Fire & Flower Holdings Corp.

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications and National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions -- application for order that issuer is not a reporting issuer and for full revocation of failure-to-file cease trade order -- issuer cease traded due to failure to file interim financial statements, management's discussion and analysis and related certifications -- issuer has completed reorganization under the Companies' Creditors Arrangement Act -- issuer has applied for a full revocation of the cease trade order -- issuer has applied to cease to be a reporting issuer in each jurisdiction where it is a reporting issuer -- full revocation of the failure-to-file cease trade order and cease to be reporting issuer application granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(10)(a)(ii) and 144.

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications.

National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdiction.

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO AND IN THE MATTER OF A REVOCATION OF A FAILURE-TO-FILE CEASE TRADE ORDER AND IN THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF FIRE & FLOWER HOLDINGS CORP. (the Issuer)

Background

The Issuer is subject to a failure-to-file cease trade order (the FFCTO) issued by the Ontario Securities Commission (the Decision Maker) on August 28, 2023.

The Issuer has applied to the Decision Maker under National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions (NP 11-207) for a revocation of the FFCTO (FFCTO Revocation Order) pursuant to section 144 of the Securities Act (Ontario) (the Legislation).

The Decision Maker also received an application (Cease to be a Reporting Issuer Application) from the Issuer for an order (the Cease to be a Reporting Issuer Order) under section 1(10)(a)(ii) of the Legislation that the Issuer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer pursuant to section 21 of National Policy 11- 206 Process for Cease to be a Reporting Issuer Applications (NP 11-206).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

(a) the Decision Maker is the principal regulator for this application; and

(b) the Issuer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Québec, Saskatchewan, and Yukon.

Interpretation

Terms defined in National Instrument 14-101 Definitions, NP 11-206, NP 11-207 and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Issuer:

1. The Issuer is a "reporting issuer" in each of Ontario, Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Québec, Saskatchewan, and Yukon (the Reporting Jurisdictions).

2. The Issuer was incorporated under the Business Corporations Act (Ontario) on December 12, 2017, and continued under the Canada Business Corporations Act on February 12, 2019.

3. The Issuer's registered and head office is located at 2 Bloor Street West, Suite 2006, Toronto, ON, M4W 3E2.

4. The Issuer is a technology-powered, adult-use cannabis retailer with retail locations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Yukon.

5. The authorized capital of the Issuer consists of an unlimited number of Class "A" Common shares (the New Common Shares). As at the date hereof, there are 1,000,000,000 Class "A" Common shares issued and outstanding. The Issuer has no other outstanding securities (including debt securities).

6. In light of ongoing financial difficulties, the Issuer and its subsidiaries (the F&F Group) filed for creditor protection under the Companies' Creditors Arrangement Act (the CCAA) and received an order (the Initial Order) for creditor protection under the CCAA from the Ontario Superior Court of Justice (Commercial List) (the Court) on June 5, 2023 (the CCAA Proceedings).

7. Pursuant to the Initial Order, the Court, inter alia, appointed FTI Consulting Canada Inc. as monitor (in such capacity, the Monitor) of the F&F Group under the CCAA Proceedings and authorized the Issuer to obtain a debtor-in-possession loan from 2707031 Ontario Inc. in the amount of $9,800,000 in order to fund the CCAA Proceedings and other short-term working capital requirements of the F&F Group.

8. On June 21, 2023, the Court granted an order (the SISP Order) authorizing the Monitor to conduct, with the assistance of the Issuer, a sale and investment solicitation process (the SISP) intended to solicit interest in the opportunity for a sale of or investment in all or part of the Issuer's assets and business operations.

9. On August 17, 2023, the Issuer announced that the bid by 2759054 Ontario Inc., operating as FIKA Cannabis (FIKA), had been designated as the successful bid under the SISP (the Successful Bid) and that in accordance with the SISP Order the Issuer would seek Court approval of the Successful Bid and authority to consummate the transactions provided for therein.

10. On August 29, 2023, the Court granted an order under the CCAA (the Sale Approval and Vesting Order) pursuant to which, inter alia, the Court (i) approved the subscription agreement, dated August 17, 2023 with 2759054 Ontario Inc. (the Subscription Agreement) and the transaction (the Transaction) contemplated therein, including the sale and issuance by the Issuer of 1,000,000,000 Class "A" Common shares (the Purchased Shares) to FIKA for the aggregate purchase price of $36,000,000, (ii) authorized the transfer and vesting of all of F&F Group's right, title and interest in certain excluded assets and excluded liabilities to "Residual Co.", (iii) authorized and directed the Issuer to issue the Purchased Shares to FIKA, and vest in FIKA, all right title and interest in and to the Purchased Shares, (iv) authorized the termination and cancellation all capital shares, capital stock, partnership, membership, joint venture or other ownership or equity interest, participation or securities (whether voting or non-voting, whether preferred, common or otherwise, and including share appreciation, contingent interest or similar rights) of the Issuer other than the Purchased Shares, and (v) approved a claims process pursuant to which claimants may file claims against the F&F Group.

11. The Transaction included the filing of articles of amendment of the Issuer's articles with Corporations Canada (the Amended Articles) to, inter alia, effect the redemption and cancellation of the common shares of the Issuer (the Old Common Shares) outstanding immediately prior to effective date of the Transaction, and authorized the issuance of New Shares to FIKA. The principal items in the Amended Articles include the:

(i) amendment to the rights, privileges, restrictions and conditions attached to the Old Common Shares to include the redemption of all Old Common Shares for no consideration and without notice to the holders (the Redemption);

(ii) amendment to the authorized share capital of the Issuer to create an unlimited number of New Common Shares;

(iii) following the Redemption, the deletion of the previously authorized but unissued Old Common Shares so that the maximum number of shares that the Issuer is authorized to issue shall consist of an unlimited number of New Common Shares;

(iv) following the Redemption, the cancellation of any and all agreements, contracts, plans, indentures, deeds, certificates, subscription rights, conversion rights, pre-emptive rights, options (including stock option or share purchase or equivalent plans), warrants, or other documents or instruments governing, convertible or exchangeable into, and/or having been created or granted in connection with the share capital of the Issuer, and for greater certainty excluding the New Common Shares

(v) restrictions on transfer in order to qualify it as a "private issuer" for the purposes of National Instrument 45-106 Prospectus Exemptions, which limitations will provide that no securities shall be transferred without either: (A) the consent of the directors of the Issuer expressed by a resolution passed or by an instrument in writing signed by the majority of the directors; or (B) the consent of the holders of shares of the Issuer to which are attached at least a majority of the votes attaching to the shares;

12. In connection with carrying out the SISP Order and obtaining the Sale Approval and Vesting Order, the Issuer has engaged in certain acts in furtherance of trades in the securities of the Issuer, including its entry into the Subscription Agreement (the Acts), which Acts were taken at the direction of, and with the approval of, and under the supervision of, the Court. Accordingly, the Issuer applied for and obtained a partial revocation order from the Decision Maker on September 6, 2023 in order to complete the Transaction.

13. The effective date of the Transaction was September 15, 2023 (the Effective Date).

14. Immediately prior to the Effective Date, the authorized capital of the Issuer consisted of an unlimited number of Old Common Shares, of which approximately 45,154,000 Old Common Shares were outstanding, including approximately 1,935,529 options and 17,796,284 Series C Warrant units outstanding. Immediately prior to the Effective Date, the Issuer had no other outstanding securities (including debt securities).

15. As of and since the Effective Date, the authorized share capital of the Issuer consists solely of an unlimited number of shares of New Common Shares, of which 1,000,000,000 New Common Shares are issued and outstanding as of the date hereof.

16. As of and since the Effective Date, the Issuer only has one registered and beneficial securityholder, namely FIKA.

17. The rights of the shareholders of the Issuer are governed by and subject to the Issuer's share terms, which are set forth in the Amended Articles.

18. There is no obligation in the Sale Approval and Vesting Order or the Amended Articles for the Issuer to maintain its status as a reporting issuer and no prohibition on ceasing to be a reporting issuer.

19. The prior holders of Old Common Shares ceased to have any economic interest in the Issuer upon completion of the Transaction.

20. The Old Common Shares were previously listed for trading on the Toronto Stock Exchange (the TSX) under the symbol "FAF". The Old Common Shares were delisted from the TSX effective as of the close of markets on July 14, 2023, as a result of the failure of the Issuer to meet the continued listing requirements of the TSX. The Common Shares were also quoted for trading on the OTCQX in the United States under the symbol "FFLWF". The Old Common Shares were delisted from the OTCQX effective as of the close of markets on June 14, 2023.

21. On the Effective Date, no securities of the Issuer have been traded in Canada, the United States or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation (NI 21-101), or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

22. The Issuer has no current intention to seek public financing by way of an offering of securities in Canada or elsewhere or to make or maintain a market in securities of the Issuer.

23. The securities of the Issuer are subject to a FFCTO issued by the Decision Maker on August 28, 2023 that is applicable in certain other Reporting Jurisdictions for its failure to file the Filings (as defined below) under applicable securities laws.

24. The Issuer is applying for an order revoking the FFCTO and an order that the Issuer has ceased to be a reporting issuer in all of the Reporting Jurisdictions.

25. As of the date hereof, the Issuer is not in default of any of the requirements of securities legislation in the Reporting Jurisdictions, or the rules and regulations made pursuant thereto, except (the following, the Defaults):

(i) the obligation to file the following continuous disclosure documents (the Filings):

(A) interim financial statements for the period ended June 30, 2023;

(B) management's discussion and analysis relating to the interim financial statements for the period ended June 30, 2023; and

(C) certification of the foregoing filings as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.

26. But for the Defaults, the Issuer would qualify for the simplified procedure set out in NP 11206 on the basis that:

(i) it is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;

(ii) the outstanding securities of the Issuer, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide; and

(iii) the Issuer's outstanding securities, including debt securities, are not traded in Canada or another country on a marketplace, as defined in NI 21-101, or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

27. The Issuer acknowledges that, in granting the relief sought, the Decision Maker is not expressing any opinion or approval as to the terms of the Transaction.

Order

The Decision Maker is satisfied that FFCTO Revocation Order and the Cease to be a Reporting Issuer Order meet the tests set out in the Legislation for the Decision Maker to make the order

The decision of the Decision Maker under the Legislation is that the FFCTO Revocation Order and the Cease to be a Reporting Issuer Order are granted.

DATED this 3rd day of October, 2023

OSC File #: 2023/0432