Canopy Growth to Fast Track Entry into the U.S. Cannabis Market Creation of U.S. holding company and exchangeable share structure designed to enable Canopy USA to trigger full ownership of U.S. cannabis investments and c

Canopy Growth to Fast Track Entry into the U.S. Cannabis Market

Creation of U.S. holding company and exchangeable share structure designed to enable Canopy USA to trigger full ownership of U.S. cannabis

investments and capitalize on market opportunity projected to be over $50B1 by 2026

Floating Share Arrangement Agreement facilitates acquisition of 100% of Acreage Holdings

Additional balance sheet actions reduce costs and create flexibility to pursue strategic growth opportunities

SMITHS FALLS, ONTARIO (October 25, 2022) Canopy Growth Corporation ( Canopy or the Company ) (TSX: WEED)

(NASDAQ: CGC) today announced a strategy to accelerate its entry into the U.S. cannabis industry and unleash the value of its full U.S. cannabis ecosystem through the creation of a new U.S.-domiciled holding company, Canopy USA, LLC ( Canopy

USA ) and the execution of a deliberate and highly-structured process. Canopy USA will hold the Company s U.S. cannabis investments, which will enable it to exercise rights to acquire Acreage (as defined below), Wana (as defined below)

and Jetty (as defined below).

As the growth of the U.S. cannabis market continues rapidly at the state level, this strategy enables us to take

control of our own destiny and capitalize on the once-in-a-generation opportunity in the largest cannabis market in the

world, said David Klein, Chief Executive Officer of Canopy Growth Corporation. We expect to unleash the full power of Canopy s scalable and ideally-positioned U.S. cannabis ecosystem to unlock potential expansion opportunities. This

strategy and positioning are true differentiators, which we expect to enable our investors and brands to realize value in the near term while positioning Canopy for profitable growth and a fast start upon U.S. federal permissibility.

Strategic Highlights

Canopy s U.S. Cannabis Ecosystem

cannabis ecosystem has an established presence across large-scale and rapidly developing adult-use markets. Collectively, this footprint currently spans 21

states3: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York,

Pennsylvania, Ohio, Oklahoma, and Oregon.

Canopy USA will have interests in the following assets, among others:

In addition, Canopy USA controls a conditional ownership position, assuming conversion of its exchangeable

shares and the exercise of its option but excluding the exercise of its warrants, of approximately 13.7% in TerrAscend Corp. (CSE: TER, OTCQX: TRSSF) ( TerrAscend ), a leading North American cannabis operator with vertically

integrated operations and a presence in Pennsylvania, New Jersey, Michigan, and California as well as licensed cultivation and processing operations in Maryland. Canopy USA s direct and indirect interests in TerrAscend includes control over all

exchangeable shares, options, and warrants previously held by Canopy in TerrAscend as well as the debentures and loan agreement outstanding between Canopy and certain TerrAscend subsidiaries.

Ownership of U.S. Cannabis Investments

interests in Acreage, Wana, Jetty, and TerrAscend will be held, directly or indirectly, by Canopy USA, and Canopy will not hold a direct interest in any shares or interests in Acreage, Wana, Jetty, or TerrAscend. Canopy holds non-voting and non-participating shares (the Non-Voting Shares ) in the capital of Canopy USA. The Non-Voting Shares do not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy USA but are convertible into common shares of Canopy USA. To facilitate the creation of the Non-Voting Shares, Canopy USA has raised funds from a third-party investor and has agreed to issue additional common shares of Canopy USA to the shareholders of Wana as additional consideration in exchange for the

option to acquire Wana and reduce the future payments owed in connection with the exercise of the option to acquire Wana to $3.00 (the Wana Amendments ). The value of the common shares of Canopy USA to be issued to the shareholders

of Wana will be equal to 7.5% of the value of Wana as of no earlier than January 1, 2023. Canopy will have the right to convert its Non-Voting Shares for common shares of Canopy USA and Canopy USA retains

a call right to repurchase all common shares that have been issued to third-parties.

Canopy and Canopy USA have also entered into a protection agreement

(the Protection Agreement ) to provide for certain negative covenants in order to preserve the value of the Non-Voting Shares held by the Company until such time as Canopy controls Canopy

USA. Canopy also has two designees on the four-person board of managers of Canopy USA.

Upon closing of Canopy USA s acquisition of Acreage, Canopy

will receive additional Non-Voting Shares from Canopy USA as consideration for the issuance of Canopy Shares that shareholders of Acreage will receive in accordance with the Existing Acreage Arrangement

Agreement (as defined below) and the Floating Share Arrangement Agreement (as defined below).

In addition, subject to the terms and conditions of the

Protection Agreement and the terms of the option agreements to acquire Wana and Jetty, Canopy may be required to issue additional Canopy Shares in satisfaction of certain deferred and/or option exercise payments to the shareholders of Wana and

Jetty. Canopy will receive additional Non-Voting Shares from Canopy USA as consideration for any Canopy Shares issued in the future to the shareholders of Wana and Jetty.

Until such time as Canopy converts the Non-Voting Shares into common shares of Canopy USA, Canopy will have no

economic or voting interest in Canopy USA, Wana, Jetty, TerrAscend, or Acreage. Canopy USA, Wana, Jetty, TerrAscend, and Acreage will continue to operate independently of Canopy.

In connection with the Wana Amendments, the Company has also agreed to issue Canopy Shares to the

shareholders of Wana with a value equal to 7.5% of the value of Wana as of no earlier than January 1, 2023, subject to certain limitations. The Company has also agreed to register the resale of the Canopy Shares issued in connection with the

entered into an arrangement agreement with Canopy USA and Acreage (the Floating Share Arrangement Agreement ), pursuant to which, subject to approval of the holders of the Class D subordinate voting shares of Acreage (the

Floating Shares ) and the terms and conditions of the Floating Share Arrangement Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares by way of a court-approved plan of arrangement (the

Floating Share Arrangement ) on the basis of 0.45 of a Canopy Share in exchange for each Floating Share held.

It is expected that the

Floating Share Arrangement will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). The Floating Share Arrangement requires the approval of: (i) at least two-thirds of the votes cast by the holders of the Floating Shares; and (ii) at least a majority of the votes cast by the holders of the Floating Shares, excluding the votes cast by interested

parties and related parties (as such terms are defined in Multilateral Instrument 61-101 Protection Of Minority Security Holders In Special Transactions), at a special meeting of

Acreage shareholders expected to be held in January 2023.

The Company has also agreed to issue Canopy Shares with a value of $50 million to, among

others, certain unitholders (the Holders ) of High Street Capital Partners, LLC, a subsidiary of Acreage ( HSCP ), in order to reduce a potential liability of approximately $121 million pursuant to HSCP s

amended tax receivable agreement and the related tax receivable bonus plans. Canopy Shares with a value of approximately $15 million will be issued to certain Holders as soon as practicable as the first installment under this agreement with a

second payment of approximately $15 million in Canopy Shares to occur on the earlier of (a) the second business day following the date on which the shareholders of Acreage approve the Floating Share Arrangement; or (b) April 24,

2023. The final payment with a value of approximately $20 million will be issued immediately prior to completion of the Floating Share Arrangement. The Company has also agreed to register the resale of such Canopy Shares under the Securities

Act of 1933, as amended. In addition, a wholly-owned subsidiary of the Company ( Acreage Debt Optionholder ) has also agreed to acquire an option to purchase the outstanding principal of Acreage s debt, being an amount up to

$150 million (the Acreage Debt ) from Acreage s existing lenders (the Lenders ) in exchange for an option premium payment of $28.5 million (the Option Premium ). The Acreage Debt

Optionholder will have the right to exercise its option at its discretion, and the Option Premium will be used towards settlement of the outstanding principal of Acreage debt. In the event that Acreage repays the Acreage Debt on or prior to

maturity, the Option Premium will be returned to the Acreage Debt Optionholder. In the event that Acreage defaults on the Acreage Debt and the Acreage Debt Optionholder does not exercise its option to acquire the Acreage Debt, the Option Premium

will be released to the Lenders.

Canopy and Canopy USA have entered into voting support agreements with certain of Acreage s directors, officers,

and consultants pursuant to which such persons have agreed, among other things, to vote their Floating Shares in favor of the Floating Share Arrangement, representing approximately 7.3% of the issued and outstanding Floating Shares.

In addition to shareholder and court approvals, the Floating Share Arrangement is subject to approval of the

Amendment Proposal (as defined below) and applicable regulatory approvals including, but not limited to, TSX approval and the satisfaction of certain other closing conditions customary in transactions of this nature. Assuming timely receipt of all

necessary court, shareholder, regulatory and other third-party approvals and the satisfaction of all other conditions, closing of the acquisition of Acreage is expected to occur in late 2023.

It is intended that the Company s existing option to acquire the Class E subordinate voting shares of Acreage (the Fixed Shares )

on the basis of 0.3048 of a Canopy Share per Fixed Share will be exercised after the Meeting (as defined below) in accordance with the terms of the arrangement agreement dated April 18, 2019, as amended on May 15, 2019, September 23,

2020 and November 17, 2020 (the Existing Acreage Arrangement Agreement ). Canopy will not hold any Fixed Shares or Floating Shares.

Completion of the acquisition of the Fixed Shares following exercise of the option is subject to the satisfaction of certain conditions set forth in the

Existing Acreage Arrangement Agreement. The acquisition of the Floating Shares pursuant to the Floating Share Arrangement is anticipated to occur concurrently with the acquisition of the Fixed Shares pursuant to the Existing Acreage Arrangement

Agreement in late 2023 such that 100% of the issued and outstanding shares of Acreage will be owned by Canopy USA on closing of the acquisition of both the Fixed Shares and the Floating Shares.

Special Shareholder Meeting

In connection with the

formation of Canopy USA, the Company is also pleased to announce that it expects to hold a special meeting of shareholders in January 2023 (the Meeting ). At the Meeting, shareholders will be asked to consider a special resolution

authorizing an amendment to its articles of incorporation (the Amendment Proposal ) to create a new class of non-voting exchangeable shares in the capital of Canopy (the Exchangeable

Shares ). The Exchangeable Shares will not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy but will be convertible into Canopy Shares.

The Amendment Proposal must be approved by at least 662 3% of the votes

cast on a special resolution by Canopy shareholders present in person or represented by proxy at the Meeting. Greenstar Canada Investment Limited Partnership ( Greenstar ) and CBG Holdings LLC ( CBG ), indirect,

wholly-owned subsidiaries of Constellation Brands, Inc. ( Constellation ) (NYSE: STZ and STZ.B), have entered into a voting and support agreement with Canopy pursuant to which they have agreed to vote in favor of the Amendment

The Amendment Proposal provides all shareholders of Canopy with the opportunity to self-assess their level of comfort with the Company s

exposure to the U.S. cannabis market. There is a risk that the Company s interpretation of laws, regulations, and guidelines, may differ from those of others, including those of shareholders, government authorities, securities regulators, and

stock exchanges. The Exchangeable Shares provide shareholders that may otherwise have concerns about the Company s exposure to the U.S. cannabis market with an opportunity to retain an interest in Canopy through a

non-voting and non-participating share.

In the event that the Amendment

Proposal is approved, Canopy USA is expected to exercise the options to acquire Wana and Jetty. If the Amendment Proposal is not approved, Canopy USA will not be permitted to exercise the rights to acquire Acreage, Wana or Jetty and the Floating

Share Arrangement Agreement will be terminated. In such circumstances, Canopy will retain its option to acquire the Fixed Shares under the Existing Acreage Arrangement Agreement and Canopy USA will continue to hold an option to acquire Wana and

Jetty as well as exchangeable shares in the capital of TerrAscend.

It is expected that the Company will file a proxy statement (the Proxy Statement ) related

to the Meeting later today with the U.S. Securities and Exchange Commission (the SEC ). A full description of the Amendment Proposal will be included in the Proxy Statement, which will be accessible by shareholders and filed with

the SEC through the Electronic Data Gathering, Analysis, and Retrieval ( EDGAR ) system at www.sec.gov/edgar and with the Canadian securities regulators on the System for Electronic Document Analysis and Retrieval

( SEDAR ) at www.sedar.com.

Balance Sheet Actions

The Company has entered into agreements with certain of its lenders under its term loan credit agreement dated March 18, 2021 (the Credit

Agreement ) pursuant to which Canopy will tender US$187,500,000 of the principal amount outstanding thereunder at a discounted price of US$930 per US$1,000 or US$174,375,000 in the aggregate (the Paydown ). The Paydown

will be made in two equal payments: the first payment on or about November 10, 2022, and the second payment on or about April 17, 2023.

connection with the Paydown, Canopy is also pleased to announce that it has agreed with its lenders to amend certain terms of the Credit Agreement (collectively, the Amendments ). The Amendments include, among other things,

reductions to the minimum Liquidity (as defined in the Credit Agreement) covenant to US$100,000,000, which is to be reduced as payments are made in accordance with the Paydown, certain changes to the application of net proceeds from asset sales and

the establishment of a new committed delayed draw term credit facility in an aggregate principal amount of US$100,000,000. In addition, the Amendments include the elimination of the additional US$500,000,000 incremental term loan facility.

The Paydown is expected to reduce cash interest costs and enable the Company to continue to pursue growth investments, acquisitions and other strategic

In addition, the Company also intends, following the creation of the Exchangeable Shares, to negotiate an exchange agreement with Greenstar

to purchase for cancellation up to CAD$100 million principal amount of senior notes of the Company due July 2023 (the Notes ) in exchange for Exchangeable Shares, subject to the rules and policies of the Nasdaq and the Toronto

Stock Exchange. As Canopy continues to work towards positive cashflow and sustained profitable operations, the repurchase of the Notes in exchange for Exchangeable Shares would preserve the Company s cash on hand and reduce the Company s