Curaleaf announces reorganization of its U.S. operations

In connection with Curaleaf's conditional approval of the Toronto Stock Exchange to list the Company's subordinate voting shares on the TSX, the Company proceeded with an internal reorganization of its U.S. operations. Among other things, Curaleaf, Inc., a wholly-owned subsidiary of the Company, entered into a subscription agreement with a third-party investor that is not affiliated with the Company, under which Curaleaf USA issued to the Investor one (1) share of Class A voting and non-participating common stock, for an aggregate subscription amount of US$1 million.

Before the Investment, the Company held common stock of Curaleaf USA, representing 100% of the issued and outstanding shares of Curaleaf USA. Concurrently with the closing of the Investment and in accordance with the seventh amended and restated certificate of incorporation of Curaleaf USA filed immediately prior to the execution of the Subscription Agreement, such common stock has been automatically exchanged for 999 shares of Class B non-voting and participating common stock (the "Class B Non-Voting Stock"). Following the closing of the Investment in accordance with the terms of the Subscription Agreement, the Investor now holds all of the issued and outstanding Class A Voting Stock and voting rights of Curaleaf USA. The Company holds all of the issued and outstanding Class B Non-Voting Stock, which represents 99.9% of the economic ownership of Curaleaf USA, on an as-converted basis.

The Class B Non-Voting Stock does not provide for voting rights but is exchangeable into shares of Class C voting and participating common stock (the "Class C Voting Stock") of Curaleaf USA at any time. As a result of the limited rights associated with the Class B Non-Voting Stock, Curaleaf and Curaleaf USA entered into, concurrently with the closing of the Investment, a protection agreement (the "Protection Agreement") providing for certain negative covenants in order to preserve the value of the Class B Non-Voting Stock held by the Company until such time as the Class B Non-Voting Stock is converted into Class C Voting Stock by the Company, including, among others, prohibitions on Curaleaf USA's organizational documents amendments, changes to the authorized share capital of Curaleaf USA, changes to the Curaleaf USA's board of directors, material changes to the business conducted by Curaleaf USA or the making of loans or capital expenditures above certain specified thresholds, the whole except with the prior written consent of Curaleaf or as required by applicable laws.

Concurrently with the Investment, as more fully described in the Consent Solicitation Statement and Information Circular of the Company dated July 14, 2023 and the Management Information Circular of the Company dated August 23, 2023, respectively, and as previously approved by the Company's securityholders, the Company implemented (A) certain amendments to the indenture among the Company and Odyssey Trust Company dated as of December 15, 2021 (as supplemented from time to time, the "Indenture") governing the notes thereunder (the "Indenture Amendments") in order to facilitate the implementation of the Reorganization, and (B) certain amendments to the Company's articles (the "Articles Amendments") in order to: (i) create a new class of non-voting and non-participating shares in the capital of the Company exchangeable at the holder's option into Subordinate Voting Shares (the "Non-Voting Exchangeable Shares") and authorize the issuance of an unlimited number of Non-Voting Exchangeable Shares; and (ii) restate the rights of the Subordinate Voting Shares to provide for a conversion feature whereby each Subordinate Voting Share may at any time, at the holder's option, be converted into one (1) Non-Voting Exchangeable Share. The Non-Voting Exchangeable Shares do not carry voting rights, rights to receive dividends, or other rights upon dissolution of the Company and are considered "restricted securities" within the meaning of such term under applicable Canadian securities laws.

The Articles Amendments aim to provide the Company's shareholders with the option to convert their Subordinate Voting Shares into Non-Voting Exchangeable Shares if such shareholders prefer to hold non-voting and non-participating shares given the uncertainty and complexity related to cannabis regulations in the United States.

Concurrently with the closing of the Investment, the Company, and the Investor, as shareholders of Curaleaf USA, also entered into a shareholders' agreement (the "Shareholders' Agreement") with respect to Curaleaf USA, to establish, among other things, the rights and obligations arising out of or in connection with the ownership of the Class A Voting Stock and the Class B Non-Voting Stock. Under the Shareholders' Agreement, Curaleaf USA holds a call right to repurchase all of the Class A Voting Stock issuable to the Investor at any time, and the Investor has the right to appoint a director to the Curaleaf USA's board of directors and a put right exercisable following the occurrence of certain stated events and after the five (5) year anniversary of the Shareholders' Agreement subject to certain parameters to ensure the maintaining of the TSX Listing.

The particulars of the Reorganization, as well as the material terms of the Subscription Agreement, the Protection Agreement, and the Shareholders' Agreement, will be more fully described in a material change report to be filed by the Company with the Canadian Securities Administrators and which will be available under the Company's profile on SEDAR+ at www.sedarplus.ca. Copies of the Indenture, as amended, the amended and restated articles of Curaleaf, the Shareholders Agreement, and the Protection Agreement will also be made available under the Company's profile on SEDAR+.