3. Acquisitions, Assets Held for Sale, and Dispositions

Acquisitions

On December 18, 2024, the Company, entered into Merger Agreements with respect to the Mergers. Each Merger was an all-share transaction whereby, at the closing of each applicable Merger, (i) a new wholly-owned subsidiary of the Company

merged with and into Deep Roots, (ii) a new wholly-owned subsidiary of the Company merged with and into Wholesome, and (iii) the Proper entities each merged with and into new wholly-owned subsidiaries of the Company.

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The consideration paid to acquire each of Deep Roots, Proper and Wholesome was based, in each case, in part, on an estimated multiple of a 2024 “Closing EBITDA,” which was pro forma for pending acquisitions, planned new retail openings and expansion projects, and a US$0.52 share reference price for the Company’s subordinate voting shares (each subordinate voting share an “SVS” and collectively, the “SVSs”).

Pursuant to the Merger Agreements, former stockholders of Proper, Wholesome, and certain former stockholders of Deep Roots may qualify for earnout payments made with the Company’s SVSs following December 31, 2026, based on each target’s adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) (as defined in the applicable Merger Agreement) growth compared to such target’s Closing EBITDA (as defined in the applicable Merger Agreement) (plus, with respect to Deep Roots, $1,000,000 in EBITDA attributed to a new retail location) (at a 4x multiple), adjusted for incremental debt and certain other matters, respectively, and paid out using a share price for the Company’s SVSs of the higher of US$1.05 or the 20-day volume weighted average price of the Company’s SVSs on the Canadian Securities Exchange (“CSE”), converted to United States Dollars based on the average exchange rate posted by the Bank of Canada as of the end of each trading day during such 20-day period, as reported by Bloomberg Finance L.P. (the “VWAP”) as of December 31, 2026. The Closing EBITDA for Deep Roots, Proper and Wholesome are US$30.0 million, US$31.0 million, and US$16.0 million, respectively. EBITDA growth is defined as the increase between the Closing EBITDA and the higher of 2026 Adjusted EBITDA or the trailing nine-month annualized Adjusted EBITDA as of immediately prior to December 31, 2026. In no event shall the number of earnout shares issued under each Merger Agreement exceed the number of shares issued as closing merger consideration under each Merger Agreement.

Each of the Merger Agreements provides for the clawback of up to 50% of the upfront merger consideration (excluding, in the case of Proper and Wholesome, the amounts described in the next paragraph that are attributable to Arches, as defined below) on December 31, 2026, if (1) for Wholesome and Deep Roots, (a) 2026 Adjusted EBITDA underperforms 96.5% of the Closing EBITDA (plus with respect to Deep Roots, $1,000,000 in EBITDA attributed to a new retail location), and (b) the retail revenue market share or EBITDA margin for 2026 is less (or lower) than 2024 and (c) the 20-day VWAP as of immediately prior to December 31, 2026 is greater than US$1.05 per share, and (2) for Proper, 2026 Adjusted EBITDA underperforms 96.5% of the Closing EBITDA. The amount of shares subject to a clawback would be equal to the Acquisition Multiple (as defined in each Merger Agreement) of 4.175 for each of Deep Roots, Proper and Wholesome, respectively, multiplied by the EBITDA shortfall, and subject to certain other adjustments for incremental debt and certain other matters, set forth in the applicable Merger Agreement, divided by US$0.52 per share.

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In connection with the Merger Agreement with Wholesome (the “Wholesome Merger Agreement”) and the Merger Agreement with Proper (the “Proper Merger Agreement”), the Company included in the stock merger consideration

calculation an amount equal to (i) US$11,860,800 for Wholesome and (ii) US$2,139,200 for Proper for all of the outstanding equity interests in Arches IP, Inc. (“Arches”) owned by Wholesome and Proper, respectively. Subject to the terms and conditions of the Wholesome Merger Agreement and the Proper Merger Agreement, each of Wholesome, Proper and Arches option holders are collectively entitled to earnout payments based on the performance of Arches, based on the greater of US$37.5 million or 5x certain revenue percentages of Arches minus $4,000,000, with such revenue percentage amounts measured at the higher of the trailing-twelve-month or nine-month annualized amounts as of December 31, 2026, paid out using a share price for the Company’s SVSs at the higher of US$1.05 or the 20-day VWAP as of immediately prior to December 31, 2026.

Wholesome

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On May 12, 2025, the Company closed the Wholesome Merger contemplated by the Wholesome Merger Agreement. The Company analyzed the acquisition under Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business and determined that the Wholesome Merger should be accounted for as a business combination. Goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. The goodwill arising from the Wholesome Merger primarily consists of the synergies and economies of scale expected from combining the operations of the Company and Wholesome, including growing the Company's customer base, acquiring assembled workforces, and expanding its presence in new and existing markets. These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

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The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:

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The acquired intangible assets include cannabis licenses and developed technology which are treated as definite-lived intangible assets amortized over a 15-year useful life.

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As of December 31, 2025, the Company has recorded a contingent consideration liability of $19,180,000, which represents the estimated fair value of the potential earnout payments based on management’s current projections of Adjusted EBITDA performance relative to the Closing EBITDA thresholds. The contingent consideration is classified as a Level 3 liability within the fair value hierarchy and is remeasured at each reporting date, with changes in fair value recognized in earnings. During the year ended December 31, 2025, the Company recognized a $9,827,000 loss related to the change in the fair value of contingent consideration in earnings related to the remeasurement of this liability.

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As part of the Wholesome Merger, the sellers contractually agreed to indemnify the Company for certain pre-closing liabilities, including those related to unpaid uncertain tax liabilities. On May 12, 2025, the Company recognized a liability of $13,309,000 for uncertain tax positions related to the pre-acquisition periods in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes. Consistent with the provisions of ASC 805-20-25-27, the Company also recognized a corresponding indemnification asset of $11,005,980, measured on the same basis as the related liability, which represents the uncertain tax liability recognized of $13,309,000 less $303,020 of income taxes receivable and $2,000,000 of tax specific cash contributions from Wholesome.

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The indemnification asset was classified as a non-current asset in the Company’s consolidated balance sheet as of December 31, 2025, and will be adjusted in future periods if the related liability is settled, released, or remeasured. Changes in the fair value of the indemnification asset, if any, will be recorded in earnings in the same financial statement line item as the change in the related liability. As of December 31, 2025, there have been no changes in the estimated amount of indemnified tax exposure or the related asset.

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Supplemental pro forma information (unaudited) for Wholesome Merger

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The unaudited pro forma information for the periods set forth below gives effect to the Wholesome Merger as if the acquisition had occurred on January 1, 2025. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transaction been consummated as of that time nor does it purport to be indicative of future financial operating results.

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Proforma revenues attributable to subordinate voting shareholders for the year ended December 31, 2025 were $54,040,596. Proforma net loss attributable to subordinate voting shareholders for the year ended December 31, 2025 was $11,143,028.

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Unaudited pro forma net income reflects the adjustment of sales between the companies, and adjustments for alignment of significant differences in accounting principles and elections.

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Proper

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On June 5, 2025, the Company closed the Proper Mergers contemplated by the Proper Merger Agreement. The Company analyzed the acquisition under ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business and determined that the Proper Mergers should be accounted for as a business combination. Goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. The goodwill arising from the Proper Mergers primarily consists of the synergies and economies of scale expected from combining the operations of the Company and Proper, including growing the Company's customer base, acquiring assembled workforces, and expanding its presence in new and existing markets. These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

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The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:

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The acquired intangible assets include cannabis licenses and developed technology which are treated as definite-lived intangible assets amortized over a 15-year useful life.

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As of December 31, 2025, the Company recorded a contingent consideration liability of $3,951,000, which represents the estimated fair value of the potential earnout payments based on management’s current projections of Adjusted EBITDA performance relative to the Closing EBITDA thresholds. The contingent consideration is classified as a Level 3 liability within the fair value hierarchy and is remeasured at each reporting date, with changes in fair value recognized in earnings. During the year ended December 31, 2025, the Company recognized a $898,000 loss related to the change in the fair value of contingent consideration in earnings related to the remeasurement of this liability.

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As part of the Proper Mergers, the sellers contractually agreed to indemnify the Company for certain pre-closing liabilities, including those related to unpaid uncertain tax liabilities. On June 5, 2025, the Company recognized a liability of $14,927,000 for uncertain tax positions related to the pre-acquisition periods in accordance with ASC 740, Income Taxes. Consistent with the provisions of ASC 805-20-25-27, the Company also recognized a corresponding indemnification asset of $6,221,000, measured on the same basis as the related liability, which represents the uncertain tax liability recognized of $14,927,000 less $5,705,592 of income taxes receivable and $3,000,000 of tax specific cash contributions from Proper.

The indemnification asset was classified as a non-current asset in the Company’s consolidated balance sheet as of December 31, 2025, and will be adjusted in future periods if the related liability is settled, released, or remeasured. Changes in the fair value of the indemnification asset, if any, will be recorded in earnings in the same financial statement line item as the change in the related liability. As of December 31, 2025, there were no changes in the estimated amount of indemnified tax exposure or the related asset.

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Supplemental pro forma information (unaudited) for Proper Mergers

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The unaudited pro forma information for the periods set forth below gives effect to the Proper Mergers as if the acquisition had occurred on January 1, 2025. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transaction been consummated as of that time nor does it purport to be indicative of future financial operating results.

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Proforma revenues attributable to subordinate voting shareholders for the year ended December 31, 2025 were $96,524,931. Proforma net loss attributable to subordinate voting shareholders for the year ended December 31, 2025 was $3,612,147.

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Unaudited pro forma net income reflects the adjustment of sales between the companies, and adjustments for alignment of significant differences in accounting principles and elections.

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Deep Roots

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On June 6, 2025, the Company closed the Deep Roots Merger contemplated by the Merger Agreement with Deep Roots (the “Deep Roots Merger Agreement”). The Company analyzed the acquisition under ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business and determined that the Deep Roots Merger should be accounted for as a business combination. Goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. The goodwill arising from the Deep Roots Merger primarily consists of the synergies and economies of scale expected from combining the operations of the Company and Deep Roots, including growing the Company's customer base, acquiring assembled workforces, and expanding its presence in new and existing markets. These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

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The following table summarizes the allocation of consideration exchanged for the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed:

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The acquired intangible assets include cannabis licenses which are treated as definite-lived intangible assets amortized over a 15-year useful life.

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As part of the Deep Roots Merger, the sellers contractually agreed to indemnify the Company for certain pre-closing liabilities, including those related to unpaid uncertain tax liabilities. On June 6, 2025, the Company recognized a liability of $24,917,000 for uncertain tax positions related to the pre-acquisition periods in accordance with ASC 740, Income Taxes. Consistent with the provisions of ASC 805-20-25-27, the Company also recognized a corresponding indemnification asset of $8,545,886, measured on the same basis as the related liability, which represents the uncertain tax liability recognized of $24,917,000 less $14,370,392 of income taxes receivable and $2,000,000 of tax specific cash contributions from Deep Roots.

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As of December 31, 2025, the Company recorded a contingent consideration liability of $1,317,000, which represents the estimated fair value of the potential earnout payments based on management’s current projections of Adjusted EBITDA performance relative to the Closing EBITDA thresholds. The contingent consideration is classified as a Level 3 liability within the fair value hierarchy and is remeasured at each reporting date, with changes in fair value recognized in earnings. During the year ended December 31, 2025, the Company recognized a $1,108,000 gain related to the change in the fair value of contingent consideration in earnings related to the remeasurement of this liability.

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The indemnification asset was classified as a non-current asset in the Company’s consolidated balance sheet as of December 31, 2025, and will be adjusted in future periods if the related liability is settled, released, or remeasured. Changes in the fair value of the indemnification asset, if any, will be recorded in earnings in the same financial statement line item

as the change in the related liability. As of December 31, 2025, there were no changes in the estimated amount of the indemnified tax exposure or the related asset.

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Supplemental pro forma information (unaudited) for Deep Roots Merger

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The unaudited pro forma information for the periods set forth below gives effect to the Deep Roots Merger as if the acquisition had occurred on January 1, 2025. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transaction been consummated as of that time nor does it purport to be indicative of future financial operating results.

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Proforma revenues attributable to subordinate voting shareholders for the year ended December 31, 2025 were $101,736,343. Proforma net income attributable to subordinate voting shareholders for the year ended December 31, 2025 was $1,180,493.

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Unaudited pro forma net income reflects the adjustment of sales between the companies, and adjustments for alignment of significant differences in accounting principles and elections.

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Assets Held for Sale

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As of December 31, 2025, the Company has identified property and equipment with carrying amounts that are expected to be recovered principally through sale or disposal rather than through continuing use. The sale of these assets is highly probable, they can be sold in their immediate condition, and the sales are expected to occur within the next twelve months. As such, these assets and liabilities have been classified as “held for sale.” Management does not believe these divestitures represent a strategic shift that has or will have a major effect on an entity’s operations and financial results, and as such, none of these divestitures are considered a discontinued operation. The fair value less expected cost to sell of net assets exceeded the carrying value, and as such, the Company recorded no impairment loss.

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At December 31, 2024, the Company determined that certain assets and liabilities associated with its New York operations met the criteria to be classified as held for sale and, accordingly, ceased depreciation and amortization on the related long-lived assets.

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During the year ended December 31, 2025, the Company reassessed its strategic plans related to the New York operations and determined that the Company now expects to retain control of these assets and liabilities. As a result, the assets and liabilities previously classified as held for sale no longer met the criteria for such classification.

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Accordingly, during 2025, the Company reclassified the assets and liabilities out of assets held for sale and back to their respective balance sheet captions. The long-lived assets were measured at the lower of (i) their carrying amounts prior to classification as held for sale, adjusted for depreciation and amortization that would have been recognized had the assets remained in use, or (ii) their fair value at the date of the decision to retain the assets.

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As a result of this reassessment, the Company recorded a catch-up depreciation expense of $9,685,126 and $219,229 of catch-up amortization expense during the year ended December 31, 2025, which is included in operating expenses in the consolidated statements of loss and comprehensive loss.

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During the year ended December 31, 2025, the Company completed the disposition of certain assets previously classified as held for sale. As consideration, the Company received $250,000 in cash and notes receivable with an aggregate principal amount of $1,250,000.

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Assets and liabilities held for sale are as follows:

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