreement in accordance with its terms.

The Floating Share Arrangement Agreement may be terminated prior to the Effective Time by:

The Floating Share Arrangement Agreement may be terminated between the Effective Time and the Acquisition Effective Time by the mutual written agreement of the Parties.

Termination Fee

The Termination Fee is payable by Acreage to Canopy USA in the event that:

Additional Agreements

By entering into the Floating Share Arrangement Agreement, Canopy irrevocably waived its rights under the Existing Arrangement Agreement to exercise the Floating Call Option.

Canopy and Canopy USA have covenanted and agreed in favour of Acreage that from the date of the Floating Share Arrangement Agreement until and including the Effective Date, each will procure that: (a) neither CBG, Greenstar nor any of their affiliates (other than Canopy) will be permitted to invest directly in Canopy USA; and (b) any investment by either of them, intended for the benefit of Canopy USA, will be made directly into Canopy.

Expenses of the Floating Share Arrangement

Except as otherwise provided in the Floating Share Arrangement Agreement, including in connection with any Canopy Expense Reimbursement, all out-of-pocket third-party transaction expenses incurred in connection with the Floating Share Arrangement Agreement and the Floating Share Plan of Arrangement and the transactions contemplated thereunder, will be paid by the Party incurring such fees, costs or expenses, whether or not the Floating Share Arrangement is consummated.

Expenses Reimbursement

Canopy has agreed that, in the event that the Canopy Capital Reorganization is not completed prior to the Exercise Outside Date or that CBG or Greenstar do not exchange all of their Canopy Shares into Exchangeable Canopy Shares prior to the Exercise Outside Date, Canopy will forthwith, and in any event within 2 Business Days following the Exercise Outside Date, pay the Canopy Expense Reimbursement to Acreage.

The payment of the Canopy Expense Reimbursement will not preclude Acreage from seeking damages and pursuing any and all other remedies that it may have in respect of losses incurred or suffered by it as a result of breach by Canopy or Canopy USA, as applicably, of any representation or warranty, or failure by Canopy or Canopy USA, as applicable, to perform any covenant or satisfy any condition.

Voting Agreements

Pursuant to the Floating Share Arrangement Agreement‎, Acreage agreed to deliver the Voting Agreements from each of the Acreage Locked-Up Shareholders. On October 24, 2022, each of the Acreage Locked-Up Shareholders entered into a Voting Agreement with Canopy and Canopy USA.

The following summarizes the material provisions of the Voting Agreements. This summary may not contain all of the information about the Voting Agreements that is important to Floating Shareholders and is qualified in its entirety by reference to the Voting Agreements, which is attached as Schedule C to the Floating Share Arrangement Agreement‎ and has been filed by Acreage with the SEC and is available on EDGAR at www.sec.gov/edgar and on Acreage’s SEDAR profile at www.sedar.com.

Canopy and Canopy USA entered into the Voting Agreements with the Acreage Locked-Up Shareholders, whereby, among other things, such Acreage Locked-Up Shareholders, in their capacities as securityholders and not in their capacities as directors or officers of Acreage have agreed, among other things:

In addition, until the termination of the Voting Agreements, subject to the Acreage Locked-Up Shareholder’s fiduciary duties, each of the Acreage Locked-Up Shareholders agreed that it will not, and will ensure that its affiliates do not, directly or indirectly, through any officer, director, employee, representative or agent or otherwise:

The Voting Agreements will terminate and be of no further force or effect upon the earliest to occur of:

As of the Record Date, to the knowledge of Acreage, the Acreage Locked-Up Shareholders, collectively, beneficially owned, or exercised control or direction over, an aggregate of [t] Floating Shares, representing approximately [t%] of the issued and outstanding Floating Shares on a non-diluted basis.

Of the votes attaching to the Floating Shares held by Acreage Locked-Up Shareholders, approximately 2.36% of the votes attaching to the Floating Shares will be excluded for the purposes of determining whether “minority approval” has been obtained pursuant to MI 61-101.

As of the Record Date, to the knowledge of Acreage, the Acreage Locked-Up Shareholders also beneficially owned, or exercised control or direction over, [t] High Street Units, [t] Floating Options and [t] Floating Share Units.

Amended Credit Facility

Concurrently with the execution of the Floating Share Arrangement Agreement, the Company entered into the Credit Agreement Amendment to amend the Credit Agreement. Under the terms of the Amended Credit Facility, subject to the satisfaction of certain terms and conditions, an additional $25 million is available for immediate draw, and an additional $25 million is available in future periods under a committed accordion option once certain predetermined milestones are achieved and conditions satisfied. In conjunction with entering into the Credit Agreement Amendment, the Lenders waived the requirement for the Company to comply with certain financial covenants, except a minimum cash requirement, through Q1 2024, and new financial covenants have been agreed upon in respect of all periods beginning on and after March 31, 2024, reflecting the Company’s growth plan, financial position, and current market conditions. Finally, the Credit Agreement Amendment permits Canopy, its affiliates or Canopy USA to acquire control of the Company without requiring repayment of all amounts outstanding under the Amended Credit Facility. Acreage intends to use the proceeds of the Amended Credit Facility to fund expansion initiatives and provide additional working capital.

The Amended Credit Facility will bear interest at Prime plus 5.75% per annum, payable monthly in arrears, with a Prime floor of 5.50%, and a maturity date of January 1, 2026. Under the terms of the Amended Credit Facility, at any time after January 1, 2023 and before January 1, 2024, the Company has the option to extend the maturity date to January 1, 2027, for a fee equal to 1.0% of the total amount available to be drawn under the Amended Credit Facility. In connection with the Credit Agreement Amendment, the Company paid an amendment fee of $1.25 million to the Lenders.‎ This summary is qualified in its entirety by reference to the Credit Agreement Amendment, which has been filed by Acreage on its SEDAR profile at www.sedar.com and with the SEC and is available on EDGAR at www.sec.gov/edgar.

Tax ‎Receivable Agreement and Bonus Plan Amendments

Concurrently with the execution of the Floating Share Arrangement Agreement, Canopy, Canopy USA, High Street, Acreage Holdings America, Inc. and certain individuals party to the TRA, amended the TRA in accordance with the Third Amendment. Pursuant to the Third Amendment, Canopy, on behalf of Canopy USA, agreed to: (i) issue Canopy Shares with a value of approximately $30.5 million to the TRA Members in exchange for each such individual executing an assignment of rights agreement assigning such individual’s rights under the TRA to Canopy USA, such that following assignment, Canopy USA is the sole member and beneficiary under the TRA; and (ii) fund a payment with a value of approximately $19.5 million to be made by the Company in Canopy Shares to certain eligible participants pursuant to the Bonus Plans, as amended on October 24, 2022, both in order to reduce a potential liability of approximately $121 million under the TRA and the Bonus Plans. In connection with the foregoing, Canopy issued 5,648,927 Canopy Shares with a value of approximately $15.25 million to the TRA Members, with a second payment of approximately $15.25 million in Canopy Shares to occur on the earlier of: (a) the second Business Day following the date on which the Floating Share Arrangement has been approved; or (b) April 24, 2023. In addition, the TRA Bonuses with an aggregate value of approximately $19.5 million in Canopy Shares will be issued by Canopy to certain eligible participants under the Bonus Plans on the closing of the Floating Share Arrangement or, if the Floating Share Arrangement does not close or is terminated but the Existing Arrangement closes, then on the closing of the Acquisition. The TRA Bonuses will be paid to recipients to be determined by Kevin Murphy, the administrator of the Bonus Plans, and may include one or more of Kevin Murphy, John Boehner, Brian Mulroney, and Peter Caldini, each of whom are directors of Acreage and other current and former officers or consultants of Acreage as may be determined by Kevin Murphy. Canopy has also agreed to register the resale of such Canopy Shares under the Securities Act of 1933, as amended.

High Street Operating Agreement Amendments

Concurrently with the execution of the Floating Share Arrangement Agreement, Acreage‎ amended the High ‎Street Operating Agreement to: (i) allow Canopy USA to have a call right on the High Street Units effective immediately following the earlier of the closing of the ‎Floating Share Arrangement or the closing of the Existing Arrangement (rather than the three year anniversary of the closing of the Existing Arrangement) thereby requiring each holder of ‎High Street Units to exchange their High Street Units for Canopy Shares as described in further detail in such amendment; and (ii) make ‎other non-‎substantive changes agreed upon by Acreage‎ and Canopy which were advisable or ‎necessary in order to ‎carry out the purpose and intention of the transactions contemplated in the Floating Share Arrangement.

Amendments to USCo2 Constating ‎Documents

The USCo2 Constating Documents will be amended prior to the closing of the Floating Share Arrangement ‎Agreement to: (i) allow Canopy USA to ‎have a call right on the USCo2 ‎floating shares effective immediately following the earlier of the closing of the ‎Floating Share Arrangement or the closing of the Existing Arrangement (rather than the three year anniversary of the closing of the Existing Arrangement) thereby requiring each USCo2 shareholder to exchange their floating shares for Canopy Shares; and (ii) ‎make ‎other non-substantive changes agreed upon by Acreage‎ and Canopy which were advisable or ‎‎necessary in order to carry out the purpose and intention of the transactions contemplated in the Floating Share ‎Arrangement.‎

SECURITIES LAW MATTERS

The following is a brief summary of certain Canadian and United States Securities Law considerations applying to ‎the Transactions‎.

Canadian Securities Laws

The following is only a general overview of certain requirements of Canadian Securities Laws relating to the ‎Floating Share Arrangement that may be applicable to Floating Shareholders, Floating Optionholders, Floating ‎Share Unit Holders and Floating Warrantholders. Each securityholder is urged to consult its professional advisors to ‎determine the conditions and restrictions applicable under Canadian Securities Laws to the securities issued to such ‎securityholder pursuant to the Floating Share Arrangement‎.

The issuance of the Canopy Shares and Replacement Securities pursuant to the Floating Share Arrangement will constitute a distribution of securities that is exempt ‎from the ‎prospectus requirements of applicable Canadian Securities Laws.

The Canopy Shares issued pursuant to the Floating Share Arrangement may be ‎resold in each province and territory of Canada‎ provided that: (i) Canopy is a reporting issuer in a jurisdiction of Canada for the four months immediately preceding the trade; (ii) the trade is not a “control distribution” as defined in NI 45-102; (iii) no unusual effort is made to prepare the market or create a demand for those securities; (iv) no extraordinary commission or consideration is paid in respect of that trade; and (v) if the selling securityholder is an “insider” or “officer” (as such terms are defined by applicable Canadian Securities Laws) of Canopy, the insider or officer has no reasonable grounds to believe that Canopy is in default of applicable Canadian Securities Laws.

To the extent that a Floating Shareholder resides in a non-Canadian jurisdiction, the Canopy Shares received by such Floating ‎Shareholder pursuant to the Floating Share Plan of Arrangement may be subject to certain additional trading restrictions under securities laws of such jurisdiction. All Floating Shareholders residing outside Canada are advised to consult their own legal advisors regarding such resale restrictions.

Status Under Canadian Securities Laws

Acreage is a reporting issuer in the Provinces of Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick and Nova Scotia and is a registrant under the U.S. Exchange Act. Following the Effective Date and the Acquisition Date, it is expected that Canopy USA will apply to have ‎Acreage cease to be a reporting issuer in all jurisdictions in which it is a reporting issuer and thus will terminate Acreage’s reporting ‎obligations in Canada and the United States

Canopy is a reporting issuer in each of the provinces and territories of Canada. Following the Effective Date, it is expected that Canopy will remain a reporting issuer in such jurisdictions.

Multilateral Instrument 61-101

The Floating Share Arrangement is subject to the requirements of MI 61-101. MI 61-101 regulates certain transactions to ensure equality ‎of ‎‎treatment among securityholders, generally requiring enhanced disclosure, approval by a majority of securityholders ‎‎excluding any “interested party”, any “related party” of an “interested party” or any “joint actor” of such interested party or related party of an interested party (as such terms are defined in MI 61-101) (collectively, the “Interested Parties”), independent valuations and, in certain instances, approval and oversight of ‎the ‎transaction by a ‎special committee of independent directors. The protections of MI 61-101 apply to a reporting issuer proposing to carry out a: (i) ‎‎“business combination”, which as defined in MI 61-101 includes, among other things, an arrangement as a consequence of which the interest of the holder of an equity security of the issuer (such as the Floating Shares) undertaking the arrangement may be terminated without the holder’s consent, regardless of whether the equity security is replaced with another security; or (ii) “related party transaction”, which includes a transaction between the issuer and a person that is a related party of the issuer at the time the transaction is agreed to, whether or not there are also other parties to the transaction, as a consequence of which, either through the transaction itself or together with “connected transactions” (as defined in MI 61-101), the issuer, directly or indirectly, among other things, materially amends the terms of an outstanding credit facility with the related party. ‎‎“Connected transactions”, as defined in MI 61-101, are two or more transactions that have at least one party in ‎common, directly or indirectly, other than transactions related solely to services as an employee, director or ‎consultant, and (i) are negotiated or completed at approximately the same time, or (ii) the completion of at least one of ‎the transactions is conditional on the completion of each of the other transactions. For the purposes of a business combination or a related party transaction, an “interested party” is defined in part ‎in MI 61-101 as a related party of the issuer at the time the transaction is agreed to, if the related party is ‎entitled to receive, directly or indirectly, a collateral benefit as a consequence of the transaction.

A transaction such as the Floating Share Arrangement constitutes a “business combination” for ‎purposes of MI 61-101 if, at the time the Floating Share ‎‎Arrangement is agreed to, a “related party” of Acreage, such as a director or senior officer ‎‎(as defined in MI 61-101) or a ‎‎holder of 10% or more of any class of Acreage Shares, is entitled to receive a “collateral benefit” as a consequence of the ‎transaction.‎ ‎

A “collateral benefit” is broadly defined for purposes of MI 61-101 and means, subject to certain specified ‎exclusions, any ‎benefit that a related party of the issuer is entitled to receive, directly or indirectly, as a ‎consequence of the transaction, ‎including, without limitation, an increase in salary, a lump sum payment, ‎a payment for surrendering securities or other ‎enhancement in benefits related to past or future services ‎as an employee, director or consultant of the issuer or of another ‎Person, regardless of the existence of ‎any offsetting costs to the related party or whether the benefit is provided, or agreed ‎to, by the issuer or ‎another party to the transaction. ‎

The definition of “collateral benefit” in MI 61-101 contains certain exclusions. In that regard, a benefit received by ‎a ‎related party of ‎Acreage is not considered to be a collateral benefit for purposes of the Floating Share ‎Arrangement if the benefit is received solely in ‎connection with the related party’s ‎services as an employee, director ‎or consultant of Acreage or an ‎affiliated entity and: (i) the benefit is not conferred for the ‎purpose, in whole or in ‎part, of increasing the ‎value of the consideration paid to the related party for securities relinquished ‎under the ‎Floating Share Arrangement; (ii) ‎the conferring of the benefit is not, by its terms, conditional on the related party ‎supporting the ‎‎Floating Share Arrangement in any manner; (iii) full particulars of the benefit are disclosed in this ‎Circular; and (iv) either ‎‎(A) at the time ‎the Floating Share Arrangement was agreed to, the related party and its ‎associated entities beneficially ‎own or exercise control or direction ‎over less than 1% of the Floating Shares, or (B) ‎‎(x) if the ‎transaction is a “business combination”, the related ‎party discloses to an independent committee of ‎‎Acreage the amount of consideration that the related party expects it will be ‎beneficially entitled to ‎receive, under ‎the terms of the Floating Share Arrangement, in exchange for equity securities beneficially owned ‎by the ‎related ‎party, (y) the independent committee, acting in good faith, determines that the value of the ‎benefit, net of any ‎‎offsetting costs to the related party, is less than 5% of the value referred to in (x), and ‎‎(y) the independent ‎committee’s ‎determination is disclosed in this Circular‎.

Benefits to Acreage Related Parties from the Floating Share Arrangement and Certain Connected Transactions and ‎ Related Party Transactions

Third Amendment to the TRA

Pursuant to the Third Amendment, Canopy and Canopy USA have agreed with the TRA Members that ‎‎Canopy will issue Canopy Shares with a value of approximately $30.5 million to the TRA Members in exchange ‎‎for the assignment of each TRA Member’s rights under the TRA to Canopy USA, such that Canopy USA will ‎‎become the only beneficiary of the TRA. The Special Committee has determined that, for the purposes of MI 61-‎‎‎101, the issuance of such Canopy Shares to the TRA Members is a “connected transaction” with respect to the ‎‎Floating Share Arrangement. Kevin Murphy is a related party of Acreage and, for purposes of ‎MI 61-101, the ‎Special Committee has determined that the value of the benefit to be received by him in respect of the foregoing is ‎approximately $8.77 million (the “TRA Payment”) in connection with the Third ‎Amendment to the TRA, half of ‎which was satisfied by the issuance of 3,254,273 Canopy Shares, with a second payment of approximately $4.385 million ‎in Canopy Shares to occur on the earlier of (a) the second Business Day following the date on which the Floating ‎Share Arrangement has been approved; or (b) April 24, 2023. The number of Canopy Shares to be issued in ‎satisfaction of the TRA Payment shall be equal to the fair market value of such Canopy Shares measured as of the ‎close of trading on the second trading date prior to the relevant date of issuance‎.

Bonus Plans

In addition, pursuant to the ‎Third Amendment Canopy has also agreed to fund the payment owing by Acreage with ‎‎respect to ‎the TRA Bonuses by issuing additional Canopy Shares with a value of approximately $19.5 million to ‎‎such those ‎‎participants in the Bonus Plan as may be determined by Mr. Murphy, as administrator of the Bonus ‎Plans. ‎The recipients may include one or more of the following related parties of Acreage: Kevin Murphy, John ‎Boehner, Brian Mulroney, ‎Peter Caldini‎, Steve Goertz, Corey Sheahan or Dennis Curran. ‎The Special Committee has concluded that, for purposes of MI 61-101, payment of the TRA ‎‎Bonuses may ‎constitute a ‎‎“related party transaction” for purposes of MI 61-101. For purposes of MI 61-101, the Special ‎Committee has ‎determined that the value of the benefit to be received by each of Mr. Murphy, Mr. Boehner, Mr. ‎Mulroney, Mr. ‎Caldini, Mr. Goertz, Mr. Sheahan and Mr. Curran in respect of the foregoing shall not be more $19.15 million in the aggregate as ‎‎an amount not less than ‎‎$350,000 has been allocated to an unrelated party, and the Special Committee understands that Mr. Murphy has ‎the discretion to allocate up to the entire balance of $19.15 million to any one of the foregoing‎‎.

Amended Credit Facility

The Special Committee has determined that, for purposes of MI 61-101, the entry by Acreage into the Amended ‎Credit Facility constitutes a “related party transaction”. See “Transaction Agreements – Amended Credit Facility”. Viridescent is one of the Lenders under the Amended Credit Facility. VRT Agent LLC is an agent for ‎Viridescent, and Kevin Murphy is the President and Chairman of the Board of Directors of Viridescent and ‎therefore a “related party” of Acreage. Under the Amended Credit Facility: (i) subject to the satisfaction of certain ‎terms and conditions, an additional $25 million ‎is available for immediate draw by Acreage‎, with a further $25 million available in future periods under a ‎committed accordion ‎option once certain predetermined milestones are achieved and conditions satisfied; (ii) the Lenders waived ‎the ‎requirement for Acreage to comply with certain financial covenants, except a minimum cash requirement, ‎through ‎Q1 2024; (iii) new financial covenants have been agreed upon in respect of periods beginning on and ‎after March 31, 2024; and (iv) Canopy, its affiliates or Canopy USA are permitted to acquire control of Acreage without requiring ‎repayment ‎of all amounts outstanding under the Amended Credit Facility‎. As a Lender under the Amended Credit Facility, Viridescent committed $15 million of the aggregate $50 million accordion available thereunder. Furthermore, VRT Agent, as co-agent in connection with the Amended Credit Facility, received approximately $16,335 as an agency fee and approximately $375,000 as an amendment fee.

For the purposes of MI 61-101, the Special Committee has determined that the benefit that may be derived, directly or ‎‎‎indirectly, by VRT Agent and Viridescent, entities in respect of which Mr. Murphy is a director and officer, in ‎connection with the Amended Credit Facility is approximately $391,335.

Option Agreement – Acreage Debt

On November 15, 2022, the Acreage Debt Optionholder and the Lenders entered into an option agreement (the “Option Agreement”), which superseded the Letter Agreement, pursuant to which, the Acreage Debt Optionholder was granted the right to purchase all monetary obligations owing by Acreage to VRT Agent LLC and the Lenders under the Amended Credit Facility (the “Acreage Debt”) in exchange for the Option Premium payment of $28.5 million, which was deposited into an escrow account. The Acreage Debt Optionholder has the right to exercise its option at its discretion, and the Option Premium will be used towards settlement of the Acreage Debt. In the event that Acreage repays the Acreage Debt on or prior to maturity, the Option Premium will be returned to the Acreage Debt Optionholder. In the event that Acreage defaults on the Acreage Debt and the Acreage Debt Optionholder does not exercise its option to acquire the Acreage Debt, the Option Premium will be released to the Lenders.

The Special Committee has determined that the entry into the Option Agreement is a “connected transaction” with respect to the entry into the Amended Credit Agreement, since Kevin Murphy is a “related party” of Acreage, and Viridescent, an entity of which Kevin Murphy is the President and Chairman of the board of directors, will receive a share of the Option Premium if the option provided for in the Option Agreement is exercised. In the event that the option under the Option Agreement is ever exercised or the Option Premium is otherwise released to the Lenders, Viridescent, an entity of which Kevin Murphy is the President and Chairman of the board of directors, would receive its pro rata portion of the Option Premium, being $8.55 million.

Valuation Requirements

Acreage is exempt from the formal valuation requirement in MI 61-101 and can rely on the exemption contained in Section 5.5(b) of MI 61-101 with respect to the entry into of the Floating Share Arrangement Agreement, payment of the TRA Bonuses and entry into the Amended Credit Facility, as Acreage does not have securities listed on the Toronto Stock Exchange, Aequitas NEO Exchange Inc., the New York Stock ‎‎Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock ‎‎exchange outside of Canada or the United States, other than the Alternative ‎‎Investment Market of the London Stock Exchange or the PLUS markets operated by ‎‎PLUS Markets Group plc‎. ‎

Minority Approval

As described above, the Floating Share Arrangement will constitute a “business combination” for Acreage for ‎purposes of MI 61-101 if any related party of Acreage will receive a “collateral benefit” and therefore be an ‎Interested Party for purposes of the Floating Share Arrangement.

As described above, Kevin Murphy is a related party of Acreage and, for purposes of ‎MI 61-101, the Special ‎Committee has determined that the value of the benefit in the form of the TRA Payment to be received by him in ‎respect of the foregoing is approximately $8.77 million. For purposes of MI 61-101, the Special Committee has also ‎‎determined that the value of the benefit to be received by each of Mr. Murphy, Mr. Boehner, Mr. Mulroney, Mr. ‎‎Caldini, Mr. Goertz, Mr. Sheahan and Mr. Curran in respect of the Bonus Plans and the TRA Bonuses may be up to $19.15 million as it has ‎assumed that Mr. Murphy may ‎determine to allocate up to the entire balance of the TRA Bonuses to any one of ‎the foregoing‎‎. In addition, the Special Committee has determined that the benefit that may be derived, directly or ‎‎indirectly, by VRT Agent and Viridescent, entities in respect of which Mr. Murphy is a director and officer, is approximately $391,335, in the ‎case of the Amended Credit Facility, for the purposes of MI 61-101‎.In addition, in the event that the option under the Option Agreement is ever exercised or the Option Premium is otherwise released to the Lenders, Viridescent, an entity of which Kevin Murphy is the President and Chairman of the board of directors, would receive its pro rata portion of the Option Premium, being $8.55 million.

Acreage is exempt from the “minority approval” requirement with respect to the TRA Bonuses pursuant to Section 5.7(1)(a) of MI 61-101 because, at the time the transaction was agreed to, neither the fair market value of the TRA Bonuses to be paid to “related parties” of Acreage, nor the fair market value of the consideration for, the transaction, insofar as it involves Interested Parties, exceeds 25% of Acreage’s market capitalization. Acreage is also exempt from the “minority approval” requirement with respect to entry into the Amended Credit Facility pursuant to Section 5.7(1)(f) of ‎MI 61-101, as the Amended Credit Facility was entered into ‎on ‎reasonable commercial terms that are not less advantageous to Acreage than if the Amended Credit Facility was obtained ‎‎from a person dealing at arm’s length with Acreage and the Amended Credit Facility is not: (A) convertible, directly ‎‎or indirectly, into equity or voting securities of Acreage or any of its Subsidiaries, or otherwise participating in nature; ‎‎or (B) repayable as to principal or interest, directly or indirectly, in equity or voting securities of Acreage or a ‎‎Subsidiary entity of Acreage. The Amended Credit Facility was approved by the Acreage Board with Kevin Murphy recusing ‎‎himself from all discussions related thereto, declaring his interest and abstaining from voting thereon.

‎At the time ‎the Floating Share Arrangement was agreed to‎, each of the directors and executive officers of Acreage ‎‎and their respective associated and affiliated entities ‎beneficially owned, or exercised control or direction over, less ‎than ‎‎1% of the issued and outstanding shares of each class of Acreage Shares ‎‎(assuming, in each case, the exercise ‎of ‎Acreage Options held by them, the conversion of all High Street Units held by them and taking into account all ‎‎vested Acreage Share Units or Acreage Share Units vesting within 60 days of the Announcement Date), other than ‎Kevin Murphy, a member of the Acreage Board, and Peter Caldini, the Chief Executive Officer of Acreage and a ‎member of the Acreage Board, who hold approximately 14.04% and 1.30%, respectively, of the outstanding ‎Floating Shares, and approximately 14.18% and 0.87%, respectively, of the outstanding Fixed Shares (assuming, in ‎each case, all relevant securities held by each of Kevin Murphy and Peter Caldini, respectively, which are ‎convertible, exercisable or exchangeable to acquire beneficial ownership of Floating Shares and/or ‎Fixed Shares within 60 days of the Announcement Date are converted, exercised or exchanged into Floating Shares ‎and Fixed Shares). In addition, Kevin Murphy holds 100% of the outstanding Fixed Multiple Shares‎.

As a result of the foregoing, for purposes of the Floating Share Arrangement, the Interested Parties are Mr. ‎Murphy ‎and Mr. Caldini. The following table sets forth the securities of Acreage held by each of Mr. Murphy and ‎Mr. ‎Caldini, which includes an aggregate of 807,866 Floating Shares ‎‎(approximately 2.37% of the issued and ‎outstanding Floating Shares), as of the date of this Circular, which Floating Shares shall be excluded ‎from voting for ‎purposes of determining whether “minority approval” is obtained in respect of the Arrangement ‎Resolution at the ‎Meeting‎. ‎

Notes:

‎(1) ‎‎195,000 of the Floating Shares and 455,000 Fixed Shares are registered in the name of Murphy Capital, LLC, an entity over which Mr. ‎Murphy exercises ‎direction or ‎control‎‎.‎

U.S. Securities Laws

The following is only a general overview of certain requirements of U.S. Securities Laws relating to the Floating Share Arrangement that may be applicable to holders of Floating Share Arrangement Issued Securities. Each securityholder is urged to consult its professional advisors to determine the U.S. conditions and restrictions applicable under U.S. Securities Law to trades in the Canopy Shares issuable pursuant to the Floating Share Arrangement.

Exemption from U.S. Registration

The Canopy Shares, Replacement Options, Replacement Share Units and Replacement Warrants to be issued to Floating Shareholders and holders of Floating Share Replacement Securities, respectively, under the Floating Share Arrangement have not been and are not expected to be registered under the U.S. Securities Act or the Securities Laws of any state of the United States and will be issued in reliance upon the Section 3(a)(10) Exemption and exemptions provided in respect of the Securities Laws of states of the U.S. in which U.S. Holders reside. The Section 3(a)(10) Exemption exempts from registration a security that is issued in exchange for outstanding securities and other property where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all Persons to whom it is proposed to issue securities in such exchange have the right to appear, by a court or by a governmental authority expressly authorized by Law to grant such approval. On [t], 2023, prior to the mailing of this Circular, Acreage obtained the Interim Order, which was varied on [t], 2023 to amend the Record Date, the date of the Meeting, the date of the hearing for the Final Order approving the Floating Share Arrangement and any related timelines, and, subject to the approval of the Floating Share Arrangement by the Floating Shareholders, a hearing for the Final Order approving the Floating Share Arrangement is currently expected to take place on [t], 2023. All Floating Shareholders, Floating Optionholders, Floating Share Unit Holders and Floating Warrantholders are entitled to appear and be heard at this hearing, provided that they satisfy the applicable conditions set forth in the Interim Order. The Final Order of the Court will, if granted, constitute the basis for the Section 3(a)(10) Exemption with respect to the Floating Share Arrangement Issued Securities.

The Section 3(a)(10) Exemption will not be available for the Canopy Shares that are issuable upon exercise of the Replacement Options, the Canopy Shares that are issuable upon exercise of the Replacement Warrants and the Canopy Shares that are issuable on the vesting of the Replacement Share Units. Therefore, the Canopy Shares issuable upon the exercise of the Replacement Options and Replacement Warrants and the Canopy Shares issuable on the vesting of the Replacement Share Units will be “restricted securities” within the meaning of Rule 144 under the U.S. Securities Act, and may be issued only pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state Securities Laws or following registration under such Laws. To the extent permitted by applicable Law, Canopy agreed to, as promptly as practicable following the Effective Time, cause a registration statement on Form S-8 to be filed with the SEC to register the issuance of Canopy Shares issuable upon exercise of the Replacement Options and Replacement Warrants and the Canopy Shares issuable on the vesting of the Replacement Share Units. If Canopy is not permitted by applicable Law to file a Form S-8 to register the issuance of Canopy Shares issuable upon exercise or vesting, as applicable, of the Replacement Options, Replacement Warrants and Replacement Share Units, Canopy has agreed to promptly file a registration statement on an appropriate form to register the resale of the Canopy Shares issuable upon exercise or vesting, as applicable, of the Replacement Options, Replacement Warrants and Replacement Share Units, or otherwise take all necessary actions to cause the Canopy Shares issuable upon exercise or vesting, as applicable, of the Replacement Options, Replacement Warrants and Replacement Share Units, to be issued free of resale restrictions and without restrictive legends to the extent permitted by applicable Law.

The Canopy Shares to be issued after the Effective Time of the Floating Share Arrangement will be freely transferable under United States federal Securities Laws, except that the U.S. Securities Act imposes restrictions on the resale of Canopy Shares received by Persons who are, or within 90 days of the Effective Time become, “affiliates” of Canopy.

As defined in Rule 144 under the U.S. Securities Act, an “affiliate” of an issuer is a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such issuer and may include certain officers and directors of such issuer and principal shareholders of such issuer. “Control” means the possession, direct or indirect, of the power to direct or cause direction of the management and policies of an issuer, whether through the ownership of voting securities, by contract or otherwise.

An “affiliate” of Canopy is a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, Canopy and may include certain executive officers and directors of Canopy, and principal shareholders of Canopy, directors or executive officers of Acreage who become directors or executive officers of Canopy after the Effective Time, and any Person deemed to be an affiliate of Canopy within 90 days before the Effective Time.

Any Floating Shareholder who, after the Effective Time is an “affiliate” (as defined in Rule 144 under the U.S. Securities Act) of Canopy or was, at any time during the 90 days immediately before the resale of any Canopy Shares received pursuant to the Floating Share Arrangement, an “affiliate” of Canopy, may not resell such Canopy Shares, unless such shares are registered under the U.S. Securities Act or an exemption from registration, such as the exemptions contained in Rule 144 and Rule 904 of Regulation S under the U.S. Securities Act, is available. This Circular does not cover resales of any Canopy Shares received by any Person pursuant to the Floating Share Arrangement, and no Person is authorized to make any use of this Circular in connection with any resale.

Affiliates – Rule 144

In general, under Rule 144, Persons that are affiliates of Canopy after the Effective Time or were affiliates of Canopy within the 90 days immediately before the resale of the Canopy Shares issued pursuant to the Floating Share Arrangement will be entitled to sell such shares that they receive after the Effective Time in the United States, provided that the number of such shares sold, together with all other shares of the same class sold for their account during any three-month period, does not exceed the greater of one percent of the then outstanding securities of such class or, if such shares are listed on a U.S. securities exchange and/or reported through the automated quotation system of a U.S. registered securities association, the average weekly trading volume of such shares during the four calendar week period preceding the date of sale, subject to aggregation rules, specified restrictions on manner of sale, reporting requirements, and the availability of current public information about the relevant issuer. Persons that are affiliates of Canopy after the Effective Time will continue to be subject to the resale restrictions described in this paragraph for so long as they continue to be affiliates of Canopy, and for 90 days thereafter.

To the extent that a Floating Shareholder resides in a non-U.S. jurisdiction, the Canopy Shares received by the Floating Shareholder may be subject to certain additional trading restrictions under Securities Laws of such jurisdiction. All Floating Shareholders residing outside the U.S. are advised to consult their own legal advisors regarding such resale restrictions.

Affiliates – Regulation S

In general, pursuant to Rule 904 of Regulation S under the U.S. Securities Act, Persons who are affiliates of Canopy solely by virtue of their status as an officer or director of such company may sell Canopy Shares outside the United States in an “offshore transaction” (which would include a sale through the TSX, if applicable) if neither the seller nor any Person acting on its behalf engages in “directed selling efforts” in the United States and no selling commission, fee or other remuneration is paid in connection with such sale other than a usual and customary broker’s commission. For purposes of Regulation S, “directed selling efforts” means, “any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for any of the securities being offered” in the sale transaction. Pursuant to Rule 903 of Regulation S, certain additional restrictions are applicable to a holder of Canopy Shares who is an affiliate of Canopy after the Effective Time other than solely by virtue of his or her status as an officer or director of Canopy.

To the extent that a Floating Shareholder resides in a non-U.S. jurisdiction, the Canopy Shares received by the Floating Shareholder may be subject to certain additional trading restrictions under Securities Laws of such jurisdiction. All Floating Shareholders residing outside the U.S. are advised to consult their own legal advisors regarding such resale restrictions

Status Under U.S. Securities Laws

Acreage is a domestic issuer in the United States subject to the reporting requirements of the U.S. Exchange Act. Following the Effective Date and the Acquisition Date, it is expected that Canopy USA will apply to have ‎Acreage cease to be subject to the reporting requirements of the U.S. Exchange Act.

Canopy is a domestic issuer in the United States subject to the reporting requirements of the U.S. Exchange Act. Following the Effective Date and the Acquisition Date, it is expected that Canopy will remain a domestic issuer in the United States.

REGULATORY MATTERS

Other than the Shareholder Approval, receipt of the Interim Order and the Final Order, state regulatory approvals required in connection with the closing of the Existing Arrangement and all required approvals from the stock exchanges on which the Canopy Shares are ‎listed for the listing of the Consideration Shares and any Canopy Shares issuable ‎upon the exercise or vesting, as applicable, of Replacement Options, Replacement ‎Share Units and Replacement Warrants‎, Acreage is not aware of any material approval, consent or other action by any federal, provincial, state or foreign government or any administrative or regulatory agency that would be required to be obtained in order to complete the Floating Share Arrangement. In the event that any such approvals or consents are determined to be required, such approvals or consents will be sought. Any such additional requirements could delay the Effective Date or prevent the completion of the Floating Share Arrangement. While there can be no assurance that any regulatory consents or approvals that are determined to be required will be obtained, Acreage currently anticipates that any such consents and approvals that are determined to be required will have been obtained or otherwise resolved by the Effective Date. Subject to Shareholder Approval, the receipt of the Interim Order and the Final Order, and all required approvals from the stock exchanges on which the Canopy Shares are ‎listed, and the satisfaction or waiver of all other conditions specified in the Floating Share Arrangement Agreement‎, the Floating Share Arrangement is expected to be completed in the second half of 2023.

Stock Exchange Matters

The Floating Shares are listed on the CSE under the symbol “ACRG.B.U”, quoted on the OTCQX under the symbol “ACRDF” and traded on the FSE under the symbol “0VZ2”. It is a condition to the completion of the Floating Share Arrangement that Acreage will have obtained approval of the CSE in respect of the Floating Share Arrangement, as required.

It is expected that Canopy USA will apply to: (i) have the Floating Shares delisted from the CSE, the OTCQX and the FSE as promptly as possible following the Effective Date; and (ii) have the Fixed Shares delisted from the CSE, the OTCQX and the FSE as promptly as possible following the Acquisition Date.

The Canopy Shares are currently listed and posted for trading on the TSX under the symbol “WEED” and on the Nasdaq under the symbol “CGC”. Subject to applicable Laws and any required approvals, Canopy has agreed to use its commercially reasonable efforts to obtain all required approvals from the stock exchanges on which the Canopy Shares are listed, and for the listing of the Consideration Shares and any Canopy Shares issuable upon the exercise or vesting, ‎as applicable, of Replacement Options, Replacement Share Units and Replacement Warrants. As of the date of this Circular, Canopy has received conditional approval of the TSX for the listing of such Canopy Shares.

The listing of the Canopy Shares on the TSX and the Nasdaq prohibit Canopy from investing in, or acquiring, state ‎regulated, but federally illegal, businesses in the United States cannabis market. Canopy has advised that it expects ‎to consolidate the financial statements of Canopy USA in accordance with U.S. GAAP, including the financial ‎statements of Acreage, Wana and Jetty once those acquisitions have been completed by Canopy USA. On ‎December 7, 2022, Canopy received a letter from Nasdaq Regulation requesting certain information and stating, ‎among other things, their position that companies that consolidate “the assets and revenues generated from ‎activities in violation under federal law cannot continue to list on Nasdaq.” Canopy has advised that it expects to ‎continue dialogue with Nasdaq Regulation regarding their position. Representatives of Nasdaq have expressed to representatives of ‎Canopy that the exchange was comfortable with the formation of Canopy USA, the Reorganization and Canopy ‎holding Canopy USA Non-Voting Shares. Based on the current structure of Canopy’s interest in Canopy USA, consolidation of Canopy USA by Canopy was deemed to most appropriately result in compliance with the requirements of U.S. GAAP despite Canopy’s inability to direct or ‎manage the operations of Canopy USA. In addition, Canopy advised that it believes that consolidating the financial statements of Canopy USA under U.S. GAAP provides investors of Canopy with a more fulsome, accurate and ‎detailed understanding of the financial position and profit and loss for Canopy overall despite Canopy’s inability ‎to direct or manage the operations of Canopy USA. There can be no assurance that Canopy will remain listed on ‎the Nasdaq or any other exchange on which the Canopy Shares are currently listed on, which could have a material ‎adverse effect on the trading price of the Canopy Shares, as well as Canopy’s business, financial condition and ‎results of operations. In the event of a delisting from a stock exchange, there is no assurance that Canopy will be ‎able to satisfy the conditions required to list on an alternative stock exchange. See “Risk Factors – Risks Relating ‎to the Floating Share Arrangement – If Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage without structural amendments to Canopy’s interest in Canopy USA, the listing of Canopy Shares on the Nasdaq Stock Market may be jeopardized”. ‎

RISK FACTORS ‎

Floating Shareholders should carefully consider the following risk factors before deciding to vote or instruct their vote to be cast to ‎approve the Arrangement Resolution. In addition to the risk factors set out below, Floating Shareholders should also carefully ‎consider the risk factors applicable to Acreage set out in the Acreage Annual Report under the heading “Risk Factors”, a copy of which is available under Acreage’s profile on ‎SEDAR at www.sedar.com ‎ and with the SEC and available on EDGAR at www.sec.gov/edgar, and the risk factors applicable to Canopy referred to in Appendix “G” to this Circular. ‎

The following risk factors are not an exhaustive list of all of the risk factors associated with the Floating Share Arrangement Agreement‎ and the Floating Share Arrangement. Additional risks and uncertainties, including those currently unknown or considered immaterial by Acreage, Canopy and Canopy USA, may also adversely affect the holders of the Floating Shares, the Canopy Shares and the businesses of the ‎Acreage, Canopy and Canopy USA following completion of the Floating Share Arrangement. All of the risk factors described in this Circular and ‎incorporated by reference in this Circular should be considered by Floating Shareholders in conjunction with the other ‎information included in this Circular, including the appendices hereto.

See the Existing Arrangement and Acreage’s proxy statement and management information circular dated August 17, 2020 in connection with a special meeting held to approve the Existing Arrangement for further risk factors with respect to the Existing Arrangement, a copy of each of which is available under Acreage’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

Risks Relating to the Floating Share Arrangement

The Floating Share Arrangement may not be completed

There can be no assurance that the Floating Share Arrangement will be completed. The completion ‎of the Floating Share Arrangement is subject to the satisfaction or waiver of a number of conditions which include, among other things: ‎‎(i) obtaining necessary approvals, including the Floating Share Arrangement Regulatory Approvals and other Regulatory Approvals; (ii) performance by Acreage, Canopy and Canopy USA of their respective ‎obligations and covenants in the Floating Share Arrangement Agreement; and (iii) satisfaction or, if permitted, waiver of the Acquisition Closing Conditions, excluding conditions that by their terms cannot be satisfied until the Acquisition Effective Time, and the ‎conditions precedent set out in the Floating Share Arrangement Agreement, including, among others, completion of the Canopy Capital Reorganization on or prior to the Exercise Outside Date.

If these conditions are not fulfilled or waived, or the ‎Floating Share Arrangement is not completed for any other reason, Floating Shareholders will not receive the Consideration Shares. Certain of these conditions are outside of the control of Acreage. ‎There can be no certainty, nor can Acreage provide any assurance, that all conditions precedent to the completion of the Floating Share Arrangement will be satisfied or waived, ‎or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the Floating Share Arrangement may not be completed. ‎In addition, in the event that the Floating Share Arrangement is not completed, Canopy will still retain the right to acquire all of the Fixed Shares pursuant to Fixed Call Option under the Existing Arrangement. If the Fixed Call Option is exercised, it is anticipated Canopy USA will beneficially own approximately 70% of the voting rights attached to all the outstanding Acreage Shares at the Acquisition Time. If the Floating Share Arrangement is not completed and the Acquisition is completed within the anticipated timeframe, thereafter holders of Floating Shares will have little or no influence on the conduct of Acreage’s business and affairs, and there may not be an active trading market for the Floating Shares, among other things.

Further, if the Floating Share Arrangement is not completed, the ongoing business of Acreage may be adversely ‎affected as a result of the costs (including opportunity costs) incurred in respect of pursuing the‎ Floating Share Arrangement, and Acreage could experience negative reactions from the financial markets, which ‎could cause a decrease in the market price of the Floating Shares and/or the Fixed Shares. Acreage may also experience negative reactions from its customers and employees, and there could be a ‎negative impact on Acreage’s ability to attract future acquisition opportunities. Failure to complete ‎the Floating Share ‎Arrangement ‎or a change in the terms of the Floating Share ‎Arrangement Agreement could each have a material adverse effect ‎‎on Acreage’s business, financial condition and results of operations and its ability to comply with the covenants ‎and conditions set forth in the Existing Arrangement Agreement.

See “Risk Factors – Risks Relating to the Completion of the Floating Share Arrangement – Risks if the Floating Share Arrangement is Not Completed and Canopy Acquires the Fixed Shares”, “Risk Factors – Risks Relating to the Completion of the Floating Share Arrangement – Risks Relating to holding Floating Shares in a company with a minority controlling shareholder” and “Risk Factors – Risks Relating to the Completion of the Floating Share Arrangement – There may not be an active trading market for the Floating Shares”.

Risks associated with the Exchange Ratio

Upon completion of the Floating Share Arrangement, Floating Shareholders will receive 0.45 of a Canopy Share for each Floating Share held, rather than a number of Canopy Shares with a fixed dollar value. Because the number of Canopy Shares to be received by Floating Shareholders (other than Canopy USA, Canopy and/or their respective affiliates) pursuant to the Floating Share Arrangement will not be adjusted to reflect any change in the market ‎value of the Canopy Shares prior to the Effective Date, the market value of Canopy Shares received by Floating Shareholders upon completion of the Floating Share Arrangement may ‎vary significantly from the market value of such Canopy Shares as at the date of the Floating Share Arrangement Agreement. If the market price of the Canopy Shares increases or decreases, the value of the ‎Canopy Shares that Floating Shareholders will receive pursuant to the Floating Share Arrangement will ‎correspondingly increase or decrease. There can be no assurance that the market price of the Canopy ‎Shares at the Effective Date will not be lower than the market price of such Canopy Shares as at the date of the Floating Share Arrangement Agreement. ‎

In addition, the number of Canopy Shares to be issued to Floating Shareholders pursuant to the Floating Share Arrangement will not ‎change despite decreases or increases in the market price of the Floating Shares. Many of the factors ‎that affect the market price of the Canopy Shares and/or the Floating Shares are beyond the control of ‎Canopy and Acreage, respectively. These factors include, but are not limited to, changes in market perceptions of the ‎cannabis industry, changes in the regulatory environment, adverse political developments and prevailing ‎conditions in the capital markets. ‎

In the event that the market value of the Canopy Shares decreases subsequent to the date of the Floating Share Arrangement Agreement and prior to the Effective Date, this may have a negative impact on the value that holders of Floating Shares will realize upon completion of the Floating Share Arrangement.

Market overhang risk

Upon completion of the Floating Share Arrangement and assuming completion of the Acquisition, a significant number of additional Canopy Shares will be issued and available ‎for trading in the public market. Such increase in the number of Canopy Shares available for trading in the public market may lead to sales of such Canopy Shares, or ‎the perception that such sales may occur (commonly referred to as “market overhang”), either of which may adversely ‎affect the market for, and the market price of, the Canopy Shares.‎

Nasdaq listing and share consolidation

The Canopy Shares are listed for trading on the TSX and the Nasdaq. In order to maintain the listing of the Canopy Shares on the Nasdaq, Canopy must comply with the Nasdaq’s continued listing requirements and standards, which stipulate that the Canopy Shares must maintain a minimum bid price of at least $1.00 per share (the “Minimum Share Price Listing Standard”). There can be no assurance that there will be sufficient liquidity of the Canopy Shares, nor that Canopy will be able to meet the Minimum Share Price Listing Standard on an ongoing basis. In order for Canopy to regain compliance with the Minimum Share Price Listing Standard in the event that the trading price of the Canopy Shares drops below $1.00, Canopy may be required to consolidate (or reverse split) the issued and outstanding Canopy Shares into a lesser number of issued and outstanding Canopy Shares. This would have a dilutive effect on the Floating Shareholders that receive Consideration Shares pursuant to the Floating Share Arrangement. If Canopy is unable to regain compliance with the Minimum Share Price Listing Standard, the Canopy Shares may be subject to delisting from the Nasdaq.

Canopy cannot finance Canopy USA

In October 2017, the TSX issued a staff notice (the “TSX Staff Notice”), warning that listed issuers with ongoing business activities that are in violation of United States federal law regarding marijuana are not compliant with applicable listing requirements (the “TSX Listing Requirements”). Furthermore, the TSX Staff Notice made clear that the concept of “ongoing business activities” would be interpreted broadly to include: (i) activities related to the cultivation, distribution or possession of cannabis in the United States (a “U.S. Cannabis Business”); (ii) commercial interests of arrangements with a U.S. Cannabis Business that are similar in substance to ownership or investment; (iii) providing services or products that are specifically designed for, or targeted as, a U.S. Cannabis Business; or (iv) commercial interests or arrangements with entities providing such services or products to a U.S. Cannabis Business.

As a result of the foregoing, Canopy cannot finance the business or operations of Canopy USA for so long as Canopy is listed on the TSX or the TSX Listing Requirements remain subject to the TSX Staff Notice. There can be no assurance that Canopy USA will be able to generate sufficient funds required for its operations without external funding, which may dilute Canopy’s as-converted interest in Canopy USA. Further, there can be no assurance that Canopy USA will be able to obtain and maintain financing on acceptable terms, or at all. In the event that Canopy USA is unable to obtain or maintain sufficient financing, the value of the Canopy Shares may decline as the business, growth and prospects of Canopy USA may be materially adversely impacted thereby impacting the consolidated financial statements of Canopy and its own future business, growth and prospects.

The Consideration Shares to be received by Floating Shareholders as a result of the Floating Share Arrangement will have different rights ‎from the Floating Shares

Upon completion of the Floating Share Arrangement, Floating Shareholders will no longer be shareholders of Acreage, a ‎company governed by the BCBCA, but will instead be shareholders of Canopy, a corporation ‎governed by the CBCA. There may be important ‎differences between the current rights of Floating Shareholders and the rights to which such shareholders will be ‎entitled as shareholders of Canopy under the CBCA and Canopy’s constating documents. ‎Shareholder rights under the CBCA are in many instances comparable to those under the BCBCA; however, there are several differences. See Appendix “I” – Comparison of Shareholder Rights under the BCBCA and CBCA for a comparison of certain of these rights. This summary is not intended to be exhaustive and Floating Shareholders should consult their legal advisors regarding all of the implications of the effects of the Floating Share Arrangement on such Floating Shareholders’ rights.

Anticipated benefits of integration with Canopy USA may not materialize

It is anticipated that ‎Canopy USA will exercise the Wana Option and the Jetty Option. If such options are exercised, upon completion of the Floating Share Arrangement, it is anticipated that Canopy USA’s business will involve the integration of companies that previously operated ‎‎independently. Such integration may present challenges for Canopy USA, including ‎the integration ‎of the operations, systems and personnel, and special risks, ‎including possible unanticipated liabilities, unanticipated ‎costs, diversion of time and attention and ‎the loss of key employees. The difficulties Canopy USA may encounter ‎in the transition and integration ‎process could have an adverse effect on the revenues, level of expenses and ‎operating results of ‎Canopy and Canopy USA. If actual results are less ‎favourable than anticipated, the business, results of operations, financial ‎‎condition and liquidity of Canopy and Canopy USA could be materially adversely impacted. ‎

The ability to realize the benefits of the Floating Share Arrangement may depend in part on successfully ‎consolidating ‎functions and integrating operations, procedures and personnel in a timely and efficient manner, as ‎well ‎as on Canopy USA’s ability to realize the anticipated growth opportunities and synergies, ‎efficiencies and cost ‎savings from integrating the businesses of Acreage with Wana and Jetty, in the event the Wana Option and the Jetty Option are exercised.

‎ 

Operational, strategic and staffing decisions have not yet been made. These decisions, coupled with the ‎integration of Acreage, Wana and Jetty, in the event the options to acquire ownership of these entities is exercised, into Canopy USA’s operations, may present ‎challenges, ‎including the integration of systems and personnel, ‎and special risks, including possible unanticipated liabilities, ‎unanticipated costs, and the loss of key ‎employees. The performance of Canopy USA after completion of the ‎Floating Share Arrangement could be adversely affected if Canopy USA cannot attract and retain key employees to ‎assist in ‎its operations. As a result of these factors, it is ‎possible that the expected cost reductions and synergies may not be realized. ‎

It is expected that integration will require the dedication of substantial effort, time and resources, which ‎may divert the ‎focus of Canopy USA and resources from other strategic opportunities following completion ‎of the ‎Floating Share Arrangement, as well as from operational matters. The amount and timing of the ‎synergies the Parties ‎hope to realize may not occur as planned. In addition, the integration process may ‎result in the disruption of ‎ongoing business that may adversely affect the ability of Canopy USA and Canopy to achieve the anticipated ‎benefits of the Floating Share Arrangement‎.

Canopy may not be able to renegotiate its debt to Greenstar

Greenstar holds $100 million aggregate principal amount of outstanding unsecured subordinated senior promissory ‎notes issued by Canopy which mature on July 15, 2023. Greenstar, in its early warning report filed under Canopy’s ‎profile on SEDAR dated October 26, 2022, and Canopy have each announced their intention to negotiate an ‎exchange of such notes for Exchangeable Canopy Shares if the Canopy ‎Capital Reorganization is authorized by Canopy’s shareholders at the Canopy Meeting. There can be no assurance ‎that the Canopy Capital Reorganization will be approved at the Canopy Meeting, or if it is, that negotiations for ‎such exchange will be successful. If Canopy is not able to successfully negotiate the exchange of such notes for ‎Exchangeable Canopy Shares, the maturity of such notes on July 15, 2023 will require repayment of the notes in cash, which may result in financial difficulty for Canopy. This may result in a decline in the market value of the Canopy Shares, and a resulting negative impact on ‎the value that Floating Shareholders will realize upon completion of the Floating Share Arrangement.‎

The anticipated benefits of the strategy involving Canopy USA may not be realized

Achieving the benefits anticipated through Canopy USA depends in part on the ability of Canopy USA to effectively capitalize on its scale, to realize the anticipated capital and operating synergies, to profitably sequence the growth prospects and to maximize the potential of its growth opportunities. The ability to realize these benefits from the proposed acquisitions of Acreage, Wana and Jetty by Canopy USA may depend, in part, on successfully consolidating certain functions and integrating operations, procedures and personnel in a timely and efficient manner, and on Canopy USA’s ability to realize the anticipated growth opportunities and synergies. The integration of Acreage with Wana and Jetty, in the event the Wana Option and Jetty Option are exercised, by Canopy USA will require the dedication of substantial effort, time and resources on the part of Canopy USA which may divert time, focus and resources from other strategic opportunities available to Canopy USA and from operational matters during this process. In addition, the integration process could result in disruption of existing relationships with suppliers, employees, customers and other constituencies of each company. There can be no assurance that Canopy USA will be able to integrate the operations of each of the businesses successfully or achieve any of the synergies or other benefits that are anticipated.

Operational and strategic decisions with respect to the integration of Acreage with Wana and Jetty, in the event the Wana Option and Jetty Option are exercised, have not yet been made and may present challenges. It is possible that the integration process could result in the inability to attract and retain key employees, the disruption of the respective ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability to maintain relationships with clients, suppliers, employees or to achieve the anticipated benefits. The performance of Canopy USA could be adversely affected if Canopy USA cannot attract and retain key employees. Any inability of Canopy USA to successfully integrate the operations could have a material adverse effect on the business, financial condition and results of operations of Canopy and Canopy USA.

Upon the closing of the Floating Share Arrangement, Shareholders will own shares of Canopy whose management team will not have the ability to direct or manage the operations of Canopy USA

Current Shareholders will not receive shares of Canopy USA as part of the Floating Share Arrangement but only shares of Canopy yet upon the closing of the Floating Share Arrangement, Canopy USA will hold all of the Acreage Shares. Canopy does not have the ability to direct or manage the operations of Canopy USA. The interests of Canopy USA may not coincide with the interests of Canopy and its shareholders and, consequentially, management of Canopy USA may not necessarily act in accordance with the best interests of the shareholders of Canopy. To the extent that conflicts of interests may arise, Canopy USA may act in a manner adverse to Canopy and its shareholders.

Canopy may issue additional equity securities

Canopy may issue equity securities to ‎finance its activities, including in order to finance acquisitions. In addition, if Canopy is successful in negotiating the exchange of certain outstanding promissory notes owed to ‎Greenstar for Exchangeable Canopy Shares (see “Canopy may be unable to renegotiate its debt to Greenstar” above), ‎additional Exchangeable Canopy Shares will be issued, which will be convertible into Canopy Shares. ‎Following any issuance of ‎additional equity securities by Canopy, whether prior to or following the completion of the Floating Share Arrangement, the ownership interest of Floating Shareholders in Canopy upon such completion of the Floating Share Arrangement may be diluted, and some or ‎all of Canopy’s financial measures on a per share basis may be reduced. Moreover, if ‎Canopy’s intention to issue additional equity securities becomes publicly known, the price of the Canopy Shares may be materially adversely affected.

The Acquisition will affect the rights of Floating Shareholders

Following the completion of the Floating Share Arrangement, Floating Shareholders will no longer have an interest ‎in Acreage, its assets, revenues or profits. In the event that the actual value of Acreage’s assets or business as at the ‎Effective Date, exceeds the value of Acreage implied by the Exchange Ratio, holders of Floating Shares will not be ‎entitled to additional consideration‎.

Adverse U.S. federal income tax consequences

For U.S. federal income tax purposes, the Floating Share Arrangement is expected not to qualify as a reorganization under Section 368(a) of the Code and is expected to be a fully taxable transaction. U.S. Holders may be required to pay substantial U.S. federal ‎income taxes in connection with the Floating Share Arrangement. Assuming the Floating Share Arrangement does not qualify as a reorganization under Section 368(a) of the Code, a U.S. Holder that receives Canopy Shares in exchange for Floating Shares would generally recognize a capital gain or loss equal to the difference between the fair market value of the Canopy Shares received and the U.S. Holder’s adjusted tax basis in the Floating Shares exchanged therefor. For additional information, see the section ‎entitled “Certain United States Federal Income Tax ‎Considerations”‎.‎ Special rules apply to Non-U.S. Holders based on their particular circumstances. There is a risk that such Non-U.S. Holders could be subjected to U.S. federal income tax under certain circumstances. For additional information, see the section entitled “Certain United States Federal Income Tax Considerations – Non-U.S. Holders”.

Canopy may be acquired prior to the Effective Date

In the event of a Canopy Change of Control prior to the Effective Date, Floating Shareholders will not be entitled to vote or exercise any dissent rights in connection with a proposed acquisition of Canopy. However, all such Floating Shareholders will be bound by the terms of any such acquisition, if approved. Accordingly, following a successful Canopy Change of Control, it is anticipated that Floating Shareholders would receive cash and/or securities of the entity resulting from such Canopy Change of Control. The projected synergies and anticipated benefits of the Floating Share Arrangement being completed by Canopy USA may not be realized if it is completed by a third-party purchaser or successor entity, as applicable, following a successful Canopy Change of Control. Acreage and such third-party purchaser or successor entity may not successfully integrate. If actual results are less favourable than Acreage, Canopy and Canopy USA currently anticipate, the business, results of operations, financial condition and liquidity of any such third-party purchaser or successor entity, as applicable, could be materially adversely impacted.

Canopy is subject to certain restrictions of the TSX and the Nasdaq, which may constrain is ability to expand its business in the United States

The Canopy Shares are currently listed on the TSX and the Nasdaq. So long as Canopy continues to be listed on the TSX and the Nasdaq, Canopy must comply with their requirements and guidelines when conducting business, particularly when pursuing opportunities in the United States.

In October 2017, the TSX issued the TSX Staff Notice, which notes that listed issuers with ongoing business activities that are in violation of United States federal law regarding marijuana are not compliant with the TSX Listing Requirements. Should the TSX determine that Canopy is in violation of the TSX Listing Requirements, the TSX may initiate a delisting review. ‎Although Canopy believes that it complies with all applicable laws and regulations, including the TSX Listing Requirements, there is a risk that Canopy’s interpretation may differ from that of the TSX. Canopy’s failure to ‎comply with the TSX Listing Requirements could result in a delisting of the Canopy Shares from the TSX, or the denial of ‎Canopy’s application (the “Listing Application”) to list the Consideration Shares issuable to the Floating Shareholders on the TSX. The denial of Canopy’s Listing Application could, among other things: (i) ‎result in the failure to satisfy the condition precedent to completion of the Floating Share Arrangement that all ‎required Floating Share Arrangement Regulatory Approvals be obtained, such that the Floating Share Arrangement Agreement will be ‎terminated, and the Floating Share Arrangement will not be completed; (ii) have a material adverse effect on the ‎trading price of the Canopy Shares; or (iii) have a material adverse effect on Canopy’s business, financial condition and ‎results of operations.‎

While the Nasdaq has not issued official rules specific to the cannabis or hemp industry, stock exchanges in the United ‎States, including the Nasdaq, have historically refused to list certain cannabis related businesses, including cannabis ‎retailers, that operate primarily in the United States. Failure to comply with any requirements imposed by the Nasdaq ‎could result in the delisting of the Canopy Shares from the Nasdaq, or the denial of any application to have additional ‎securities listed on the Nasdaq, which could have a material adverse effect on the trading price of the Canopy Shares‎. See “Regulatory Matters – Stock Exchange Matters”.

If Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage without structural amendments to Canopy’s interest in Canopy USA, the listing of the Canopy Shares on the Nasdaq Stock Market may be jeopardized

Canopy’s listings on the TSX and Nasdaq prohibit Canopy from investing in, or acquiring, state regulated, but federally illegal, businesses in the United States cannabis market until a change in United States federal law occurs or Canopy delists the Canopy Shares from the TSX and Nasdaq and lists on an alternative exchange that does not prohibit investments in United States cannabis businesses. While Canopy believes that it currently complies with all applicable laws and regulations, as well as the applicable cannabis related policies of the TSX and Nasdaq, Canopy’s interpretation may differ from those of the stock exchanges now or in the future, and therefore, the TSX or Nasdaq could allege that Canopy violates the exchange’s cannabis-related policies.

Canopy has advised that it expects to consolidate the financial statements of Canopy USA in accordance with U.S. GAAP, including the financial statements of Acreage, Wana and Jetty once those acquisitions have been completed by Canopy USA. On December 7, 2022, Canopy received a letter from Nasdaq Regulation requesting certain information and stating, among other things, their position that companies that consolidate “the assets and revenues generated from activities in violation under federal law cannot continue to list on Nasdaq.” Canopy has advised that it expects to continue dialogue with Nasdaq Regulation regarding their position. Representatives of Nasdaq have expressed to representatives of Canopy that the exchange was comfortable with the formation of Canopy USA, the Reorganization and Canopy holding Canopy USA Non-Voting Shares. Representatives of Nasdaq have also indicated to representatives of Canopy that Nasdaq Rule 5205(c) requires Nasdaq to determine compliance with the listing standards based on a company’s financial statements. Canopy has advised that it disagrees with Nasdaq’s application of Nasdaq Rule 5205(c) since Nasdaq Rule 5205(c) merely refers to a company’s initial listing and continued listing qualifications expressly enumerated in the Nasdaq Rules and does not address the matter of the legality of the revenues reported within a Company’s financial statements. Accordingly, Canopy has advised that it intends to continue its dialogue with Nasdaq Regulation as it believes that the “qualifications” referenced in Nasdaq Rule 5205(c) cannot refer to a standard that does not exist within the Nasdaq Rules nor, intuitively, can accounting treatment form the basis for a conclusion with respect to compliance with laws.

Canopy has advised that it is hopeful that the other exchange will seek to determine Canopy’s compliance with its listing requirements on the basis of applicable laws. In the event that neither Nasdaq nor another exchange is comfortable with financial consolidation of Canopy USA and Nasdaq initiates a delisting process, Canopy has advised that it intends to vigorously appeal such a decision.

There is significant judgment in applying the guidance with respect to consolidation of a variable interest entity under U.S. GAAP, particularly given the highly-structured, nuanced and novel nature of Canopy’s interest in Canopy USA. No precedent has been identified by Canopy with respect to the accounting treatment under U.S. GAAP. Canopy USA was structured to ensure that Canopy does not currently have the ability to direct or manage the operations of Canopy USA. The Protection Agreement provides for stringent negative covenants in favor of Canopy that limit a wide variety of corporate and operational decisions of Canopy USA without the consent of Canopy. Canopy considers that in the aggregate, given the disproportionality of economics to stated power over the operations and strategy of Canopy USA, the limited exposure to the economics of Canopy USA for shareholders other than Canopy, the negative covenants contained in the Protection Agreement and the fact that the third-party investors in Canopy USA had pre-existing business relationships with Canopy, based on the current structure of Canopy’s ownership in Canopy USA, consolidation of Canopy USA by Canopy was deemed to most appropriately result in compliance with the requirements of U.S. GAAP despite Canopy’s inability to direct or manage the operations of Canopy USA. In addition, Canopy advised that it believes that consolidating the financial statements of Canopy USA under U.S. GAAP provides investors of Canopy with a more fulsome, accurate and detailed understanding of the financial position and profit and loss for Canopy overall despite Canopy’s inability to direct or manage the operations of Canopy USA. However, in the event that financial consolidation of Canopy USA is not acceptable to either Nasdaq or another exchange and Canopy is unsuccessful in an appeal with respect to a delisting on Nasdaq, Canopy has advised that it intends to amend the structure of its interest in Canopy USA and the terms of the Protection Agreement and Canopy USA’s Limited Liability Company Agreement such that Canopy would not be required to consolidate the financial results of Canopy USA into Canopy’s financial statements. Accordingly, Canopy has advised that it does not believe there is any circumstance in which the Amendment Proposal will result in a delisting from Nasdaq unless there is a concurrent listing on another exchange. Nonetheless, there can be no ‎assurance that the SEC will agree with Canopy’s proposed accounting treatment of Canopy USA. Accordingly, ‎there can be no assurance that Canopy will remain listed on Nasdaq or any other exchange on which the Canopy Shares are currently listed on, which could have a material ‎adverse effect on the trading price of the Canopy Shares, as well as Canopy’s business, financial condition and ‎results of operations. In the event of a delisting from a stock exchange, there is no assurance that Canopy will be ‎able to satisfy the conditions required to list on an alternative stock exchange‎.

A delisting could adversely impact the liquidity of the Canopy Shares

The Canopy Shares are currently listed on the TSX and the Nasdaq. During the 12-month period ended ‎December 31, 2022, approximately 78% of the trading volume of the Canopy Shares took place on the Nasdaq. If ‎the Canopy Shares are delisted from the Nasdaq, there may be a reduction in the liquidity of the Canopy Shares. The pool of potential purchasers of Canopy Shares could also become more ‎limited as a result. Accordingly, a purchase or sale of Canopy Shares may take longer to ‎complete unless Canopy was able to list the Canopy Shares on an alternative exchange. Any inability to purchase and sell Canopy Shares on a timely basis in sufficient quantities could have a ‎material ‎adverse effect on the market price of the Canopy Shares‎ or the ability of Canopy to complete future ‎equity financings on terms favourable to it‎. ‎

Canopy’s ability to meet its debt obligations may have an adverse impact on its capital position, business and operations

Canopy’s publicly available interim financial statements as of and for six months ended September 30, 2022 ‎reflect a net loss and negative cash flow from operating activities for the six months ended September 30, 2022. ‎Canopy has approximately C$337.38 million in debt maturing in 2023, including certain notes owed to Greenstar (see “Canopy may be unable ‎to renegotiate its debt to Greenstar”) above. Canopy and Greenstar have each indicated their intention to negotiate ‎an exchange of such debt for Exchangeable Canopy Shares if the Canopy Capital Reorganization is approved at the ‎Canopy Meeting. If such negotiations are not successful, and Canopy is unable or does not have the resources to ‎repay or refinance such debt coming due in 2023, that may have an adverse impact on Canopy’s capital ‎position, business and operations and, consequentially, the liquidity and price of the Canopy Shares‎.

Risk of a change of control of Canopy USA but not Canopy

There can be no assurance that Canopy will maintain its ownership interest in Canopy USA. If Canopy divests its ownership interest in Canopy USA, whether as a result of a forced divestiture or by voluntary sale, Floating Shareholders will no longer have an interest in Canopy USA or its U.S. cannabis investments previously held by Canopy.

The Reorganization may not be acceptable to certain of Canopy’s financial lenders or other capital providers

Although the sale of cannabis is permissible at the state level in a number of states in United States, cannabis continues to be categorized as a controlled substance under the Controlled Substances Act, and the cultivation, distribution, sale and possession of cannabis remains federally illegal in the United States. As such, the Controlled Substances Act may still be enforced against individuals and companies operating in states in which the sale of cannabis is permissible. This poses a risk that certain of Canopy’s lenders or other capital providers may choose not to engage in business with Canopy if it is believed that Canopy is in contravention of the Controlled Substances Act. If one or more of such providers terminates its relationship with Canopy as a result of the Reorganization, it could have a material adverse effect on Canopy, including its reputation and ability to conduct business, its financial position, operating results, profitability or liquidity or the market price of its listed securities.

The Canopy Capital Reorganization may lead to overhang and less liquidity

If the Canopy Amendment Proposal is approved at the Canopy Meeting and the Canopy Capital Reorganization is completed, Canopy Shareholders will have the option to convert their Canopy Shares into Exchangeable Canopy Shares. There are important differences between the rights attached to the Canopy Shares and the Exchangeable Canopy Shares. While each Exchangeable Canopy Share is convertible into a Canopy Share, the Exchangeable Canopy Shares do not carry voting rights, rights to receive dividends or rights to receive distributions upon dissolution of Canopy. Holders of Exchangeable Canopy Shares will not be able to exercise voting rights at meetings of Canopy Shareholders and will not receive distributions if dividends are declared by the board of directors of Canopy.

The differences between the rights attached to the Canopy Shares and the Exchangeable Canopy Shares are significant and may materially and adversely affect the market value of an investment in Canopy. Canopy currently does not plan to list the Exchangeable Canopy Shares on a securities exchange or in the over-the-counter market, and there is not expected to be a market for trading of the Exchangeable Canopy Shares. Therefore, holders of Exchangeable Canopy Shares will likely have no ability to sell their Exchangeable Canopy Shares and will likely have to exchange such Exchangeable Canopy Shares for Canopy Shares in order to have any liquidity.

The completion of the Canopy Capital Reorganization may result in reduced liquidity of the Canopy Shares, reduced trading volumes, a lower market capitalization and a reduction in the trading price of the Canopy Shares. In addition, even if approved at the Canopy Meeting, the Canopy Capital Reorganization may not be acceptable to certain of the Canopy Shareholders, and such Canopy Shareholders may elect to sell their Canopy Shares, resulting in further market overhang and reduced liquidity, either of which may adversely ‎affect the market for, and the market price of, the Canopy Shares.

The Canopy Shares may not meet index requirements

If each of CBG and Greenstar elect to convert their Canopy Shares into Exchangeable Canopy Shares, assuming the Canopy Amendment Proposal is approved by the requisite Canopy Shareholders and the Canopy Capital Reorganization is completed, there will be a subsequent reduction in the number of Canopy Shares issued and outstanding and listed for trading and, consequentially, a corresponding reduction in the market capitalization of Canopy. Such reduction in Canopy’s market capitalization may jeopardize Canopy’s listing as a constituent on various stock indices. Canopy’s exclusion from stock market indices may limit the ability of some institutions to invest in Canopy Shares, which may result in increased selling pressure and decreased demand for the Canopy Shares, which may increase stock price volatility or otherwise cause the market price of the Canopy Shares to decline.

Prior to the Effective Time, Acreage is restricted from taking certain actions pursuant to the Floating Share Arrangement

The Floating Share Arrangement Agreement restricts Acreage from taking specified actions until the earlier of the Effective Time and the time that the Floating Share Arrangement Agreement is terminated in accordance with its terms, including issuing additional Floating Shares subject to certain exceptions, without the consent of Canopy which may adversely affect the ability of Acreage to execute certain business strategies. These restrictions may prevent Acreage from pursuing certain business opportunities that may arise prior to the Effective Time.

The Fairness Opinions obtained by the Special Committee and the Acreage Board will not reflect changes, circumstances, developments or events that may have occurred or may occur after the date of such Fairness Opinions, and the Management Forecasts delivered in connection with such Fairness Opinions reflect numerous variables, estimates and forecasts made by Acreage’s management at the time the Management Forecasts were prepared

On October 24, 2022, Eight Capital delivered the Eight Capital Fairness Opinion to the Special Committee and Canaccord Genuity delivered the Canaccord Genuity Fairness Opinion to the Acreage Board. As the Fairness Opinions have not been, nor will they be, updated prior to the completion of the Floating Share Arrangement, they do not reflect changes, circumstances, developments or events that may have occurred or may occur after the date of such Fairness Opinions. A summary of the Fairness Opinions, and the limitations and qualifications contained therein, can be found under the heading “The Floating Share Arrangement – Eight Capital Fairness Opinion” and “The Floating Share Arrangement – Canaccord Genuity Fairness Opinion”. Please refer to the full text of the Eight Capital Fairness Opinion and the Canaccord Genuity Fairness Opinion, which are attached to this Circular as Appendix “D” and Appendix “E”, respectively.

The Fairness Opinions delivered by Eight Capital and Canaccord Genuity were necessarily based on economic, market, financial and other conditions as they existed on, and on the information made available to Eight Capital and Canaccord Genuity, respectively, as of, October 24, 2022. The opinions do not speak as of the time the Floating Share Arrangement will be completed or as of any date other than the date of such opinions. Although subsequent developments may affect their respective opinions, neither Eight Capital nor Canaccord Genuity has any obligation to update, revise or reaffirm its opinion. These developments may include changes to the operations and prospects of Acreage, regulatory or legal changes, general market and economic conditions and other factors that may be beyond the control of Acreage.

As further described under the heading “The Floating Share Arrangement – Certain Financial Projections”, Eight Capital and Canaccord Genuity reviewed the Management Forecasts in connection with the rendering of their respective Fairness Opinions. The Management Forecasts, while presented with numerical specificity, necessarily were based on numerous assumptions and estimates that are inherently uncertain. Because the Management Forecasts cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. The assumptions upon which the Management Forecasts were based necessarily involve subjective judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. In addition, the Management Forecasts, and the assumptions, opinions and judgments applied in developing the Management Forecasts, were based on the management of the Company’s best estimates at the time of preparation of the Management Forecasts and were not the subject of independent verification. The Management Forecasts provide no indication that the Management Forecasts will be necessarily predictive of actual future events, or Acreage’s ultimate performance.

The Management Forecasts were not prepared with a view toward public disclosure or with a view toward complying with the published guidelines of the SEC or Canadian Securities Regulators regarding projections or U.S. GAAP, or the guidelines established by the American Institute of Certified Public Accountants with respect to the preparation or presentation of prospective financial information, but, in the view of Acreage’s management, were prepared on a reasonable basis, reflected the best available estimates and judgments at the time of preparation, and presented as of the time of preparation, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Acreage. Although Acreage’s management believes there is a reasonable basis for the Management Forecasts, Acreage cautions Floating Shareholders that future results could be materially different from the Management Forecasts. The Management Forecasts have not been updated or revised to reflect information or results after the date they were prepared or as of the date of this Circular, and except as required by applicable securities laws, Acreage does not intend to update or otherwise revise the Management Forecasts or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the underlying assumptions are shown to be in error.

Risks Relating to the Completion of the Floating Share Arrangement

The Fixed Call Option is not expected to be exercised in the short term unless the Fixed Call Option Conditions are satisfied

The Fixed Call Option must be exercised within five Business Days of the satisfaction of the Fixed Call Option Conditions. If the Fixed Call Option Conditions are not satisfied, the Fixed Call Option is not expected to be exercised in the short term. The satisfaction of the Fixed Call Option Conditions is outside of Acreage’s control.

The Canopy Amendment Proposal must be approved by at least 66⅔% of the votes cast on a special resolution by Canopy Shareholders present in person or represented by proxy at the Canopy Meeting. While Greenstar and CBG have entered into the CBG Support Agreement with Canopy pursuant to which they have agreed, among other things, to vote in favour of the Canopy Amendment Proposal, there can be no assurance that the Canopy Amendment Proposal will be ‎‎approved by the Canopy Shareholders at the Canopy Meeting. In addition, there can be no assurance that either CBG or Greenstar will elect to convert their Canopy Shares into Exchangeable Canopy Shares if the Canopy Amendment Proposal is approved at the Canopy Meeting. ‎ Any decision to undertake such conversion is in the sole discretion of CBG and Greenstar.

If the Fixed Call Option Conditions are not satisfied by the Exercise Outside Date, Acreage may terminate the Floating Share ‎Arrangement Agreement. Canopy will be obliged to pay Acreage $2.0 ‎million as an expense reimbursement in the event the Canopy Capital Reorganization is not completed‎, or if CBG and Greenstar do not exchange all Canopy Shares held by CBG and Greenstar into Exchangeable ‎Shares, ‎prior to the Exercise Outside Date. Pursuant to the terms of the Consent Agreement, if CBG and ‎Greenstar have not converted their Canopy Shares into Exchangeable Canopy Shares on or before the later of: (i) 60 days ‎after the Canopy Meeting; or (ii) February 28, 2023, the Fixed Call ‎Option will not be exercised and the Floating Share Arrangement Agreement will be terminated.‎

‎Acreage could fail to receive the necessary approvals required to complete the Floating Share Arrangement

The Floating Share Arrangement is subject to certain conditions, including, among other things, Shareholder Approval and receipt of the Floating Share Arrangement Regulatory Approvals and any other Regulatory Approvals. Acreage, Canopy and Canopy USA have not yet obtained certain Floating Share Arrangement Regulatory Approvals and other Regulatory Approvals, all of which are required in advance of the Effective Time. The Regulatory Approval processes may take a lengthy period of time to complete, which could delay the Effective Time or result in a failure to obtain the required Regulatory Approvals past the Outside Date, thus giving both Canopy ‎and Acreage the right to terminate the Floating Share Arrangement Agreement. See “Transaction Agreements – The Floating Share Arrangement Agreement‎ – Conditions for Completion of the Floating Share Arrangement”.‎

Certain of these conditions are outside of Acreage’s control. There can be no certainty, nor can Acreage provide any assurance, that all conditions precedent will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the Floating Share Arrangement may not be completed. If, for any reason, the Floating Share Arrangement is not completed or its completion is materially delayed and/or the Floating Share Arrangement Agreement‎ is terminated, the market price of the Floating Shares may be materially adversely affected. Acreage’s business, financial condition or results of operations could also be subject to various material adverse consequences, including that Acreage would remain liable for costs relating to the Floating Share Arrangement.

If the Floating Share Arrangement is not completed and the Fixed Call Option has not then been exercised by the time the Floating Share Arrangement Agreement has been terminated, the Existing Arrangement will remain in effect and Acreage will continue to be subject to the covenants and conditions of the Existing Arrangement Agreement. See “Risk Factors – Risks if the Floating Share Arrangement is Not Completed and the Existing Arrangement Remains in Effect.”

Acreage expects to incur substantial transaction-related costs in connection with the Floating Share ‎Arrangement

Acreage has incurred, and expects to continue to incur, material non-recurring expenses in ‎connection with the ‎Floating Share ‎Arrangement, including costs relating to obtaining the Shareholder Approval. Additional ‎‎unanticipated costs may be incurred by Acreage prior to the Effective Date or the date of termination of the ‎Floating Share Arrangement Agreement in connection with the Floating Share Arrangement (including in respect of any additional fees that may be payable under its engagement in respect of the Existing Arrangement, as described above). Even if the Floating Share ‎‎Arrangement is not completed, Acreage will be obliged to pay certain costs relating to ‎the Floating ‎Share ‎Arrangement, such as legal, ‎accounting, financial advisory, proxy solicitation and printing fees and in certain circumstances, will be required to pay the Termination Fee in accordance with the terms of the Floating Share Arrangement Agreement. Such costs ‎may be significant and could have an adverse effect on ‎Acreage’s future results of operations, cash flows and ‎financial condition‎.