12.

WARRANTS

As part of the Company’s private placement financing and Mortgage on

he Joliet, Illinois dispensary, the Company issued warrants to related parties, as well as unrelated third parties, which allow the holders to purchase Subordinate Voting Shares at an exercise price determined at the time of issuance.

The following table summarizes the number warrants outstanding as of December 31, 2020:


	Number of Shares			Weighted Average Exercise Price (C$)		Weighted Average Contractual Life		Number of Shares		Weighted Average Exercise Price (USD)		Weighted Average Contractual Life
	Liability Classified							Equity Classified
Balance as at January 1, 2020		2,406,811		C$	18.59		4.86		—	$	—		—
Additional Modification Warrants		84,924			14.03		5.00		—		—		—
Dispensary Mortgage Warrants		—			—		—		35,000		9.10		5.00
Warrants Exercised		(5,941	)		12.42		5.00		—		—		—

Balance as at December 31, 2020		2,485,794		C$	18.45		4.87		35,000	$	9.10		5.00

The following table summarizes the number of warrants outstanding as of December 31, 2019:


	Number of Shares		Weighted Average Exercise Price (C$)		Weighted Average Contractual Life		Number of Shares		Weighted Average Exercise Price (USD)		Weighted Average Contractual Life
	Liability Classified						Equity Classified
Balance as at January 1, 2019		—	C$	—		—		—	$	—		—
Bridge Financing Warrants		218,964		22.90		0.32		—		—		—
Private Placement Financing Warrants		1,822,771		19.39		3.79		—		—		—
Modification Warrants		365,076		12.04		0.75		—		—		—
Warrants Exercised		—		—		—		—		—		—

Balance as at December 31, 2019		2,406,811	C$	18.59		4.86		—	$	—		—

(a)

Liability Classified Warrants

The following table summarizes the fair value of the liability classified warrants at December 31, 2020 and 2019:


Warrant Liability	Strike Price		Warrants Outstanding		December 31, 2020		December 31, 2019
Bridge Financing Warrants	C$	22.90		218,964	$	2,544,500	$	1,385,400
Private Placement Financing Warrants	C$	19.39		1,822,771		28,756,500		12,189,169
Modification Warrants	C$	12.04		360,256		6,630,000		2,305,274
Additional Modification Warrants	C$	14.03		83,803		1,523,000		—

Totals				2,485,794	$	39,454,000	$	15,879,843

(i)

Note Purchase Agreement Warrants

During the years ended December 31, 2020 and 2019, the Company issued warrants associated with each closing and amendment of the Bridge Notes and related Private Placement Financing under the Note Purchase Agreement (as amended) for a total of 2,491,735 warrants (collectively the “Note Purchase Agreement Warrants”) of which 2,485,794 were outstanding as of December 31, 2020. The exercise price of these warrants is denominated in Canadian dollars whereas the Company’s functional currency is USD. As such, upon issuance and at each reporting date, the Company measures the fair value of the warrants using a Monte Carlo Simulation model. For the year ended December 31, 2020 and 2019, the Company recorded a loss of $23,001,771 and a gain of $4,159,687, respectively, on the change in the fair value of the warrant liability within other income (expense) on the consolidated statements of operations.

The following table summarizes the significant assumptions used in determining the fair value of the warrant liability as of each reporting date:


Significant Assumptions	December 31, 2020		December 31, 2019
Volatility		72.19% – 79.10%		117.43% – 123.64%
Remaining Term		1.78 – 4.39 years		2.78 – 4.86 years
Risk Free Rate		0.20% – 0.28%		1.68% – 1.69%

(b)

Equity Classified Warrants

The following table summarizes the fair value of the equity classified warrants at December 31, 2020 and 2019:


Warrants Included in Contributed Surplus	Strike Price		Warrants Outstanding		December 31, 2020		December 31, 2019
Dispensary Mortgage Warrants	$	9.10		35,000	$	181,272	$	—

(i)

Dispensary Mortgage Warrants

On June 5, 2020, as part of the $1,814,000 promissory note, the Company issued warrants that allow the promissory noteholder to purchase 35,000 Subordinate Voting Shares. These warrants are denominated in USD, which is the Company’s functional currency. As such, upon issuance, the Company recorded a debt discount of $181,272 which was measured at fair value using a Black Scholes Options Pricing model. The Company did not incur any other material fees related to the promissory note.

The following table summarizes the significant assumptions used in determining the fair value of the equity classified warrants as of each reporting date:


Significant Assumptions	December 31, 2020			December 31, 2019
Volatility		80	%		—
Remaining Term		5 years			—
Risk Free Rate		0.37	%		—