Harvest Health & Recreation Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Issuer granted relief from certain restricted security requirements under National Instrument 41-101 General Prospectus Requirements, National Instrument 44-101 Short Form Prospectus Distributions, and National Instrument 51-102 Continuous Disclosure Obligations -- Relief granted subject to conditions.

OSC Rule 56-501 Restricted Shares -- Issuer granted relief from certain restricted share requirements under OSC Rule 56-501 -- Relief granted subject to conditions.

Applicable Legislative Provisions

National Instrument 41-101 General Prospectus Requirements, ss. 12.2(3), 12.2(4), 12.3, and 19.1.

Form 41-101F1 Information Required in a Prospectus, s. 1.13(1).

National Instrument 44-101 Short Form Prospectus Distributions, s. 8.1.

Form 44-101F1 Short Form Prospectus, s. 1.12(1).

National Instrument 51-102 Continuous Disclosure Obligations, ss. 10.1(1)(a), 10.1(2), 10.1(4), 10.1(6), and 13.1.

OSC Rule 56-501 Restricted Shares, ss. 2.3(1)(1.), 2.3(1)(3.), 2.3(2), 3.2 and 4.2.

February 7, 2020

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF HARVEST HEALTH & RECREATION INC. (the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of 1204599 B.C. Ltd. ("Newco") and 1204899 B.C. Ltd. ("Parentco") which will amalgamate to form the resulting issuer, assuming the name Harvest Health & Recreation Inc. (the "Resulting Issuer"), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that the requirements under:

(a) subsections 12.2(3) and 12.2(4) of National Instrument 41-101 -- General Prospectus Requirements ("NI 41-101"), relating to the use of restricted security terms, and subsection 1.13(1) of Form 41-101F1 -- Information Required in a Prospectus and subsection 1.12(1) of Form 44-101F1 -- Short Form Prospectus, relating to restricted security disclosure, shall not apply to the multiple voting shares of the Resulting Issuer (the "Resulting Issuer Multiple Voting Shares") in connection with any prospectus that may be filed by the Resulting Issuer under NI 41-101, National Instrument 44-101 -- Short Form Prospectus Distributions, National Instrument 44-102 -- Shelf Distributions or National Instrument 44-103 -- Post-Receipt Pricing (the "Prospectus Disclosure Exemption");

(b) section 12.3 of NI 41-101 relating to prospectus filing eligibility for distributions of restricted securities shall not apply to distributions by the Resulting Issuer of Resulting Issuer Multiple Voting Shares, Resulting Issuer Subordinate Voting Shares (as defined below), Resulting Issuer Super Voting Shares (as defined below), Replacement Options (as defined below), Replacement Compensation Options (as defined below), Replacement RSUs (as defined below), and any other securities of the Resulting Issuer, on a go-forward basis, that are directly or indirectly convertible into, or exercisable or exchangeable for, Resulting Issuer Subordinate Voting Shares or Resulting Issuer Multiple Voting Shares (the "Prospectus Eligibility Exemption");

(c) subsections 10.1(1)(a), 10.1(2), 10.1(4) and 10.1(6) of National Instrument 51-102 Continuous Disclosure Obligations relating to the use of restricted security terms and restricted security disclosure shall not apply to the Multiple Voting Shares in connection with continuous disclosure documents that may be prepared by the Resulting Issuer under NI 51-102 (the "CD Disclosure Exemption");

(d) subsections 2.3(1)(1.), 2.3(1)(3.) and 2.3(2) of Ontario Securities Commission Rule 56-501 -- Restricted Shares ("Rule 56-501") relating to the use of restricted share terms and restricted share disclosure shall not apply to the Multiple Voting Shares in connection with dealer and adviser documentation, rights offering circulars and offering memoranda of the Resulting Issuer (the "Rule 56-501 Disclosure Exemption"); and

(e) subsection 3.2 of OSC Rule 56-501 relating to the withdrawal of prospectus exemptions for distributions of restricted shares shall not apply to distributions by the Resulting Issuer of Resulting Issuer Multiple Voting Shares, Resulting Issuer Subordinate Voting Shares (as defined below), Resulting Issuer Super Voting Shares (as defined below), Replacement Options (as defined below), Replacement Compensation Options (as defined below), Replacement RSUs (as defined below), and any other securities of the Resulting Issuer, on a go-forward basis, that are directly or indirectly convertible into, or exercisable or exchangeable for, Resulting Issuer Subordinate Voting Shares or Resulting Issuer Multiple Voting Shares (the "Rule 56-501 Withdrawal Exemption" and, together with the Prospectus Disclosure Exemption, the Prospectus Eligibility Exemption, the CD Disclosure Exemption and the OSC Rule 56-501 Disclosure Exemption, the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and,

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in each of the provinces and territories of Canada (other than with respect to the Rule 56-501 Disclosure Exemption and the Rule 56-501 Withdrawal Exemption), which, pursuant to subsection 8.2(2) of National Policy 11-202 -- Process for Prospectus Reviews in Multiple Jurisdictions and subsection 5.2(6) of National Policy 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions, also satisfies the notice requirement of subsection 4.7(1)(c) of MI 11-102.

Interpretation

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

Representations

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

1. Harvest (formerly RockBridge Resources Inc.) is a corporation incorporated under the laws of British Columbia on November 20, 2007. Harvest is a reporting issuer in the provinces of Ontario, Alberta, British Columbia, and Saskatchewan. Harvest has three classes of shares issued and outstanding: subordinate voting shares (the "Harvest Subordinate Voting Shares"), multiple voting shares (the "Harvest Multiple Voting Shares"), and super voting shares (the "Harvest Super Voting Shares", and together with the Harvest Subordinate Voting Shares and the Harvest Multiple Voting Shares, the "Harvest Shares"). The Harvest Subordinate Voting Shares are listed for trading on the Canadian Securities Exchange ("CSE") under the symbol "HARV".

2. Newco is a corporation incorporated under the laws of the province of British Columbia on April 9, 2019.

3. Parentco is a corporation incorporated under the laws of the province of British Columbia on April 11, 2019.

4. Verano Holdings, LLC ("Verano") is a limited liability company formed under the laws of Delaware on September 12, 2017.

5. On April 22, 2019, the Filer, Verano and its subsidiaries, Newco and Parentco, entered into a business combination agreement (the "Business Combination Agreement") in connection with the proposed business combination transaction (the "Transaction") involving such parties pursuant to which, among other steps described herein, Parentco and Newco will amalgamate to form the Resulting Issuer, assuming the name "Harvest Health & Recreation Inc.". A summary of the Transaction and the business combination agreement dated April 22, 2019 (the "Business Combination Agreement") in respect of the Transaction can be found in the management information circular of the Filer dated May 24, 2019 (the "Harvest Circular") on the Filer's SEDAR profile at www.sedar.com.

6. It is a condition of closing the Transaction pursuant to the Business Combination Agreement that the subordinate voting shares of the Resulting Issuer ("Resulting Issuer Subordinate Voting Shares") be listed for trading on the CSE.

7. The Filer, Verano, Parentco and Newco entered into the Business Combination Agreement as of April 22, 2019 pursuant to which the businesses of the Filer and Verano will be combined through a plan of arrangement (the "Plan of Arrangement").

8. In advance of the effective time of the Plan of Arrangement (the "Effective Time"), Parentco, Verano and other related companies will conduct a pre-closing reorganization through a series of transactions (the "Pre-Arrangement Transactions") pursuant to which, among other things, Parentco will indirectly acquire the outstanding units of Verano, all as described further in the Harvest Circular.

9. Immediately prior to the Effective Time, the articles and notice of articles of Parentco will have been amended such that Parentco will have three classes of shares: subordinate voting shares ("Parentco Subordinate Voting Shares"), multiple voting shares ("Parentco Multiple Voting Shares") and super voting shares ("Parentco Super Voting Shares"), each of which will have the same terms and conditions as the proposed shares of the Resulting Issuer as described in more detail below.

10. Pursuant to the Plan of Arrangement, Parentco will amalgamate with Newco (the "Amalgamation") to form Harvest Health & Recreation Inc., the Resulting Issuer (prior to the Effective Time, the Filer shall change its name to "Harvest Health (Holdings), Inc." (or to such other name as is determined by the Filer and approved by the Registrar)).

11. The Resulting Issuer will have three classes of shares: Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares, and super voting shares (the "Resulting Issuer Super Voting Shares"), the terms of which are described below. Upon completion of the Transaction, the Resulting Issuer will have 3,475,197 Resulting Issuer Multiple Voting Shares issued and outstanding, 2,000,000 Resulting Issuer Super Voting Shares issued and outstanding and 63,358,934 Resulting Issuer Subordinate Voting Shares issued and outstanding (in each case, assuming no convertible securities are exercised or other securities issued from the date of this decision to the time of completion of the Transaction and that 1,295,506 Resulting Issuer Multiple Voting Shares and no Resulting Issuer Subordinate Voting Shares are issued pursuant to the Transaction).

12. Each of the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares will be "equity shares" (per Rule 56-501) and "equity securities" (per NI 41-101 and NI 51-102).

13. The Resulting Issuer Subordinate Voting Shares may be "restricted securities" as defined in NI 41-101 and NI 51-102, and "restricted shares", as defined in Rule 56-501, as the Resulting Issuer Multiple Voting Shares and the Resulting Issuer Super Voting Shares will carry a greater number of votes per security relative to the Subordinate Voting Shares.

14. The Resulting Issuer Multiple Voting Shares may be "restricted securities" as defined in NI 41-101 and NI 51-102, and "restricted shares", as defined in Rule 56-501, as the Resulting Issuer Super Voting Shares will carry a greater number of votes per security relative to the Resulting Issuer Multiple Voting Shares.

15. Upon the Amalgamation, the Resulting Issuer will issue to each holder of shares of Parentco the same number and class of securities as held by such holder in Parentco immediately prior to the Effective Time of the Plan of Arrangement. No other securities of Parentco will be outstanding immediately prior to the Effective Time of the Plan of Arrangement.

16. Under the Plan of Arrangement, the holders of securities of the Filer will also exchange their securities for securities of the Resulting Issuer, substantially as follows:

(a) each Harvest Subordinate Voting Share, Harvest Multiple Voting Share, and Harvest Super Voting Share outstanding immediately prior to the Effective Time, will be exchanged for Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares, and Resulting Issuer Super Voting Shares on a one for one basis, respectively (the "Harvest Share Exchange"), in accordance with the Plan of Arrangement;

(b) each option issued by the Filer to purchase Harvest Subordinate Shares (each a "Harvest Option") outstanding immediately prior to the Effective Time will be exchanged for a substantially similar option of the Resulting Issuer (each, a "Replacement Option") in accordance with the Plan of Arrangement;

(c) each compensation option issued by the Filer (each a "Harvest Compensation Option") outstanding immediately prior to the Effective Time, will be exchanged for a substantially similar compensation option of the Resulting Issuer (each, a "Replacement Compensation Option") in accordance with the Plan of Arrangement; and

(d) each RSU issued by the Filer (each a "Harvest RSU") outstanding immediately prior to the Effective Time will be exchanged for a substantially similar RSU of the Resulting Issuer (each a "Replacement RSU") in accordance with the Plan of Arrangement.

17. The Transaction will be effected by the Plan of Arrangement under the Business Corporations Act (British Columbia). The Transaction received final approval of the Supreme Court of British Columbia on July 2, 2019.

18. The Transaction has been approved by the holders of Harvest Subordinate Voting Shares, Harvest Multiple Voting Shares, and Harvest Super Voting Shares. A meeting of shareholders of the Filer took place on June 26, 2019 (the "Harvest Meeting"). The Harvest Circular was mailed to shareholders of the Filer on May 28, 2019.

19. The Harvest Circular contemplated that among other approvals, the following approvals would be sought at the Harvest Meeting (the "Required Harvest Shareholder Approval"): (A)(i) 66?% of the votes cast on the resolution to approve the Plan of Arrangement (the "Harvest Arrangement Resolution") by holders of Harvest Subordinate Voting Shares present in person or by proxy at the Harvest Meeting, and (ii) a majority of the votes cast by holder of Harvest Subordinate Voting Shares present in person or represented by proxy and entitled to vote at the Harvest Meeting, voting separately as a class, other than the votes attaching to Harvest Subordinate Voting Shares held directly or indirectly by "affiliates" or "control persons" of the Filer, as such terms are defined in Rule 56-501; (B)(i) 66?% of the votes cast on the Harvest Arrangement Resolution by holders of Harvest Multiple Voting Shares present in person or by proxy and entitled to vote at the Harvest Meeting, voting separately as a class, and (ii) a majority of the votes cast by holders of Harvest Multiple Voting Shares present in person or represented by proxy and entitled to vote at the Harvest Meeting, voting separately as class, other than the votes attaching to Harvest Multiple Voting Shares held directly or indirectly by "affiliates" or "control persons" of the Filer, as such terms are defined in Rule 56-501; (C)(i) 66?% of the votes cast on the Harvest Arrangement Resolution by holders of Harvest Super Voting Shares present in person or by proxy and entitled to vote at the Harvest Meeting, voting separately as a class, and (ii) a majority of the votes cast by holders of Harvest Super Voting Shares present in person or represented by proxy and entitled to vote at the Harvest Meeting, voting separately as class, other than the votes attaching to Harvest Super Voting Shares held directly or indirectly by "affiliates" or "control persons" of the Filer, as such terms are defined in Rule 56-501; (D) 66?% of the votes case on the Harvest Arrangement Resolution by holders of Harvest Super Voting Shares, Harvest Multiple Voting Shares and Harvest Subordinate Voting Shares present in person or represented by proxy and entitled to vote at the Harvest Meeting, voting together as a single class; and, (E) a majority of the votes cast by Harvest shareholders present in person or represented by proxy and entitled to vote at the Harvest Meeting other than the votes attaching to Harvest Shares held directly or indirectly by "affiliates" or "control persons" of the Filer, as such terms are defined in Rule 56-501.J

20. The Required Harvest Shareholder Approval was obtained at the Harvest Meeting.

21. Multilateral Instrument 61-101 -- Protection of Minority Securityholders in Special Transactions ("MI 61-101") does not, under the circumstances of the Arrangement, apply to require minority shareholder approval at the Harvest Meeting. No "related party" will, or may be entitled to, receive a "collateral benefit" within the meaning of MI 61-101. Additionally, no related party will acquire the business of Harvest, and there are no "connected transactions". Accordingly, the Transaction is not a "business combination" within the meaning of MI 61-101.

22. The Harvest Circular complied with the disclosure requirements with respect to an information circular related to restricted shares set out in Section 3.2(1)(e) of Rule 56-501 and Section 12.3(2) of NI 41-101 (collectively, the "Restricted Share Disclosure Requirements").

23. Harvest Options, Harvest Compensation Options, and Harvest RSUs do not confer voting rights, and for purposes of the Harvest Arrangement Resolution remained non-voting.

24. As disclosed in the Harvest Circular, to the best of the knowledge of management of the Filer and the Filer's board of directors, there are no affiliates of the Filer that beneficially own any securities of the Filer. Jason Vedadi and Steven White, who hold approximately 35.4% and 32.6% of the votes attaching to all outstanding voting securities of the Filer, are considered "control persons" as defined and contemplated in Rule 56-501 and Part 12 of NI 41-101 (the "Restricted Share Rules") and, accordingly, the Harvest Shares held by each of Vedadi and White were not counted for the purpose of approval of the Harvest Arrangement Resolution for the purposes of the Restricted Share Rules.

25. In addition, the Transaction was approved by holders of shares of Parentco (the "Parentco Shares") along with those persons entitled to acquire shares of Parentco pursuant to the Pre-Arrangement Transactions (collectively, the "Parentco Shareholders"). The Parentco circular (the "Parentco Circular") was mailed to Parentco Shareholders on May 31, 2019. The Parentco meeting (the "Parentco Meeting") took place on June 26, 2019.

26. The Parentco Circular complied with the Restricted Share Disclosure Requirements.

27. For the Plan of Arrangement to be implemented, as disclosed in the Parentco Circular, the Parentco arrangement resolution (the "Parentco Arrangement Resolution") was required to be passed, with or without variation, at the Parentco Meeting by at least: (A) 66?% of the votes cast by Parentco Shareholders, present in person or represented by proxy at the Parentco meeting, voting together as a single class; and (B) a majority of the votes cast by Parentco Shareholders, excluding votes of "affiliates" of Parentco and "control persons" of Parentco, as contemplated by Rule 56-501 and NI 41-101 (the "Required Parentco Shareholder Approval").

28. As disclosed in the Parentco Circular, to the best of the knowledge of management of Parentco and Parentco's board of directors, there were no affiliates of Parentco that beneficially owned any securities of Parentco other than George Archos who was the sole shareholder of Parentco as of May 31, 2019. George Archos, who held 100% of the votes attaching to the Parentco Shares, was considered a "control person" as defined and contemplated in the Restricted Share Rules and, accordingly, the Parentco Shares held by George Archos was not counted for the purpose of approval of the Parentco Arrangement Resolution for the purposes of the Restricted Share Rules.

29. The Required Parentco Shareholder Approval was obtained at the Parentco Meeting.

30. The following is a summary of the terms attaching to the Resulting Issuer's shares (the "Share Terms").

(a) Resulting Issuer Subordinate Voting Shares

(i) Right to Vote: Holders of Resulting Issuer Subordinate Voting Shares will be entitled to notice of and to attend at any meeting of the shareholders of the Resulting Issuer, except a meeting of which only holders of another particular class or series of shares of Resulting Issuer will have the right to vote. At each such meeting, holders of Resulting Issuer Subordinate Voting Shares will be entitled to one vote in respect of each Resulting Issuer Subordinate Voting Share held.

(ii) Class Rights: As long as any Resulting Issuer Subordinate Voting Shares remain outstanding, the Resulting Issuer will not, without the consent of the holders of the Resulting Issuer Subordinate Voting Shares by separate special resolution, prejudice or interfere with any rights attached to the Resulting Issuer Subordinate Voting Shares. Holders of Subordinate Voting Shares will not be entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of Resulting Issuer Subordinate Voting Shares, or bonds, debentures or other securities of the Resulting Issuer.

(iii) Dividends: Holders of Resulting Issuer Subordinate Voting Shares will be entitled to receive as and when declared by the directors of the Resulting Issuer, dividends in cash or property of the Resulting Issuer. No dividend will be declared or paid on the Resulting Issuer Subordinate Voting Shares unless the Resulting Issuer simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Resulting Issuer Subordinate Voting Share basis) on the Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares.

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

(v) Changes: No subdivision or consolidation of the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares or Resulting Issuer Super Voting Shares shall occur unless, simultaneously, the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares are subdivided or consolidated in the same manner, so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.

(vi) Conversion: In the event that an offer is made to purchase Resulting Issuer Multiple Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Resulting Issuer Multiple Voting Shares are then listed, to be made to all or substantially all the holders of Resulting Issuer Multiple Voting Shares in a given province or territory of Canada to which these requirements apply, each Resulting Issuer Subordinate Voting Share shall become convertible at the option of the holder into Resulting Issuer Multiple Voting Shares at the inverse of the Resulting Issuer MVS Conversion Ratio (as defined below) then in effect at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Resulting Issuer Subordinate Voting Shares for the purpose of depositing the resulting Resulting Issuer Multiple Voting Shares pursuant to the offer, and for no other reason. In such event, the Resulting Issuer's transfer agent shall deposit the resulting Resulting Issuer Multiple Voting Shares on behalf of the holder. Should the Resulting Issuer Multiple Voting Shares issued upon conversion and tendered in response to the offer be withdrawn by shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the Resulting Issuer Multiple Voting Shares resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Resulting Issuer or on the part of the holder, into Resulting Issuer Subordinate Voting Shares at the Resulting Issuer MVS Conversion Ratio then in effect.

(vii) Redemption Right: The Resulting Issuer will be entitled to redeem the Resulting Issuer Subordinate Voting Shares of an "Unsuitable Person" in certain circumstances. The purpose of the redemption right is to provide the Resulting Issuer with a means of protecting itself from having a Resulting Issuer Unsuitable Person with an ownership interest of, whether of record or beneficially (or having the power to exercise control or direction over), five percent (5%) or more of the issued and outstanding Resulting Issuer Shares (calculated on as-converted to Resulting Issuer Subordinate Voting Shares basis), who a governmental entity granting licenses to the Resulting Issuer (including to any subsidiary) has determined to be unsuitable to own shares, or whose ownership of Resulting Issuer Subordinate Voting Shares and/or Resulting Issuer Multiple Voting Shares may result in the loss, suspension or revocation (or similar action with respect to any licenses relating to the conduct of the Resulting Issuer's business relating to the cultivation, processing and dispensing of cannabis and cannabis-derived products in the United States or in the Resulting Issuer being unable to obtain any new licenses in the normal course, including, but not limited to, as a result of such person's failure to apply for a suitability review from or to otherwise fail to comply with the requirements of a governmental entity, as determined by the Resulting Issuer board in its sole discretion after consultation with legal counsel and, if a license application has been filed, after consultation with the applicable governmental entity.

(b) Resulting Issuer Multiple Voting Shares

(i) Right to Vote: Holders of Resulting Issuer Multiple Voting Shares will be entitled to notice of and to attend at any meeting of the shareholders of the Resulting Issuer, except a meeting of which only holders of another particular class or series of shares of the Resulting Issuer will have the right to vote. At each such meeting, holders of Resulting Issuer Multiple Voting Shares will be entitled to one vote in respect of each the Resulting Issuer Subordinate Voting Share into which such Multiple Voting Share could then be converted (initially 100 votes per Resulting Issuer Multiple Voting Share held).

(ii) Class Rights: As long as any Resulting Issuer Multiple Voting Shares remain outstanding, the Resulting Issuer will not, without the consent of the holders of the Resulting Issuer Multiple Voting Shares by separate special resolution, prejudice or interfere with any right attached to the Resulting Issuer Multiple Voting Shares. Additionally, consent of the holders of a majority of the outstanding Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares will be required for any action that authorizes or creates shares of any class having preferences superior to or on a parity with the Resulting Issuer Multiple Voting Shares. Holders of Resulting Issuer Multiple Voting Shares will not be entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of Resulting Issuer Multiple Voting Shares, or bonds, debentures or other securities of the Resulting Issuer. In the event of the liquidation, dissolution or winding-up of the Resulting Issuer, whether voluntary or involuntary, or in the event of any other distribution of assets of the Resulting Issuer among its shareholders for the purpose of winding up its affairs, the holders of Resulting Issuer Multiple Voting Shares will, subject to the prior rights of the holders of any shares of the Resulting Issuer ranking in priority to the Resulting Issuer Multiple Voting Shares, be entitled to participate rateably along with all other holders of Multiple Voting Shares (on a Resulting Issuer MVS Conversion Ratio basis), Resulting Issuer Subordinate Voting Shares and Resulting Issuer Super Voting Shares (on an as-converted to Subordinate Voting Share basis).

(iii) Dividends: The holders of Resulting Issuer Multiple Voting Shares are entitled to receive such dividends as may be declared and paid to holders of the Resulting Issuer Subordinate Voting Shares in any financial year as the Board of the Resulting Issuer may by resolution determine, on an as-converted to Resulting Issuer Subordinate Voting Shares basis. No dividend will be declared or paid on the Resulting Issuer Multiple Voting Shares unless the Resulting Issuer simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Resulting Issuer Subordinate Voting Shares basis) on the Resulting Issuer Subordinate Voting Shares and Resulting Issuer Super Voting Shares.

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

(v) Changes: No subdivision or consolidation of the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares or Resulting Issuer Super Voting Shares shall occur unless, simultaneously, the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares are subdivided or consolidated in the same manner, so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.

(vi) Conversion: The Resulting Issuer Multiple Voting Shares each have a restricted right to convert into one hundred (100) Resulting Issuer Subordinate Voting Shares (the "Resulting Issuer MVS Conversion Ratio"), subject to adjustments for certain customary corporate changes. The ability to convert the Resulting Issuer Multiple Voting Shares is subject to a restriction that the aggregate number of Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares held of record, directly or indirectly, by residents of the United States (as determined in accordance with Rules 3b-4 and 12g3-2(a) under the United States Securities Act of 1933 (the "U.S. Securities Act")) may not exceed forty percent (40%) of the aggregate number of Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares issued and outstanding after giving effect to such conversions and to a restriction on beneficial ownership of Resulting Issuer Subordinate Voting Shares exceeding certain levels. In addition, the Resulting Issuer Multiple Voting Shares will be automatically converted into Resulting Issuer Subordinate Voting Shares in certain circumstances, including upon the registration of the Resulting Issuer Subordinate Voting Shares under the U.S. Securities Act. In the event that an offer is made to purchase Resulting Issuer Subordinate Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Resulting Issuer Subordinate Voting Shares are then listed, to be made to all or substantially all the holders of Subordinate Voting Shares in a given province or territory of Canada to which these requirements apply, each Resulting Issuer Multiple Voting Share shall become convertible at the option of the holder into Resulting Issuer Subordinate Voting Shares at the Resulting Issuer MVS Conversion Ratio at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may be exercised in respect of Resulting Issuer Multiple Voting Shares for the purpose of depositing the resulting Resulting Issuer Subordinate Voting Shares pursuant to the offer. Should the Resulting Issuer Subordinate Voting Shares issued upon conversion and tendered in response to the offer be withdrawn by shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the Resulting Issuer Subordinate Voting Shares resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Resulting Issuer or on the part of the holder, into Resulting Issuer Multiple Voting Shares at the inverse of the Resulting Issuer MVS Conversion Ratio then in effect.h

(vii) Resulting Issuer Redemption Right: The Resulting Issuer will be entitled to redeem the Resulting Issuer Multiple Voting Shares of an "Unsuitable Person" in certain circumstances. The purpose of the redemption right is to provide the Resulting Issuer with a means of protecting itself from having a Resulting Issuer Unsuitable Person with an ownership interest of, whether of record or beneficially (or having the power to exercise control or direction over), five percent (5%) or more of the issued and outstanding Resulting Issuer Shares (calculated on as-converted to Resulting Issuer Subordinate Voting Shares basis), who a governmental entity granting licenses to the Resulting Issuer (including to any subsidiary) has determined to be unsuitable to own shares, or whose ownership of Resulting Issuer Subordinate Voting Shares and/or Resulting Issuer Multiple Voting Shares may result in the loss, suspension or revocation (or similar action with respect to any licenses relating to the conduct of the Resulting Issuer's business relating to the cultivation, processing and dispensing of cannabis and cannabis-derived products in the United States or in the Resulting Issuer being unable to obtain any new licenses in the normal course, including, but not limited to, as a result of such person's failure to apply for a suitability review from or to otherwise fail to comply with the requirements of a governmental entity, as determined by the Resulting Issuer board in its sole discretion after consultation with legal counsel and, if a license application has been filed, after consultation with the applicable governmental entity.

(c) Resulting Issuer Super Voting Shares

(i) Issuance: The Resulting Issuer Super Voting Shares are only issuable in connection with the closing of the Business Combination.

(ii) Right to Vote: Holders of Resulting Issuer Super Voting Shares will be entitled to notice of and to attend at any meeting of the shareholders of the Resulting Issuer, except a meeting of which only holders of another particular class or series of shares of the Resulting Issuer will have the right to vote. At each such meeting, holders of Resulting Issuer Super Voting Shares will be entitled to two hundred (200) votes in respect of each Resulting Issuer Subordinate Voting Share into which such the Resulting Issuer Super Voting Share could ultimately then be converted (initially one (1) Resulting Issuer Subordinate Voting Share per Resulting Issuer Super Voting Share held).

(iii) Class Rights: As long as any Resulting Issuer Super Voting Shares remain outstanding, the Resulting Issuer will not, without the consent of the holders of the Resulting Issuer Super Voting Shares by separate special resolution, prejudice or interfere with any right or special right attached to the Resulting Issuer Super Voting Shares. Additionally, consent of the holders of a majority of the outstanding Resulting Issuer Super Voting Shares will be required for any action that authorizes or creates shares of any class having preferences superior to or on a parity with the Resulting Issuer Super Voting Shares. In connection with the exercise of the voting rights in respect of any such approvals, each holder of Resulting Issuer Super Voting Shares will have one vote in respect of each Resulting Issuer Super Voting Share held. The holders of Resulting Issuer Super Voting Shares will not be entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of Resulting Issuer Super Voting Shares, or bonds, debentures or other securities of the Resulting Issuer.

(iv) Dividends: The holders of Resulting Issuer Super Voting Shares are entitled to receive such dividends as may be declared and paid to holders of Resulting Issuer Subordinate Voting Shares in any financial year as the Board of the Resulting Issuer may by resolution determine, on an as-converted to Resulting Issuer Subordinate Voting Shares basis. No dividend will be declared or paid on the Resulting Issuer Super Voting Shares unless the Resulting Issuer simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Resulting Issuer Subordinate Voting Shares basis) on the Resulting Issuer Multiple Voting Shares and Resulting Issuer Subordinate Voting Shares.

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

(vi) Changes: No subdivision or consolidation of the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares or Resulting Issuer Super Voting Shares shall occur unless, simultaneously, the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Multiple Voting Shares and Resulting Issuer Super Voting Shares are subdivided or consolidated in the same manner, so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.

(vii) Conversion: Each Resulting Issuer Super Voting Share will be convertible at the option of the holder into one Resulting Issuer Subordinate Voting Share, subject to customary adjustments for certain corporate changes.

(viii) Automatic Conversion by Resulting Issuer: Some or all of the Resulting Issuer Super Voting Shares will automatically be converted into an equal number of Resulting Issuer Subordinate Voting Shares (subject to customary adjustments for certain corporate changes) in the following circumstances:

(A) upon the transfer by the holder thereof to anyone other than (i) an immediate family member of the Resulting Issuer Initial Holders or a transfer for purposes of estate or tax planning to a company or person that is wholly beneficially owned by Jason Vedadi or Steve White (each, a "Resulting Issuer Initial Holder") or immediate family members of a Resulting Issuer Initial Holder or which a Resulting Issuer Initial Holder or immediate family members of a Resulting Issuer Initial Holder are the sole beneficiaries thereof; or (ii) a party approved by the Resulting Issuer, in which case the Resulting Issuer Super Voting Shares that are the subject to such a transfer shall automatically be converted into Resulting Issuer Subordinate Voting Shares; or

(B) if at any time the aggregate number of issued and outstanding Resulting Issuer Super Voting Shares beneficially owned, directly or indirectly, at such time by a Resulting Issuer Initial Holder and the Resulting Issuer Initial Holder's permitted transferees and permitted successors, divided by the number of Resulting Issuer Super Voting Shares beneficially owned, directly or indirectly, by the Resulting Issuer at the date of completion of the Business Combination, is less than 50%, in which case all of the Resulting Issuer Super Voting Shares held by such Resulting Issuer Initial Holder will automatically be converted into Resulting Issuer Subordinate Voting Shares. Each Resulting Issuer Initial Holders will, from time to time upon the request of the Resulting Issuer, provide to the Resulting Issuer evidence as to such Resulting Issuer Initial Holder's direct and indirect beneficial ownership (and that of its permitted transferees and permitted successors) of Resulting Issuer Super Voting Shares to enable the Resulting Issuer to determine if the right to convert Resulting Issuer Super Voting Shares has occurred. For purposes of these calculations, a holder of Resulting Issuer Super Voting Shares will be deemed to beneficially own Resulting Issuer Super Voting Shares held by an intermediate company or fund in proportion to their equity ownership of such company or fund, unless such company or fund holds such shares for the benefit of such holder, in which case they will be deemed to own 100% of such shares held for their benefit.

(C) The Resulting Issuer is not required to convert Resulting Issuer Super Voting Shares on a pro-rata basis among the holders of Resulting Issuer Super Voting Shares.

(d) On completion of the Transaction, the Resulting Issuer Initial Holders, as the owners of all the outstanding Resulting Issuer Super Voting Shares, will enter into a customary coattail agreement with the Resulting Issuer and a trustee for the benefit of the holders of the Resulting Issuer Subordinate Voting Shares and the Resulting Issuer Multiple Voting Shares (the "Coattail Agreement"). The Coattail Agreement will restrict the sale of Resulting Issuer Super Voting Shares if such sale would constitute an offer to purchase Resulting Issuer Super Voting Shares that is required to be made to all or substantially all of the holders of Resulting Issuer Super Voting Shares, unless such offer is extended by the offeror that: (i) offers a price per Resulting Issuer Subordinate Voting Share or Resulting Issuer Multiple Voting Share (on an as converted to Resulting Issuer Subordinate Voting Share basis) at least as high as the highest price per share paid pursuant to the take-over bid for the Resulting Issuer Super Voting Shares (on an as converted to Resulting Issuer Subordinate Voting Share basis); (ii) provides that the percentage of outstanding Resulting Issuer Subordinate Voting Shares or Resulting Issuer Multiple Voting Shares to be taken up (exclusive of shares owned immediately prior to the offer by the offeror or persons acting jointly or in concert with the offeror) is at least as high as the percentage of Resulting Issuer Super Voting Shares to be sold (exclusive of Resulting Issuer Super Voting Shares owned immediately prior to the offer by the offeror and persons acting jointly or in concert with the offeror); (iii) has no condition attached other than the right not to take up and pay for Resulting Issuer Subordinate Voting Shares or Resulting Issuer Multiple Voting Shares tendered if no shares are purchased pursuant to the offer for Resulting Issuer Super Voting Shares; and (iv) is in all other material respects identical to the offer for Resulting Issuer Super Voting Shares.

Decision

The Ontario Securities Commission (the "Decision Maker") is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Requested Relief is granted provided that:

(a) in respect of the Prospectus Disclosure Exemption, the CD Disclosure Exemption and the Rule 56-501 Disclosure Exemption: (i) the Resulting Issuer Multiple Voting Shares continue to be "restricted securities" as such term is defined in NI 41-101 and NI 51-102, and "restricted shares" as such term is defined in Rule 56-501; and (ii) the Resulting Issuer Multiple Voting Shares are referred to as "subordinate multiple voting shares" (except as may be permitted pursuant to subsection 12.2(3) of NI 41-101, subsection 10.1(6) of NI 51-102 or subsection 2.3(2) of Rule 56-501);

(b) in respect of the Prospectus Eligibility Exemption, a subsequent restricted security reorganization, if any, carried out by the Resulting Issuer related to the Resulting Issuer Subordinate Voting Shares or the Resulting Issuer Multiple Voting Shares, other than a restricted security reorganization that results only in the creation of a security that is not itself a subject security or a restricted security but that is, directly or indirectly, convertible into or exercisable or exchangeable for Resulting Issuer Subordinate Voting Shares or Resulting Issuer Multiple Voting Shares, complies with the requirements of section 12.3 of NI 41-101; and

(c) in respect of Rule 56-501 Withdrawal Exemption, a subsequent restricted share reorganization, if any, carried out by the Resulting Issuer related to the Resulting Issuer Subordinate Voting Shares or the Resulting Issuer Multiple Voting Shares, other than a restricted security reorganization that results only in the creation of a security that is not itself a subject security or a restricted security but that is, directly or indirectly, convertible into or exercisable or exchangeable for Resulting Issuer Subordinate Voting Shares or Resulting Issuer Multiple Voting Shares, complies with the requirements of section 3.2 of Rule 56-501.

"Michael Balter"

Manager, Corporate Finance

Ontario Securities Commission