Common shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from equity. The proceeds from the exercise of stock options or warrants together with amounts previously recorded in reserves over the vesting periods are recorded as share capital. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with Accounting Standards Codification (ASC) 740, Income Taxes.

The holders of the Subordinate Voting

hares are entitled to receive dividends which may be declared from time to time, and are entitled to one vote per share at shareholder meetings of the Company. All Subordinate Voting

hares are ranked equally with regard to the Company’s residual assets. The Company is authorized to issue an unlimited number of no par value Subordinate Voting

hares. During the three months ending March 31, 2020, the shareholders of the

Company

converted 134,846 Multiple Voting Shares into 13,484,600

Subordinate Voting Shares and 11,475 Super Voting Shares into 1,147,500 Subordinate Voting Shares.

Each Multiple Voting Share is entitled to one hundred votes per share at shareholder meetings of the Company and is exchangeable for 100 Subordinate Voting Shares. At March 31, 2020, the Company has 238,504 issued and outstanding

ultiple

oting

hares, which convert into 23,850,400

ubordinate

oting

hares. The Company is authorized to issue an unlimited number of Multiple Voting

hares. During the three months ending March 31, 2020, the shareholders of the Co

mpany

converted 11,475 Super Voting Shares into 11,475 Multiple Voting Shares.

Each Super Voting Share is entitled to one thousand votes per share at shareholder meetings of the Company and is exchangeable for 100 Subordinate Voting Shares. At March 31, 2020, the Company has 390,814 issued and outstanding Super Voting

hares which convert into 39,081,400

ubordinate

oting

hares. The Company is authorized to issue an unlimited number of

uper

oting

hares. During the three months ending March 31, 2020, the shareholders of the Co

mpany

converted 11,475 Super Voting Shares into 11,475 Multiple Voting Shares.

The Company operates equity settled stock-based remuneration plans for its eligible directors, officers, employees and consultants. All goods and services received in exchange for the grant of any stock-based payments are measured at their fair value unless the fair value cannot be estimated reliably. If the Company cannot estimate reliably the fair value of the goods and services received, the Company shall measure their value indirectly by reference to the fair value of the equity instruments granted. For transactions with employees and others providing similar services, the Company measures the fair value of the services by reference to the fair value of the equity instruments granted.

Equity settled stock-based payments under stock-based payments plans are ultimately recognized as an expense in profit or loss with a corresponding credit to reserve for stock-based payments, in equity.

The Company recognizes compensation expense for Restricted Stock Units (“RSUs”) and options on a straight-line basis over the requisite service period of the award.

Non-market

vesting conditions are included in the assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from the previous estimate. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior period

if share options ultimately exercised are different to that estimated on vesting.

In June 2018, the Company established the Green Thumb Industries Inc. 2018 Stock and Incentive Plan, which was amended by Amendment No. 1 thereto (as amended, the “Plan”).

The maximum number of shares issued under the Plan shall not exceed 10% of the issued and outstanding shares.

Option and RSU grants generally vest over one to three years, and

ptions typically have a life of

five or

ten years. Option grants are determined by the Compensation Committee of the Board with the option price set at no less than 100% of the fair market value of a share on the date of grant. Stock option activity is summarized as follows:

The aggregate intrinsic value in the table above represents the total

pre-tax

intrinsic value (the difference between the Company’s closing stock price on March 31, 2020 and December 31, 2019, respectively, and the exercise price, multiplied by the number of

in-the-money

options) that would have been received by the option holders had all option holders exercised their

in-the-money

options on March 31, 2020 and December 31, 2019. This amount will change in future periods based on the fair market value of the Company’s stock and the number of options outstanding. There were no options exercised for the three months ending March 31, 2020 and the year ended December 31, 2019.

The Company used the Black-Scholes option pricing model to estimate the fair value of the options at the grant date using the following ranges of assumptions:

As the Company became publicly traded in June 2018, sufficient historical trading information was not available to determine an expected volatility rate. The volatility rate was based on comparable companies within the same industry. As permitted under ASC 718, the Company has made an accounting policy choice to account for forfeitures when they occur.

The following table summarizes the number of non

vested RSU awards as of March 31, 2020 and December 31, 2019 and the changes during the year ended December 31, 2019:

As of March 31, 2020, $33,957,180 of total unrecognized expense related to Stock Based Compensation awards is expected to be recognized over a weighted-average period of 2.29 years.

During the three months ended March 31, 2020, the Company issued 1,067,168 Subordinate Voting Shares to the previous owners of certain entities in connection with acquisitions completed during 2019. Upon issuance, the Company recorded a reduction of $8,967,257 to contingent consideration payable and a corresponding increase in share capital.