2018AND INFORMATION CIRCULAR nominee, Mr. Neil Belot, resulting in a total of nine (9) Directors standing for election at our Meeting. Together, our Director nominees have a diverse

ANNUAL MEETING OF SHAREHOLDERSAND INFORMATION CIRCULAR2018

Dated as of March 28, 2018

TING OF SHAREHOLDERS AND INFORMATION CIRCULAR Dated as of March [30], 2018

The last several years have seen challenges at Liquor Stores N.A. Ltd. (the “Company”) and the Shareholdervote at the June 2017 annual meeting reflected the desire for a new direction. This document will highlight thesignificant actions already taken since then and our strategic direction going forward to deliver significantenhancement in long-term Shareholder value.

You have received this document because you are a Shareholder and are entitled to vote at our 2018 annualand special meeting of Shareholders. We value your support and your feedback at this exciting time in ourCompany’s history.

Liquor Stores N.A. Ltd.101, 17220 Stony Plain RoadEdmonton, AB T5S 1K6www.liquorstoresna.caTSX: LIQ, LIQ.DB.B

WHAT’S INSIDE

TABLE OF CONTENTS

Letter to Shareholders 2

Notice of Meeting 3

Forward-looking statements 4

Non-IFRS financial measures 6

Management information circular 7

Business of the Meeting 8

About voting 11

Shareholder FAQ – Voting details 13

Shareholder FAQ – General 15

Corporate governance 18

Director compensation 32

Compensation discussion and analysis 35

Other information 47

Schedule A: Non-Routine Resolutions andbackground information A-1

Schedule B: Board Mandate B-1

Schedule C: Fairness Opinion C-1

LETTER TO SHAREHOLDERSDear Fellow Shareholder,

On behalf of Liquor Stores N.A. Ltd.’s new Board of Directors, I am pleased to invite you to the 2018 annualand special meeting of Shareholders. The Meeting will be held on May 9, 2018 at 8:00 a.m. (Edmonton time)at the Hyatt Place Edmonton-West (18004 100 Avenue NW Edmonton, Alberta, Canada, T5S 2T6).

THE NEW BOARD’S FOCUS

At the June 2017 annual meeting, you voted overwhelmingly for significant change by electing new Boardleadership to implement a strategic direction for the Company that would lead to the long-term enhancementof Shareholder value. We believe we have already made significant strides in delivering on that objective.

The new Board has directed management to focus on two strategic goals moving forward:• Restore the Company’s place as the market leader in Alberta retail alcohol sales and regain the Company’s

lost market share.• Establish a market-leading cannabis retail brand.

Since our election, we have accelerated initiatives to improve our balance sheet in order to fund thesestrategic goals. This has included: reversing the former strategy of expansion into the U.S. by divesting poorlyperforming assets; attracting a strategic investment of $103.5 million from Aurora Cannabis Inc. by way of anon-brokered private placement; eliminating the redundant operating costs of the U.S. head office andleadership; and optimizing inventory levels to shake free trapped capital to spend on more profitable uses.

Collectively, these initiatives have not only resulted in a complete repayment of the Company’s operating lineof credit, but also in a cash balance of approximately $61 million. The next steps of the strategic plan are nowfunded for our immediate priorities, and we will be well-positioned for future growth beyond that with accessto the Additional Aurora Investment that you will see described later in this circular. The Company has neverbeen in a better financial position than it is today.

THE NEXT STEPS

Having strengthened our balance sheet, the Company will now take the following steps to execute the firstphase of our long-term strategy to drive significant increases in Shareholder value:• Improve the brand image of the Company’s liquor business by accelerating the pace of renovating store

locations. The Company expects to renovate 50 stores in 2018 and a similar number in 2019.• Increase the scale and market presence of the Company’s liquor business by repositioning existing

stores and building new liquor stores in more desirable trade areas.• Launch a leading, best-in-class retail cannabis business by investing in a strong leadership team for

cannabis, obtaining superior cannabis store locations, and being a strong partner for provincial regulators.We have already made great progress on this initiative in 2018. On March 21, 2018, we introduced PaulWilson as the President and Chief Operating Officer of our cannabis division. Mr. Wilson is a nationally-renowned retailer, building and/or leading some of Canada’s most profitable retail brands including SpenceDiamonds, Mark’s Work Warehouse, Canadian Tire and Princess Auto.

• Engage discount competitors head-on with re-branded discount stores in strategically selected locations.

As we continue our transformation, short-term results will need to be viewed in the context of what we areconfident will be enhanced Shareholder value in the medium-to long-term. The Company’s financial positionis strong and we will use that strength to its best advantage to begin significantly improving profitability.

Our Board strongly believes that the important measures that Shareholders will be voting on will help facilitate theexecution of our strategic plan. We are asking for your support on each of the resolutions outlined in this circular.

I want you to know that your vote is important no matter how many Shares you own and even if you havenever voted before. By becoming a voter, you can have a meaningful impact on the future of your Company.

If you have any questions please call 1.780.944.9994 or email at [email protected].

Sincerely,

Derek Burney, ChairmanLiquor Stores N.A. Ltd.

2 LIQUOR STORES N.A. LTD.

NOTICE OF MEETINGWHATOur 2018 annual and special meeting of Shareholders

WHENMay 9, 2018 at 8:00 a.m. (Edmonton time)

WHEREHyatt Place Edmonton-West18004 100 Avenue NWEdmonton, Alberta, Canada T5S 2T6

WE ARE ASKING FOR YOUR VOTE TO:

• Fix the number of Directors to be elected at nine (9)• Elect Directors• Appoint auditors and fix their remuneration• Change the name of the Company to Alcanna Inc.• Increase the maximum size of the Board from eleven (11) to twelve (12) Directors• Approve the Additional Aurora Investment

YOUR VOTE WILL MAKE A DIFFERENCEIf you held Shares on April 3, 2018 (the “Record Date”) you are entitled to receive this notice and vote at this Meeting.

Becoming a voter is fast and easy. Pages 11 and 12 provide a quick guide to casting your proxy vote.

Pages 13-17 give you more information about what the Meeting will cover, who can vote and how.

By order of the Board of Directors,

Derek Burney, ChairmanLiquor Stores N.A. Ltd.

March 28, 2018

For more informationRead about the business of the Meeting beginning onpage 8.

Other documents can be found here:• www.liquorstoresna.ca/investors• www.sedar.com

Total Shares outstandingAs of March 28, 2018 we had 34,715,297 Shares issued andoutstanding.

2018 INFORMATION CIRCULAR 3

FORWARD-LOOKING STATEMENTSThis circular contains forward looking statements or information (collectively “forward-looking statements”)within the meaning of applicable securities legislation. All statements and information, other than statementsof historical fact, contained in this circular are forward-looking statements. In particular, this circular containsforward-looking statements regarding, without limitation:

• the Company’s cannabis strategy and business transformation strategy;• government regulation of liquor and cannabis;• the legalization of marijuana/cannabis for recreational use in Canada;• our expectations regarding legislation, regulations and licensing relating to the sale of cannabis products

for recreational use;• our applications for retail cannabis licenses in Alberta and British Columbia, the number of cannabis stores

we expect to open in those provinces and the products we plan to sell;• the establishment of an adult use recreational cannabis market in Canada in general and a retail cannabis

business of the Company;• the Company’s financial position and future prospects;• the anticipated benefits of the Additional Aurora Investment;• the use of proceeds of the Private Placement; and• proposed acquisitions and dispositions of or involving the Company.

Shareholders can identify many of these statements by looking for words such as “believes”, “may”,“expects”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “continues” or similar words and the negativethereof.

Forward-looking statements reflect the Company’s current plans, intentions and expectations, which arebased on management’s perception of historical trends, current conditions and expected futuredevelopments, as well as other factors it believes are appropriate in the circumstances. The Company’s plans,intentions and expectations are inherently subject to significant business, economic, competitive and otheruncertainties and contingencies regarding future events and, as such, are subject to change. There can be noassurance that the plans, intentions or expectations upon which these forward-looking statements are basedwill occur. Forward-looking statements are subject to risks, uncertainties and assumptions, including, but notlimited to, those discussed elsewhere in this circular. Although management believes that the plans,intentions and expectations represented in such forward-looking statements are reasonable, there can be noassurance that such expectations will prove to be correct and such forward-looking statements included inthis circular should not be unduly relied upon.

Some of the factors that could affect future results and could cause results to differ materially from thoseexpressed in the forward-looking statements contained herein include, but are not limited to:

• risks relating to federal, provincial and municipal government liquor and cannabis regulation and changesthereto;

• competition;• the state of the economy, including general economic conditions in Canada (including the Province of

Alberta) and the United States;• restrictions on potential growth (including the Province of British Columbia’s moratorium on granting new

liquor licenses and the granting of retail cannabis licenses in the Provinces of Alberta and British Columbia);• the unpredictability and volatility of Share prices;• dilution and future sales of Shares or securities convertible into Shares;• the availability of sufficient financial resources to fund the Company’s capital expenditures and strategies;• changes in commodity tax rates and government mark-ups or other taxes that impact the price of alcoholic

beverages and cannabis;• risks relating to future acquisitions and dispositions;• risks relating to the development of new liquor stores;• risks relating to the development of cannabis stores, the conversion of existing stores and branding of

cannabis stores;


FORWARD-LOOKING STATEMENTS

• the ability of management to execute the Company’s business transformation and cannabis strategies;• the Company’s ability to locate and secure acceptable store sites and to adapt to changing market

conditions;• poor weather conditions;• dependence on key personnel;• labour costs, shortages of labour and labour relations, including the Company’s ability to hire and retain

staff at current wage levels and the risk of possible future unionization;• supply interruption or delays;• dependence on suppliers and wholesalers;• reliance on information and control systems;• income tax changes;• leverage and restrictive covenants in agreements relating to the current and future indebtedness of the

Company; and• credit risks arising from operations.

These factors should not be construed as exhaustive. The information contained in this circular, and asdisclosed in other filings made by the Company with Canadian securities regulatory authorities and availableon SEDAR at www.sedar.com, identifies additional factors that could affect the business, financial condition,operating results and performance of the Company.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionarystatement. The forward-looking statements included in this circular are made as of the date of this circular andthe Company assumes no obligation to update or revise them to reflect new events or circumstances, exceptas expressly required by applicable securities legislation.


NON-IFRS FINANCIAL MEASURESAdjusted operating profit before amortization represents gross margin less selling, distribution andadministrative expenses, and adjusted for unusual, non-recurring or non-operating factors. This financialmeasure is not recognized by International Financial Reporting Standards (“IFRS”) and does not have astandardized meaning prescribed by IFRS. Shareholders are cautioned that adjusted operating profit beforeamortization should not replace net earnings or loss (as determined in accordance with IFRS) as an indicatorof the Company’s performance, of its cash flows from operating, investing and financing activities or as ameasure of its liquidity and cash flows. The Company’s method of calculating adjusted operating profit beforeamortization may differ from the methods used by other issuers and, as such, may not be comparable tosimilar measures presented by other issuers.

Management believes the presentation of adjusted operating profit before amortization provides usefulinformation to Shareholders, as it provides increased transparency and predictive value of our recurringfinancial results. Management also uses adjusted operating profit before amortization to set targets andassess the performance of the Company. Please see “Non-IFRS Financial Measures” in the Company’sManagement’s Discussion & Analysis for the year ended December 31, 2017 for a reconciliation of adjustedoperating profit before amortization to operating profit before amortization.


MANAGEMENT INFORMATION CIRCULARKEY TERMS

Additional Aurora Investment means the additional investment as described in Schedule A

Aurora means Aurora Cannabis Inc.

Board or Board of Directors means the Company’s board of directors

CBCA means the Canada Business Corporations Act

Computershare means Computershare Trust Company of Canada, our registrar and transfer agent

Director or Directors means individuals serving on the Company’s Board of Directors

Meeting means the 2018 annual and special meeting

SEDAR means the System for Electronic Document Analysis and Retrieval

Shareholder means a holder of Shares, unless otherwise indicated

Shares means Liquor Stores’ common shares, unless otherwise indicated

We, us, our, the Company and Liquor Stores mean Liquor Stores N.A. Ltd.

The Board of Directors has approved this circular and authorized us to send it to you. Each of our Directorsand auditors will also receive a copy. This circular was approved by our Board of Directors on March 28, 2018and, unless otherwise stated, information is given as of that date.

YOUR VOTE IS IMPORTANT

This circular details what the Meeting will cover and how to vote. Read it carefully and vote.

There are a few fast and easy ways to become a voter: Internet, fax, mail or phone.

See pages 11 and 12 for further details on how you can vote today.


BUSINESS OF THE MEETINGBelow is a list of ordinary and special resolutions to be voted on at our Meeting.

We refer to resolutions No. 4, No. 5, and No. 6 as “Non-Routine Resolutions”. For the text of these resolutionsincluding background information, please see Schedule A.

WHO IS ENTITLED TO VOTE?Shareholders as at the close of business on the Record Date (April 3, 2018) are entitled to vote. Each Share isentitled to one vote in respect of all resolutions to be considered at the Meeting. Shares held by Aurora andits associates and affiliates will not be entitled to vote on the Additional Aurora Investment, which is describedin item 6 below.

1. FIX THE NUMBER OF DIRECTORS TO BE ELECTED AT NINE (9)

At the Meeting, Shareholders will be asked to fix the number of Directors to be elected at the Meeting at nine(9). We ask Shareholders to fix the number of our Directors because our by-laws require us to. Fixing thenumber of Directors at nine (9) allows us to present the nine (9) nominees that we hope you will elect asDirectors. This is different than the proposal below to increase the maximum size of the Board to 12 Directors,as that resolution sets the limit for the maximum number of Directors we can have on our Board.

WHAT LEVEL OF SHAREHOLDER SUPPORT IS REQUIRED TO FIX THE BOARD SIZE AT NINE (9)?This resolution must be approved by a majority of votes cast at the Meeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS:The Board of Directors unanimously recommends that you vote FOR fixing the number of Directors to beelected at nine (9). Shareholders can vote FOR or AGAINST this resolution.

2. ELECT DIRECTORS

At the Meeting, Shareholders will be asked to elect nine (9) Directors to hold office until the next annualmeeting of Shareholders, or until their successors are elected or appointed.

We are nominating the Company’s eight (8) Directors that are currently serving on the Board in addition to anew nominee, Mr. Neil Belot, resulting in a total of nine (9) Directors standing for election at our Meeting.

Together, our Director nominees have a diverse skill set and significant experience, including the skills andexpertise to see the Company through its transformation.

Liquor Stores’ By-law No. 2 contains advance notice provisions (the “Advance Notice By-law”), whichprovides Shareholders, the Board and management of the Company with a clear framework for nominatingDirectors. The Advance Notice By-law helps ensure orderly business at Shareholder meetings by effectivelypreventing a Shareholder from putting forth Director nominations from the floor of a meeting without priornotice. The Advance Notice By-law does not affect nominations made pursuant to a “proposal” made inaccordance with the CBCA or a requisition of a meeting of Shareholders made pursuant to the CBCA. TheAdvance Notice By-law is available on SEDAR at www.sedar.com.

As of March 28, 2018, the Company has not received any notice of a Shareholder’s intention to nominateDirectors at the Meeting pursuant to the Advance Notice By-law.

You can read about each of our Director nominees starting on page 19 and their role on our committees.

WHAT LEVEL OF SHAREHOLDER SUPPORT IS REQUIRED TO ELECT DIRECTORS?The Board has adopted a policy stipulating that each Director should be elected by a majority of votes castand that forms of proxy for the election of Directors shall enable Shareholders to vote for each nominee on anindividual basis. For further details, please see “Majority voting” on page 18.


BUSINESS OF THE MEETING

RECOMMENDATION OF THE BOARD OF DIRECTORS:The Board unanimously recommends that you vote FOR all nine (9) nominees. Shareholders can vote FOReach of the nominees or WITHHOLD votes from any of the nominees.

3. APPOINT AUDITORS

You will vote on appointing the independent auditors and authorizing the Board of Directors to fix theirremuneration. Auditors reinforce the importance of a diligent and transparent financial reporting process andstrengthen investor confidence in our financial reporting.

Based on the recommendation of the audit committee, the Board proposes that PricewaterhouseCoopers LLPbe reappointed as our auditors until the end of our next annual meeting. PricewaterhouseCoopers LLP havebeen our auditors since August 2004, when we were known as Liquor Stores Income Fund.

If you are looking for more information about our auditors, including the fees paid, please see our AnnualInformation Form for the year ended December 31, 2017, under the heading “Audit Committee”.

WHAT LEVEL OF SHAREHOLDER SUPPORT IS REQUIRED TO APPOINT THE AUDITORS?The appointment of the auditors must be approved by at least a majority of votes cast at the Meeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS:The Board unanimously recommends that you vote FOR the appointment of PricewaterhouseCoopers LLP asauditors and authorizing the Board of Directors to fix their remuneration. Shareholders can vote FOR theappointment, or you can WITHHOLD your vote.

4. CHANGE THE NAME OF THE COMPANY TO ALCANNA INC.

To reflect the expansion of the Company’s business into two divisions, alcohol and cannabis, the Board hasproposed to change the name of the Company from Liquor Stores N.A. Ltd. to Alcanna Inc. By combining thewords “Alcohol” and “Cannabis”, the proposed name better reflects our new strategic direction. The changein name also signals a departure from the Company’s previous history and the bold launch of a newlytransformed business.

Consequently, Shareholders will be asked to approve an amendment to the Company’s articles to change itsname to Alcanna Inc.

WHAT LEVEL OF SHAREHOLDER SUPPORT IS REQUIRED TO APPROVE THE NAME CHANGE?The name change must be passed by a majority of not less than two-thirds (2/3) of the votes cast at theMeeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS:The Board of Directors unanimously recommends that you vote FOR the name change. Shareholders canvote FOR or AGAINST this resolution.

5. INCREASE THE MAXIMUM SIZE OF THE BOARD FROM ELEVEN (11) TO TWELVE (12) DIRECTORS

Due to the growth of our business and the proposed expansion of the Company’s business into retailcannabis, the Board believes that it would be prudent to have the ability to expand its size in order to attractadditional expertise and have balanced regional representation. Accordingly, we’re asking you to approve anamendment to the Company’s articles to increase the maximum number of Directors from eleven (11) totwelve (12).

WHAT LEVEL OF SHAREHOLDER SUPPORT IS REQUIRED TO APPROVE THE INCREASE IN THE SIZE OFTHE BOARD OF DIRECTORS?The increase in the size of the Board of Directors must be passed by a majority of not less than two-thirds(2/3) of the votes cast at the Meeting.


BUSINESS OF THE MEETING

RECOMMENDATION OF THE BOARD OF DIRECTORS:The Board of Directors unanimously recommends that you vote FOR increasing the maximum size of theBoard of Directors. Shareholders can vote FOR or AGAINST this resolution.

6. APPROVE THE ADDITIONAL AURORA INVESTMENT

In February 2018, Aurora and Liquor Stores announced that Aurora had agreed to make a strategicinvestment in Liquor Stores by way of a non-brokered private placement. The private placement has beenstructured in two phases. Phase 1 was an initial investment made by Aurora of $103.5 million for anapproximate 19.9% ownership interest in Liquor Stores.

At our Meeting, Shareholders will be asked to vote on phase 2, a resolution that will permit Aurora to increaseits investment in the Company from approximately 19.9% to approximately 25% of the Shares for an additional$34.5 million of proceeds to the Company, with an option for Aurora to further increase its Share ownership toapproximately 40%.

The funds from the Additional Aurora Investment will be used to:

• Accelerate the launch and expansion of a leading brand of cannabis retail outlets in B.C., Alberta andpotentially other markets;

• Strengthen our existing liquor brands by permitting more store renovations;• Evaluate and pursue new acquisitions; and• Fund general purposes.

For a full description of the Additional Aurora Investment, including the potential dilution to Shareholders,please see Schedule A.

WHAT LEVEL OF SHAREHOLDER SUPPORT IS REQUIRED TO APPROVE THE ADDITIONAL AURORAINVESTMENT?The Additional Aurora Investment must be approved by a majority of votes cast at the Meeting, excludingShares held by Aurora and its associates and affiliates.

RECOMMENDATION OF THE BOARD OF DIRECTORS:The Board of Directors, after consultation with its legal and financial advisors, unanimously determined thatthe private placement (including the Additional Aurora Investment) is in the best interests of the Company.The Board of Directors unanimously recommends that you vote FOR the Additional Aurora Investment.Shareholders can vote FOR or AGAINST this resolution.

OTHER BUSINESS

We did not receive any Shareholder proposals for our Meeting, and are not aware of any other items ofbusiness to be considered at the Meeting.

VOTING RESULTS

Computershare is the registrar and transfer agent for our Shares and will tabulate votes for us.

We will disclose the voting results from the Meeting shortly after the Meeting adjourns on our websitewww.liquorstoresna.ca, on SEDAR at www.sedar.com and in a press release.


ABOUT VOTINGWHO CAN VOTEIf you held Shares as of April 3, 2018, you are able to vote at our Meeting. Each Share you own representsone vote.

As of March 28, 2018, we had 34,715,297 Shares issued and outstanding.

PRINCIPAL HOLDERS OF SHARESAs of March 28, 2018, we are aware of one Shareholder that beneficially owns, controls or directs, directly orindirectly, 10% or more of our outstanding Shares:

• Aurora Cannabis Inc. indirectly owns 6.9 million Shares or approximately 19.9% of our outstanding Sharesthrough its affiliate, 2095173 Alberta Ltd.

WHEN TO VOTE BYMay 7, 20188:00 a.m. (Edmonton time)

HOW TO VOTEYou can vote by proxy or you canattend the Meeting and vote yourShares in person. Voting by proxyis the easiest way to vote. It meansyou are giving someone else theauthority to attend the Meeting andvote your Shares as you haveindicated.

If you do not specify how you wantthem to vote, your Shares will bevoted as indicated in the column tothe right by Derek Burney or failinghim, James Burns, who haveagreed to act as proxyholders atthe Meeting.

AM I A REGISTERED ORBENEFICIAL SHAREHOLDER?You are a registered Shareholderif you hold your Shares in yourown name and have an actualshare certificate. Your packageincludes a form of proxy.

You are a beneficial Shareholderif your Shares are held in thename of a financial intermediaryor nominee such as a bank, trustcompany, broker, trustee orother financial institution. You donot have a physical sharecertificate because yourshareholdings are recordedelectronically.

If you are a beneficialShareholder, your nominee orfinancial intermediary votes yourShares based on the instructionsyou give them. You need to dothis as soon as possible using thevoting instructions.

HOW SHOULD I VOTE?

• FOR fixing the Board size at 9Directors

• FOR electing each of theDirector nominees

• FOR appointing the auditors• FOR the new name of

“Alcanna Inc.”• FOR increasing the maximum

number of Directors from 11to 12

• FOR approving the AdditionalAurora Investment


ABOUT VOTING

The voting process is different for registered and beneficial (non-registered) Shareholders.

REGISTERED SHAREHOLDERS(YOU HOLD A SHARECERTIFICATE OR A DRSSTATEMENT REGISTERED INYOUR NAME)

Internet: Go towww.investorvote.comand follow the voting instructions.You will require a 15-digit ControlNumber (located on the front ofyour form of proxy) to identifyyourself.

Phone: To vote by phone, scanthe QR code on your form of proxyor call toll-free at 1.866.732.8683or 1.312.588.4290 (outside Canadaand the United States). You willrequire a 15-digit Control Number(located on the front of your formof proxy) to identify yourself.

Fax: Complete, sign and date yourform of proxy and return it by faxto 1.866.249.7775 toll-free(within Canada and theUnited States)

On the fax please write:To the Toronto Office ofComputershare, Attention: ProxyDepartment

Mail: Complete, date and signyour form of proxy and return it to:

ComputershareAttention: Proxy Department8th Floor, 100 University Avenue,Toronto, ON M5J 2Y1

CANADIAN NON-REGISTERED(BENEFICIAL) SHAREHOLDERS(YOU HOLD SHARES THROUGH ACANADIAN BANK, BROKER OROTHER NOMINEE)

Internet: Go towww.proxyvote.com and followthe voting instructionson the screen. You will require a16-digit Control Number (locatedon the front of your votinginstruction form) to identifyyourself

Phone: To vote by phone shouldcall 1.800.474.7493 (English) or1.800.474.7501 (French). You willrequire a 16-digit Control Number(located on the front of your votinginstruction form) to identifyyourself.

Fax: Complete, sign and date yourvoting instruction form and returnit by fax to 1.905.507.7793.

Mail: Complete, sign and dateyour VIF and return it in thepostage prepaid envelope.

UNITED STATESNON-REGISTERED (BENEFICIAL)SHAREHOLDERS(YOU HOLD SHARES THROUGH AU.S. BANK, BROKER OR OTHERNOMINEE)

Internet: Go towww.proxyvote.com and followthe voting instructionson the screen. You will require aControl Number (located on thefront of your voting instructionform) to identify yourself.

Phone: To vote by phone shouldcall 1.800.454.8683 then followthe voting instructions on yourvoting instruction form. You willrequire a Control Number (locatedon the front of your votinginstruction form) to identifyyourself.

Fax: Complete, sign, and date yourvoting instruction form and returnit by fax to the fax number(s) listedon your voting instruction form.

Mail: Complete, sign, and dateyour voting instruction form andreturn it in the postage prepaidenvelope provided to the addressset out on the envelope.


SHAREHOLDER FAQ – VOTING DETAILSYour vote is very important to us. We encourage you to vote your Shares and ensure you have a say at theMeeting. Please read the following for answers to commonly asked questions about voting your Shares.

Q: Who can vote?A: If you held your Shares as of April 3, 2018, you are able to vote at the Meeting. Each Share you own

represents one vote.

Q: Where is the Meeting being held?A: The Meeting will be held at Hyatt Place Edmonton-West (18004 100 Avenue NW Edmonton, Alberta,

Canada, T5S 2T6) on May 9, 2018 at 8:00 a.m. (Edmonton time).

Q: When do I have to vote by?A: The deadline to submit your voting instructions is May 7, 2018 at 8:00 a.m. (Edmonton time) or, in the

case of an adjournment or postponement of the Meeting, not less than 48 hours (excluding Saturdays,Sundays and holidays) before the time of the Meeting.

Q: Who is soliciting my proxy?A: Management of Liquor Stores is soliciting your proxy. Solicitation of proxies will be primarily by mail,

supplemented by telephone or other contact, by our Directors, officers, employees or agents. All costs ofsolicitation of proxies by or on behalf of management will be borne by the Company.

Q: How can I vote?A: Registered Shareholders

If you are eligible to vote and your Shares are registered in your name, you can vote your Shares inperson at the Meeting or by completing your form of proxy through any of the methods described onpage 12.

Beneficial (non-registered) Shareholders

If your Shares are not registered in your name, but are held in the name of a nominee (usually a bank,trust company, broker, trustee or other financial institution), your nominee is required to seek yourinstructions as to how to vote your Shares. Your nominee should have provided you with a package ofinformation respecting the Meeting, including a voting instruction form. Complete your voting instructionform through any of the methods described on page 12.

Q: How do I attend and vote at the Meeting in person?A: If you are a Shareholder you will need to bring a valid photo I.D. to gain admission to the Meeting.

Attendance at the Meeting is limited to Shareholders as of the Record Date, April 3, 2018, or theirauthorized representatives.

Registered Shareholders

If you plan to vote at the Meeting, do not complete or return the form of proxy. Your vote will be taken atthe Meeting. Please register with our transfer agent, Computershare, upon arrival.

Beneficial Shareholders

If you plan to vote at the Meeting, you will need to appoint yourself as a proxyholder by writing yourname in the appointee line (or, if voting electronically, entering your name in the appointee line) on yourvoting instruction form and submitting these voting instructions through one of the methods described onpage 12. Do not complete the voting instructions on the form as your vote will be taken at the Meeting.Please register with our transfer agent, Computershare, upon arrival.


SHAREHOLDER FAQ – VOTING DETAILS

Q: What different methods can I use to vote?A: As a Shareholder, you are able to submit your voting instructions using the following methods: Internet,

fax, mail or phone.

Please refer to page 12 for instructions on how to submit your vote.

Q: What happens once I vote my proxy or voting instruction form?A: Voting the enclosed form of proxy or voting instruction form gives authority to Derek Burney or failing

him, James Burns, each of whom is a Director, or to another person you have appointed, to vote yourShares at the Meeting.

Q: Can I appoint someone other than the individuals named in the proxy or voting instruction form tovote my Shares?

A: Yes. You have the right to appoint the person or company of your choice, who does not need to be aShareholder, to attend and act on your behalf at the meeting. If you appoint a Liquor Storesrepresentative to act as your proxyholder and you do not provide specific voting instructions, they willvote:

• FOR fixing the number of Directors to be elected at the Meeting at nine (9)• FOR each Director nominee• FOR the appointment of PricewaterhouseCoopers LLP as our auditors and authorizing the Board to fix

their remuneration• FOR the name change of the Company to Alcanna Inc.• FOR increasing the maximum size of the Board from eleven (11) to twelve (12) Directors• FOR the Additional Aurora Investment

NOTE: It is important to ensure that any person other than the management nominees you appoint asyour proxyholder is attending the Meeting and is aware that his or her appointment to vote your Shareshas been made.

Q: Can I revoke a proxy or voting instruction form?A: Yes. If you are a registered Shareholder and have voted your proxy, you may revoke it by:

1. completing and signing a proxy bearing a later date, and delivering it to Computershare; or

2. delivering a written statement, signed by you or your authorized attorney to:

(a) the registered office of the Company (#2500, 10303 Jasper Ave. Edmonton, Alberta T5J 3N6) atany time up to and including the last business day prior to the Meeting, or any adjournmentthereof; or

(b) the chair of the Meeting prior to the start of the Meeting.

If you are a beneficial Shareholder, contact the intermediary that holds your Shares.

Q: Who counts the votes?A: Computershare counts and tabulates the proxies. This is done independently. Proxies are referred to the

Company only in cases where a Shareholder clearly intends to communicate with management or whenit is necessary to do so to meet the requirements of applicable law. Confidentiality may also be lost if theBoard decides that disclosure is in the interests of the Company or its Shareholders.

Q: Does any Shareholder have special rights?A: Pursuant to the Investor Rights Agreement (as defined in Schedule A), 2095173 Alberta Ltd. (the

“Investor”), an indirect wholly-owned subsidiary of Aurora, has the right to designate nominees to benominated and, if elected, to serve as members of the Board. Such nomination rights permit the Investorto designate one nominee if it beneficially owns or controls between 10% and 33.33% of the Shares. If theInvestor beneficially owns or controls more than 33.33% of the Shares, the Investor may designate twonominees. Terry Booth has been nominated by the Investor in accordance with the nomination rights.


SHAREHOLDER FAQ – GENERALQ: What is included in the proxy materials?A: The proxy materials for our Meeting include the notice of Meeting, this circular, and form of proxy or

voting instruction form, all which have been approved by the Board of Directors.

Q: What’s new for 2018?A: 2017 was a significant year for the Company. Following the annual meeting of Shareholders in June of

2017, your new Board took immediate action on your directive to enact significant change in theCompany. Specifically, we:

• Reversed the former strategy of expansion in the United States and sold poorly performingnon-core assets, being the 15 liquor stores in Kentucky and 51% interest in Birchfield Ventures LLC(“Birchfield”) which owns two stores in New Jersey. Collectively, these two transactions resulted in along-term debt reduction of up to $47 million (US$37 million), in addition to extinguishing our obligationto purchase the remaining 49% interest in Birchfield as early as January 1, 2019 (valued at $12.8 millionat the time of sale).

• Attracted a strategic investment from Aurora via a private placement of Shares representingapproximately 19.9% of the Company’s total Shares outstanding in consideration for $103.5 millioncash. The cash was received in full by the Company and the Shares were issued on February 14, 2018.The Aurora investment includes the issuance of additional convertible securities where, if approved atthe Meeting, Aurora will increase its ownership interest in the Company to approximately 25% for anadditional $34.5 million and provide the option for Aurora to further increase that ownership stake toapproximately 40% at any time prior to August 14, 2019.

• Eliminated redundant operating costs from the liquor business by simplifying and streamlining ourbusiness structure, performing a store network optimization analysis to review stores that are notstrategic or contributing enough to the Company’s operating profits for closure or repositioning, andoptimizing the operating hours of the Company’s locations. This included streamlining themanagement structure and reducing overall administrative overhead by closing the U.S. regional officein Kentucky, eliminating duplicative U.S. management team members and placing thoseresponsibilities under executives based in the Edmonton head office. These initiatives are expected toreduce selling, distribution and administrative costs by more than $5 million on an annualized basis.

• Optimized the Company’s inventory levels by clearing out slow-moving inventory and rationalizingproduct assortments. These efforts have already produced an inventory reduction of approximately$29 million at December 31, 2017 compared to the same period in the prior year for Canada andAlaska.

Q: Why should I vote with the Board’s recommendations?A: As we look forward to 2018, our focus now shifts to increasing the sales and profitability of the Company

along with the value of your investment. To help us achieve these goals, you will be asked to vote on anumber of resolutions that we look to gain your support on:

• Fixing the number of Directors to be elected at the Meeting at nine (9)• Fixing the number of Directors at nine (9) allows us to present the nine (9) nominees we hope you

will elect as Directors. Together, our Director nominees have a diverse skill set and significantexperience, including the skills and expertise to see the Company through its transformation.

• Elect the Board of Directors• Each of the nine (9) Director nominees brings a diverse skill set as shown beginning on page 19

and significant experience to see the Company through its transformation.

• Appointment of auditors• Based on the recommendation of the Audit Committee, the Board proposes that

PricewaterhouseCoopers LLP be appointed as our auditors until the end of our next annualmeeting and to authorize the Board to fix their remuneration. PricewaterhouseCoopers LLP hasbeen our auditors since August 2004, when we were known as Liquor Stores Income Fund.


SHAREHOLDER FAQ – GENERAL

• Change the name of the Company to Alcanna Inc.• The Board of Directors has proposed to change the name of the Company from Liquor Stores N.A.

Ltd. to Alcanna Inc. The proposed name better reflects our new strategic direction through theexpansion of the Company’s business into two divisions, alcohol and cannabis. The change inname also signals a departure from the Company’s previous history and the bold launch of anewly transformed business.

• Increase the maximum size of the Board to twelve (12) Directors• Due to the growth of our business and our proposed expansion into the retail cannabis business,

the Board of Directors believes that it would be prudent to have the ability to expand its size inorder to attract additional expertise.

• Approve the Additional Aurora Investment• These additional funds will be used to accelerate the launch and expansion of a leading brand of

cannabis retail outlets in B.C., Alberta, and potentially other markets; strengthen our existing liquorbrands by permitting more store renovations; evaluate and pursue new acquisitions; and fundgeneral corporate purposes. Refer to Schedule A for further details about the Additional AuroraInvestment, including the potential dilution to Shareholders.

Q: What are my voting choices for each of the proposals to be voted on and what are the votingstandards?

A:

Proposal Voting Choices and Board Recommendation Voting Standard

Item 1: Fix Board size atnine (9)

✓ Vote FOR the proposal✓ Vote AGAINST the proposal✓ The Board recommends a vote FOR fixing the

number of Directors to be elected at nine (9).

Majority

Item 2: Elect Board ofDirectors

✓ vote FOR all nominees;✓ vote FOR specific nominees;✓ vote WITHHOLD for all nominees; or✓ vote WITHHOLD for specific nominees.✓ The Board recommends a vote FOR each of the

Director nominees.

Majority

Item 3: Appointment ofauditors

O vote FOR the appointment; orO vote WITHHOLD the appointment.✓ The Board recommends a vote FOR the

appointment of the auditors.

Majority

Item 4: Change of name ofthe Company to AlcannaInc.

O vote FOR the name change; orO vote AGAINST the name change.✓ The Board recommends a vote FOR the name

change

Not less than66 2/3%

Item 5: Increase themaximum size of the Boardfrom eleven (11) to twelve(12) Directors

O vote FOR the proposal; orO vote AGAINST the proposal.✓ The Board recommends a vote FOR increasing

the maximum number of Directors from eleven(11) to twelve (12)

Not less than66 2/3%

Item 6: Approve theAdditional AuroraInvestment

O vote FOR of the proposal; orO vote AGAINST the proposal.✓ The Board recommends a vote FOR the

Additional Aurora Investment.

Majority(excluding Shares

held by Auroraand its associates

and affiliates)


SHAREHOLDER FAQ – GENERAL

Q: If I need to contact the transfer agent, how do I reach them?A: You can contact our transfer agent as follows:

Computershare, 100 University Ave, 8th Floor, Toronto ON, M5J 2Y1

Telephone: 1.800.564.6253 or outside of Canada 1.416.263.9200

Fax: 1.888.453.0330

Website: www.computershare.com/ca

Other voting details

• Liquor Stores will not send proxy-related materials directly to non-objecting beneficial Shareholders andsuch materials will be delivered to non-objecting beneficial Shareholders by Broadridge or through thenon-objecting beneficial Shareholder’s intermediary.

• The Company does not intend to pay for the costs of an intermediary to deliver to objecting beneficialShareholders the proxy related materials and such beneficial Shareholders will not receive the materialsunless their intermediary assumes the costs of delivery.

• If there are amendments or other business items that properly come before the meeting, proxyholderscan vote as they see fit, as permitted by law, whether or not it is a routine matter, an amendment orcontested item of business.

• The chair of the Meeting has the discretion to accept or reject any late proxies, and can waive or extendthe deadline for receiving proxy voting instructions without notice.

• If the Meeting is postponed or adjourned, the deadline to receive your voting instructions will beextended to 48 hours (excluding Saturdays, Sundays and statutory holidays) before the Meeting isreconvened.


CORPORATE GOVERNANCECorporate governance best practices

✓ Current Board composed of 88% independent Directors✓ Current Board composed of 25% female Directors✓ Annual election of Directors✓ Majority voting for individual Directors✓ Rigorous Director selection and evaluation process✓ Fully independent committees✓ Comprehensive risk oversight by full Board and committees✓ Share ownership requirements for Directors and senior management

MAJORITY VOTINGThe Board has adopted a policy stipulating that each Director should be elected by a majority of votes castand that forms of proxy for the election of Directors shall enable Shareholders to vote for each nominee on anindividual basis. The policy provides that if any nominee for Director receives, from Shares voted at theMeeting in person or by proxy, a greater number of Shares withheld than Shares voted in favour of his or herelection, then the Director must promptly tender his or her resignation to the Board, to take effect onacceptance by the Board.

The Governance Committee of the Board will promptly consider the offer to resign and make arecommendation to the Board after reviewing the matter, and the Board will act on the GovernanceCommittee’s recommendation within ninety (90) days following the Meeting. The Board’s decision to acceptor reject the resignation offer, including the reasons therefor in the case of a determination not to accept theresignation, will promptly be disclosed to the public by press release. The nominee will not participate in anyGovernance Committee or Board deliberations on the resignation offer of that nominee. In considering atendered resignation, the Governance Committee is expected to recommend, and the Board of Directorsshall accept, the resignation of a Director except in exceptional circumstances. The policy does not apply incircumstances involving contested elections of Directors.

BOARD SKILL MATRIXAt the June 2017 annual meeting, Shareholders voted for a new Board leadership. The Company’s focus is torestore the Company’s place as the market leader in Alberta retail alcohol sales and to establish a market-leading cannabis retail brand.


CORPORATE GOVERNANCE

Pursuant to these initiatives, our Governance Committee is committed to finding the most qualified candidateswhose experience and skills are highly aligned with the Company’s long-term strategic objectives. Theexperience and/or skills (denoted by “✓”) of each Director nominee are reflected in the accompanying table.

Experience/SkillsJohn

BarnettNeil

BelotTerryBooth

DerekBurney

JamesBurns

BernieKollman

PeterLynch

KarenPrentice

DenisRyan

Liquor Industry ✓ ✓

Cannabis Industry ✓ ✓

Retail Experience ✓ ✓ ✓

Public Company Board Experience ✓ ✓ ✓ ✓ ✓ ✓ ✓

Public Company NEO Experience ✓ ✓ ✓ ✓

CPA Designation/CFO Experience ✓

Government/Government Relations/Political Acumen (Canada)

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Corporate Governance ✓ ✓ ✓ ✓ ✓ ✓ ✓

Executive Compensation ✓ ✓ ✓ ✓ ✓ ✓ ✓

Law ✓ ✓

Capital Markets/Investment Banking ✓ ✓ ✓ ✓ ✓ ✓

Strategic Planning ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Acquisition/Leasing ✓ ✓ ✓ ✓

Real Estate ✓ ✓ ✓ ✓

HR/Labour Relations ✓ ✓ ✓ ✓

Marketing ✓ ✓ ✓ ✓ ✓ ✓

Information Technology ✓ ✓

DIRECTOR PROFILESSince the last annual Shareholder meeting in 2017, the Company announced a series of Board andmanagement changes:

• On June 20, 2017, a new Board of Directors was elected with six (6) new Directors, being Derek Burney(Chairman of the Board), Kenneth Barbet, John Barnett, James Burns, Richard Perkins and Karen Prentice.Peter Lynch and Gary Collins from the old Board returned.

• On July 7, 2017, the Company announced its intention to appoint Kenneth Barbet as President and ChiefExecutive Officer (“CEO”) in early August, with Stephen Bebis, the former President and CEO, departing theCompany. During the interim period, Peter Lynch acted as the interim President and CEO of the Company.

• On August 8, 2017, Richard Perkins stepped down from the Board to take a role in senior management ofthe Company.

• On August 9, 2017, Denis Ryan was appointed to the Board as an independent Director.• On December 8, 2017, James Burns was appointed Vice Chair of the Company and became a member of

management.• On December 14, 2017, Kenneth Barbet resigned as CEO and Director of the Company and was replaced

by James Burns who also retained the position of Vice Chair.• On February 5, 2018, Bernie Kollman, ICD.D was appointed to the Board.• On February 16, 2018, Gary Collins resigned as a Director.• On March 14, 2018, Terry Booth was appointed to the Board of Directors.

In the next few pages, you will see the profiles of our Director nominees along with information about theirjurisdiction of residence, principal occupation, the date when first elected or appointed as a Director, their



work and Board experience, meeting attendance, independence and the number of Shares, or deferredShare units, beneficially owned, or over which each exercises control or direction, directly or indirectly. Noneof our nominees own stock options.

Nominee Brief Biography

John Barnett, CPA, CADirectorFlorida, U.S.Age: 73Director Since June 20, 2017Independent

Mr. Barnett currently serves as a director of Clairvest Group Inc., a private equity management firm.Previously, Mr. Barnett served as the President, Chief Executive Officer and director of Rothmans Inc.(manufacturer and distributor of tobacco products) from June 1999 until it was acquired by Phillip MorrisInternational in 2008. Prior to his service in these roles, Mr. Barnett was an officer of Molson Breweriesand its predecessor Carling O’Keefe from 1972 through 1998, acting as the company’s President andChief Executive Officer from November 1995 to November 1998. Mr. Barnett also served on the boardof directors of Granite REIT (previously known as MI Developments Inc.) from 2006 to 2008, and theboard of directors of Mosaic Group Inc. from 2002 to 2003. Mr. Barnett holds a Chartered ProfessionalAccountant designation.

Board and Committee Attendance Other Public Boards

Board 9 of 9 (100%) Clairvest Group Inc. Since August 13, 2009Committee: Audit,Compensation andHuman Resources

Audit Committee 2 of 2 (100%)

Special Committee onBusiness Transformation

4 of 4 (100%)

Special Committee 1 of 1 (100%)

Securities Held

Date Shares DSUsTotal at-risk value ofsecurities held(1)

December 31, 2017 100,000 4,090 $1,111,681

March 28, 2018 130,000 4,090 $1,302,014

Meets Director Share ownership guidelines

(1) The value of the Shares is calculated based on Liquor Stores’ closing Share price of $10.68 at December 29, 2017 and $9.71 atMarch 28, 2018, respectively.


Neil Belot(1)

Alberta, CanadaAge: 38Director NomineeIndependent

Mr. Belot has been the Chief Global Business Development Officer at Aurora since March 2017, wherehe focuses on developing business opportunities that drive Aurora’s international growth. Prior to this,he had held the position of Chief Brand Officer at Aurora since September 2015 with operationaloversight of brand, sales, marketing, client care, and digital technology. Mr. Belot has been deeplyinvolved with Canada’s medical cannabis industry and community for more than seven years. Prior tojoining Aurora, he was the Executive Director of the trade association for commercial licensedproducers known as the Canadian Medical Cannabis Industry Association since February 2015. Beforejoining the industry association, he managed one of Canada’s largest programs for the legislated bulktrading, pricing, hedging, transporting, and supply of energy to a portfolio of over 40 municipalcorporate clients with over 15,000 points of distribution since January 2013. Mr. Belot earned aninternational finance-focused MBA while studying at Dalhousie University and Copenhagen BusinessSchool.


Not Applicable Cann Group Limited Since March 21, 2018

Securities Held


December 31, 2017 Nil Nil Nil

March 28, 2018 Nil Nil Nil

Until May 9, 2021 to meet Director Share ownership guidelines

(1) Mr. Belot is an officer of Aurora, which indirectly owns approximately 19.9% of the Shares.(2) The value of the Shares is calculated based on Liquor Stores’ closing Share price of $10.68 at December 29, 2017 and $9.71 at

March 28, 2018, respectively.




Terry Booth(1)

DirectorAlberta, CanadaAge: 54 Director SinceMarch 14, 2018 Independent

Mr. Booth co-founded Aurora in 2013 when the Canadian federal government created a new regulatoryregime for the national medical cannabis system. Investing $2.5 million of his own capital in start-upfunding, he secured a 160-acre parcel of land in the foothills of the Rocky Mountains, and designed andbuilt Aurora’s first advanced cannabis production facility. Mr. Booth has assembled a diverse and highlyskilled team of experts from a broad range of disciplines to execute on Aurora’s business strategy andvision to build the world’s foremost cannabis company. Prior to founding Aurora, Mr. Booth wasinvolved in the industrial permitting and governmental regulatory sector for over 20 years. Mr. Boothalso has served as President and Chief Executive Officer of six (6) other highly successful businessesincluding Superior Safety Codes Inc., where he continues to serve as President. Mr. Booth is a strongsupporter of many charitable organizations dedicated to ending family violence and violence againstwomen, including the “Walk a Mile in Her Shoes” campaign, Kids Up Front, WINGS and WIN House.


Not Applicable Aurora Cannabis Inc. Since December 9, 2014

Radient Technologies Inc. Since November 30, 2017

Quinsam Capital Corporation Since September 7, 2017

Securities Held


December 31, 2017 Nil Nil Nil

March 28, 2018 Nil Nil Nil

Until March 14, 2021 to meet Director Share ownership guidelines

(1) Mr. Booth is an officer of Aurora, which indirectly owns approximately 19.9% of the Shares.(2) The value of the Shares is calculated based on Liquor Stores’ closing Share price of $10.68 at December 29, 2017 and $9.71 at

March 28, 2018, respectively.


Derek BurneyChairmanOntario, CanadaAge: 79Director Since June 20, 2017Independent

Mr. Burney currently serves as the Senior Strategic Advisor to Norton Rose Fulbright LLP, a global lawfirm, a position he has held since May 2006, and is the Chair of the International Advisory Board ofGarda World Security Corporation. Mr. Burney served as Chief of Staff to the Prime Minister of Canadafrom 1987-1989, and as the Prime Minister’s Personal Representative at G7 Summits from 1990-1992.He was also the Canadian Ambassador to the United States from 1989 to 1993. In 1993, Mr. Burneywas named Officer of the Order of Canada and was awarded the Public Service of Canada’soutstanding Achievement Award. Mr. Burney was appointed as Chair and Chief Executive Officer ofBell Canada International in 1993, and later served as President and Chief Executive Officer of CAEInc., a leading independent provider of commercial aviation training from 1999 to 2004. Mr. Burney hasalso served as a director of Quebecor World, Canwest Global Communications Corp., Teleglobe Inc.,Bruncor Inc., Moore Wallace Inc., and Rio Algom Limited. He serves as an advisor to Paradigm CapitalInc. and as a director of TransCanada Pipelines Limited.


Board 9 of 9 (100%) TransCanadaCorporation(1)

Since September 22,2005Committee: Governance,Audit

Compensation Committee 4 of 4 (100%)

Governance Committee 2 of 2 (100%)

Special Committee on BusinessTransformation

4 of 4 (100%)


Securities Held


December 31, 2017 5,000 4,302 $99,345

March 28, 2018 20,000 4,302 $235,972


(1) Mr. Burney sits on the board of TransCanada Pipelines Limited, which is a fully-owned main operating subsidiary of TransCanadaCorporation, but also a reporting issuer. Mr. Burney is retiring from the board of directors of TransCanada Corporation andTransCanada Pipelines Limited on April 27, 2018.





James F.C. BurnsVice Chair and ChiefExecutive Officer, DirectorAlberta, CanadaAge: 63Director Since June 20, 2017Vice Chair SinceDecember 8, 2017Chief Executive OfficerSince December 15, 2017Non-independent

Mr. Burns is a former private equity investor and Partner at Gordon Investment Company based inToronto, Ontario where he was responsible for investments including Specialty Equipment Ltd.,Sound Warehouse Inc., Empire Realty Credit Corp., ConCap Equities Inc., Windmill Bakeries, andShepherd Manufacturing Ltd. Previously, Mr. Burns was the former managing director at CIBC WoodGundy and served as the Director and CFO of Scott’s Restaurants. Mr. Burns also served 12 years withthe Federal Government where he held several positions including Chief of Staff to the Deputy PrimeMinister of Canada.


Board 9 of 9 (100%) None




4 of 4 (100%)

Securities Held


December 31, 2017 100,000 4,054 $1,111,297

March 28, 2018 100,000 4,054 $1,010,364

(1) The value of the Shares is calculated based on Liquor Stores’ closing Share price of $10.68 at December 29, 2017 and $9.71 atMarch 28, 2018, respectively. Mr. Burns is subject to our executive share ownership guidelines, which he met at December 31, 2017.


Bernadette (Bernie)Kollman, ICD.DDirectorAlberta, Canada,Age: 54Director Since February 5,2018Independent

Ms. Kollman brings over 30 years (1986-2016) of experience from various roles with IBM Canada Ltd.,including being the Vice President, Public Sector, Alberta and Senior Location Executive forEdmonton. She also founded and co-chaired (2005-2016) the IBM Alberta Centre for AdvancedStudies. She is currently the Chair of the board of Travel Alberta, serving on its board since 2013.Additionally, she is a board member of United Way, Alberta Capital Region, a board member ofEdmonton Global, Chair of the MacKay CEO Forum, an Advisory Board member for Arrkann Trailerand RV Center, and serves on the board of Compute Canada. Ms. Kollman holds the designation ofICD.D from the Institute of Corporate Directors and is a member of the International Women’s Forum.She was formerly a board member and Chair of the Edmonton Chamber of Commerce and also Chairof the 2007 United Way campaign. Ms. Kollman has been recognized as a Global TV “Woman ofVision”, Top 50 Most Influential Albertans by Alberta Venture Magazine and by her alumni, Universityof Regina, for Distinguished Humanitarian and Community Service. She was named a Fellow,Canadian Information Processing Society for her commitment to advancing the IT professionparticularly for young women.


Not Applicable None

Securities Held


December 31, 2017 4,000 Nil $42,720

March 28, 2018 9,000 Nil $87,390

Until February 5, 2021 to meet Director Share ownership guidelines





Peter Lynch, BScDirectorFlorida, U.S.Age: 67Director Since May 13, 2014Former Interim Presidentand CEO (July 7, 2017 toAugust 8, 2017)Independent

Mr. Lynch is a director of NYSE-listed Retail Properties of America, Inc. of Oak Brook, Illinois, a realestate investment trust; he is also Chair of its Nominating and Corporate Governance Committee andmember of its Compensation Committee. Mr. Lynch also serves on the board of advisors of SidWainer & Son, a private produce and specialty foods company based in New Bedford, Massachusettsand is on the Board of Nichols College in Dudley, Massachusetts. From 2004 until 2012 he was Chair,President and Chief Executive Officer of Winn-Dixie Stores Inc., a Florida-based retailer with 500grocery stores, 150 liquor stores and 280 in-store pharmacies throughout the five southeastern statesof Alabama, Florida, Georgia, Louisiana and Mississippi. Before that he was President and ChiefOperating Officer and Executive Vice President-Operations with Boise, Idaho-based Albertson’s, Inc.,one of the largest national U.S. retail food and drug chains, comprised of 2,500 stores. Mr. Lynchgraduated from Nichols College in Dudley, Massachusetts in 1974 with a Bachelor of Science Degree inFinance.


Board 17 of 18 (94%) Retail Properties ofAmerica, Inc.

Since May 28, 2014Committee:Nominating andCorporateGovernance,Compensation

Audit Committee(2) 2 of 2 (100%)



4 of 4 (100%)

Securities Held


December 31, 2017 10,000 6,896 $180,449

March 28, 2018 10,000 6,896 $164,060


(1) The value of the Shares is calculated based on Liquor Stores’ closing share price of $10.68 at December 29, 2017 and $9.71 atMarch 28, 2018, respectively.

(2) Mr. Lynch was appointed to the Audit Committee on December 15, 2017.


Karen Prentice, Q.C.,ICD.DDirectorAlberta, CanadaAge: 63Director Since June 7, 2017Independent

Ms. Prentice was a director for Matrix Solutions Inc., chaired the Board of trustees of CANMARC RealEstate Investment Trust and served for six (6) years as a member of the Alberta Securities Commission.Prior to her service in these roles, she was an Executive Vice-President of ENMAX Corporation, whereshe was responsible for legal services, corporate governance, human resources, facilities,environment, health and safety, government relations and corporate communication functions.Ms. Prentice holds an L.L.B. from the University of Calgary and the designation of ICD.D from theInstitute of Corporate Directors.






Securities Held


December 31, 2017 Nil 4,085 $43,628

March 28, 2018 10,000 4,085 $136,765






Denis RyanDirectorNova Scotia, CanadaAge: 75Director Since August 9,2017Independent

Mr. Ryan’s career includes serving as an investment advisor with CIBC Wood Gundy, an executive withBGH Investment Management Limited, Vice-President Institutional Asset Management with Altamira, aninvestment banking role for Griffiths McBurney and Partners and a founding partner with MorrisonWilliams Investment Management Limited. Mr. Ryan’s career also includes serving as co-founder anddirector of Keeper Resources Inc., as well as serving as director of Front Street Capital. Other publiclylisted past directorships include serving as a member of the board and as a financier of Immnovaccine.





Securities Held


December 31, 2017 Nil 3,395 $36,259

March 28, 2018 5,000 3,395 $81,515

Until August 9, 2020 to meet Director Share ownership guidelines


CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES ORSANCTIONSTo the knowledge of the Company, no proposed Director is, as of the date of this circular, or was within tenyears before the date of this circular, a director, Chief Executive Officer or Chief Financial Officer of anycompany (including Liquor Stores), that:

(a) was subject to a cease trade order, an order similar to a cease trade order or an order that denied therelevant company access to any exemption under securities legislation, in each case that was in effectfor a period of more than 30 consecutive days (collectively, an “Order”) that was issued while theproposed Director was acting in the capacity of director, Chief Executive Officer or Chief FinancialOfficer; or

(b) was subject to an Order that was issued after the proposed Director ceased to be a director, ChiefExecutive Officer or Chief Financial Officer and which resulted from an event that occurred while thatperson was acting in the capacity of director, Chief Executive Officer or Chief Financial Officer.

To the knowledge of the Company, except as disclosed below, no proposed Director:

(a) is, as of the date of this circular, or has been within the ten years before the date of this circular, adirector or executive officer of any company (including Liquor Stores) that, while that person was acting inthat capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made aproposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted anyproceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trusteeappointed to hold its assets; or

(b) has, within the ten years before the date of this circular, become bankrupt, made a proposal under anylegislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings,arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed tohold the assets of the proposed Director.

John Barnett was a director of Data & Audio-Visual Enterprises Holdings Inc. (“Mobilicity Holdings”) fromDecember 10, 2009 to April 30, 2013. Mobilicity Holdings, together with its affiliates, Data & Audio-VisualEnterprises Wireless Inc. and 8440522 Canada Inc., commenced two separate arrangements under the CBCAas part of their restructuring efforts before voluntarily entering into proceedings under the Companies’Creditors Arrangement Act (“CCAA”), obtaining an initial order from the Ontario Superior Court of Justice



(Commercial List) granting a stay of proceedings and other ancillary relief on September 30, 2013. At the timethat Mr. Barnett resigned from Mobilicity Holdings’ board, Telus Corp. was negotiating a transaction that wasannounced on May 16, 2013 to acquire Mobilicity Holdings. However, the acquisition by Telus did not receivethe requisite regulatory approvals and Mobilicity Holdings was ultimately acquired in 2015 by RogersCommunications Inc. in accordance with the proceedings under the CCAA.

Derek Burney was a director of Canwest Global Communications Corp. (“Canwest”) when it voluntarilyentered into proceedings under the CCAA and obtained an initial order from the Ontario Superior Court ofJustice (Commercial List) granting a stay of proceedings and other ancillary relief on October 6, 2009.Although no cease trade orders were issued, Canwest shares were de-listed from the Toronto StockExchange after the filing and started trading on the TSX Venture Exchange. Canwest emerged from CCAAprotection, and Postmedia Network acquired its newspaper business on July 13, 2010 while ShawCommunications Inc. acquired its broadcast media business on October 27, 2010. Mr. Burney ceased to be adirector of Canwest on October 27, 2010.

James Burns was a director and president of Niagara’s Best Beer Ltd. (“NBB”), an Ontario corporationinvolved in the craft brewery business. On October 1, 2010, NBB was placed into receivership andPricewaterhouseCoopers Inc. was appointed as receiver of NBB’s assets, which were subsequently liquidatedand the proceeds were distributed to NBB’s secured creditor. PricewaterhouseCoopers Inc. was dischargedas receiver on November 5, 2012.

To the knowledge of the Company, no proposed Director has been subject to:

(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securitiesregulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be consideredimportant to a reasonable securityholder in deciding whether to vote for a proposed Director.

BOARD INDEPENDENCEThe Board and the Governance Committee considered the relationships of each of the eight current Boardmembers and the new nominee to the Board and determined that eight (8) out of the nine (9) proposedDirectors qualify as independent Directors within the meaning of applicable securities laws. James Burns, asVice Chair and CEO of the Company, is not independent.

Derek Burney, the Chairman of the Board of Directors, is independent.

None of the independent Directors has a material relationship with the Company that could, in the view of theBoard, be reasonably expected to interfere with the exercise of a member’s independent judgment.

BOARD AND COMMITTEESCommittee membership as of December 31, 2017

Director Independence Audit Compensation Governance

John Barnett ✓ C M

Derek Burney ✓ M C

James Burns

Gary Collins(1) ✓ M M

Peter Lynch(2) ✓ M M

Karen Prentice ✓ C M

Denis Ryan ✓ M M

(1) Mr. Collins resigned as a Director effective February 16, 2018.(2) Mr. Lynch was appointed to the Audit Committee on December 15, 2017.



COMMITTEE MEMBERSHIP EFFECTIVE MARCH 14, 2018

Director Independence Audit Compensation Governance

John Barnett ✓ C M

Terry Booth ✓ M

Derek Burney ✓ M C

James Burns

Bernie Kollman ✓ M

Peter Lynch ✓ M M

Karen Prentice ✓ M C

Denis Ryan ✓ M M

AUDIT COMMITTEEThe Audit Committee is currently comprised of four (4) Directors: John Barnett (chair), Peter Lynch, KarenPrentice and Denis Ryan. Karen Prentice was appointed to the Audit Committee on March 14, 2018. Allmembers of the Audit Committee are “financially literate” and “independent” with the meaning of NationalInstrument 52-110 – Audit Committees (“NI 52-110”).

The Audit Committee assists the Board in overseeing and monitoring, among other things: the Company’sfinancial accounting and reporting process; associated risks and internal controls; the independence andperformance of internal and external auditors; and the Company’s compliance with applicable legal andregulatory requirements. The Audit Committee also facilitates communication among the external auditors,the Board and management. The Audit Committee charter provides that the Audit Committee will review and/or approve any other matter specifically delegated to the Audit Committee by the Board. The AuditCommittee is permitted to, but has not, delegated any of its authority to grant pre-approvals to one or moredesignated members of the Audit Committee. More information relating to our Audit Committee can be foundin our Annual Information Form for the year ended December 31, 2017 under the heading “Audit Committee”.

COMPENSATION COMMITTEEThe Compensation Committee is currently comprised of four (4) Directors: Karen Prentice (chair), DerekBurney, Peter Lynch and Bernie Kollman. All members of the Compensation Committee are “independent”with the meaning of NI 52-110.

The Compensation Committee charter provides that the committee’s responsibilities include: thedevelopment of an executive compensation philosophy and guidelines; the oversight of succession planningfor non-CEO officers and Directors; and the review of certain officer and employee compensation. Incollaboration with the Chairman of the Board, the Compensation Committee reviews the CEO’s corporategoals and objectives and evaluates his performance in light of such goals and objectives. The CompensationCommittee also oversees management’s implementation of the Company’s incentive compensation planswith a view to enabling the Company to attract, motivate and retain quality executives and personnel.

GOVERNANCE COMMITTEEThe Governance Committee is currently comprised of four (4) Directors, Derek Burney (chair), John Barnett,Denis Ryan and Terry Booth. All members of the Governance Committee are “independent” within themeaning of NI 52-110.

The Governance Committee charter provides that the committee’s responsibilities include: overseeingsuccession planning for management; monitoring the ongoing development of the Board and its committees;identifying candidates qualified to become Board members; regularly assessing the competencies, skills andbackground of the Board members and the circumstances and needs of the Company; reviewing the



performance and effectiveness of the Board, its committees committee chairs, and Board members; andoverseeing the effectiveness of corporate governance practices and recommending changes whereapplicable.

SPECIAL COMMITTEE ON BUSINESS TRANSFORMATIONThe Special Committee on Business Transformation was established on July 26, 2017 to act on theCompany’s strategic plan endorsed by Shareholders to refocus the Company’s business on its core marketsof Alberta, B.C. and Alaska.

The Special Committee was comprised of five (5) Directors: James Burns (chair), Kenneth Barbet, JohnBarnett, Derek Burney and Peter Lynch. The Special Committee was disbanded on December 15, 2017following the completion of the sale of the fifteen (15) Kentucky stores and the Company’s interest inBirchfield as described under “Shareholder FAQ”.

BOARD AND COMMITTEE MEETINGS

Board and Committees Number of Meetings Held In 2017

Board(1) 18 (9 post 2017 annual meeting)

Audit Committee(1) 4 (2 post 2017 annual meeting)

Compensation Committee(1) 6 (4 post 2017 annual meeting)

Governance Committee(1) 4 (2 post 2017 annual meeting)

Special Committee on Business Transformation 4 (all post 2017 annual meeting)

Special Committee 1 (post 2017 annual meeting)

(1) Including 4 regular meetings in 2017.

Director(1) Board Audit Compensation Governance Special Total

John Barnett 9 of 9(100%)

2 of 2(100%)

– –5 of 5(100%)

100%

Derek Burney 9 of 9(100%)

–4 of 4(100%)

2 of 2(100%)

5 of 5(100%)

100%

James Burns 9 of 9(100%)

1 of 1(100%)

4 of 4(100%)

–5 of 5(100%)

100%

Peter Lynch 17 of 18(94%)

2 of 2(100%)

5 of 6(83%)

–5 of 5(100%)

94%

Karen Prentice 8 of 9(89%)

–4 of 4(100%)

2 of 2(100%)

1 of 1(100%)

94%

Denis Ryan 6 of 6(100%)

2 of 2(100%)

–1 of 1

(100%)– 100%

(1) The Directors presented in the table above are only active Directors who are standing for election at the Meeting and were on theBoard in 2017. For other Directors that served in 2017, please see the following table for their attendance information:



Former Director(1) Board Audit Compensation Governance Total

Kenneth Barbet(2) 9 of 9(100%)

– – – 100%

Stephen Bebis(3) 9 of 9(100%)

– – – 100%

Henry Bereznicki(3) 9 of 9(100%)

2 of 2(100%)

1 of 2(50%)

– 92%

Gary Collins(4) 16 of 18(89%)

4 of 4(100%)

2 of 2(100%)

1 of 2(50%)

88%

Jim Dinning(3) 9 of 9(100%)

2 of 2(100%)

2 of 2(100%)

2 of 2(100%)

100%

Susan Doniz(3) 9 of 9(100%)

–2 of 2(100%)

2 of 2(100%)

100%

Robert Green(3) 9 of 9(100%)

2 of 2(100%)

–2 of 2(100%)

100%

David Margolus3 9 of 9(100%)

–2 of 2(100%)

2 of 2(100%)

100%

Richard Perkins(5) 3 of 3(100%)

– –1 of 1

(100%)100%

Harry Taylor(3) 9 of 9(100%)

2 of 2(100%)

2 of 2(100%)

– 100%

(1) Directors who were on the Board in 2017 but are not standing for election at the Meeting.(2) Mr. Barbet was elected as a Director on June 20, 2017 and resigned on December 14, 2017.(3) Messrs. Bereznicki, Dinning, Green, Margolus, Taylor, Bebis and Ms. Doniz did not stand for re-election in 2017.(4) Mr. Collins resigned as a Director on February 16, 2018.(5) Mr. Perkins was elected as a Director on June 20, 2017 and resigned on August 8, 2017.

IN-CAMERA SESSIONSDirectors who are not members of management meet on a regular basis to discuss matters of interestindependent of any influence from management; whether at standalone meetings or “in camera” at regularlyscheduled meetings. Four (4) of such regular Board meetings of independent Directors were held in 2017. Inaddition, each standing committee of the Board meets at each regularly-scheduled committee meetingwithout management present. Each standing committee held four (4) of such regularly-scheduled meetings in2017. Committees and the Board also hold meetings of independent members at non-regularly scheduledmeetings.

BOARD MANDATEThe Board of Directors has adopted a formal Board mandate, which is attached to this circular as Schedule B.The Board of Directors holds regular meetings to review the business and affairs of the Company and tomake decisions relating thereto. The Board of Directors, in conjunction with management, participates in thestrategic planning process, identifies the principal risks of the business and seeks to implement appropriatesystems to manage these risks, as well as seeking to ensure the integrity of the internal controls andmanagement information systems of the Company. The Board also reviews governance practice, budgets andfinancing, as well as corporate and public disclosure.

BOARD RENEWAL AND DIRECTOR EVALUATIONThe Governance Committee is responsible for establishing procedures for selecting new Directors byregularly evaluating the competencies, skills and background of the Board members while assessing needsof the Company and its subsidiaries.



For 2017, an assessment of the performance of the Board, committees, Board Chairman, committee chairsand individual Directors was undertaken, led by the Governance Committee and Board Chairman. Theseassessments are conducted on an annual basis. The assessment includes in-person interviews on a variety oftopics including the Board’s relationship with management, the relationship and dynamics amongst individualDirectors, contributions of directors, where the Board focuses its time, collaboration on how to improveindividual and collective performance and any perceived gaps in skill sets.

The Company has not adopted a term limit policy or a retirement policy for Directors, as we see term limitsand retirement ages as having a negative impact on the continuity and experience of the Board. The Boardbelieves that renewal is not presently an issue, with all but one existing Director being elected or appointedto the Board in the past year. The Board continues to evaluate the balance of knowledge, new perspectivesand experience of directors using a skill matrix. The Board uses the evaluation and assessment process toreview effectiveness.

POSITION DESCRIPTIONS

Board ChairmanThe Board of Directors has adopted formal terms of reference for the Chairman of the Board. The Chairman’sprimary role is to work with the CEO and the Board to ensure effective relations between them as well as withother stakeholders and the public. The Chairman maintains on-going communications with the CEO to ensurethe responsibilities of the CEO are well understood by the Board. The Chairman also manages the affairs ofthe Board including chairing Board meetings and ensuring that the Board is organized properly, functionseffectively, and properly discharges its obligations and responsibilities.

Committee chairsWhile there are no written terms of reference for each committee chair, each committee has a writtenmandate, which outlines the committee chair position descriptions and to which committee members andchairs must adhere. Each committee chair is expected to provide leadership to enhance committeeeffectiveness and oversee the committee’s discharge of its duties and responsibilities.

Committee chairs must report regularly to the Board.

CEOThe Company has adopted formal terms of reference for the CEO. The CEO’s primary responsibility is toprovide effective leadership and vision and to grow the value of the Company responsibly, in a profitable andsustainable manner. The CEO sets the “tone” for management to foster ethical and responsible decision-making, appropriate management and corporate governance practices, and is the designated externalspokesperson for Liquor Stores.

Ethical Business ConductThe Company has adopted a Code of Business Conduct (the “Code”) which was reviewed and revised in2017. The Code is accessible on the Investor Information section of the Company’s website atwww.liquorstoresna.ca and on SEDAR at www.sedar.com. A paper copy is also available upon request fromthe Chief Financial Officer of the Company. The Code is distributed to and signed by each of the Company’sDirectors, officers and salaried employees when they are on-boarded and policies are in place tocommunicate and confirm critical elements of the Code. In addition, the Company conducts an annualcertification process to monitor compliance with the Code (and other corporate policies) and the CEO reportsthe results of such process to the Board on an annual basis.

In addition to monitoring compliance with the Code, the Company has adopted various corporate policies thatenhance the awareness and importance of ethical business conduct and provide both employees andnon-employees with a mechanism for reporting unethical or questionable acts, including the WhistleblowerPolicy and the Disclosure, Confidentiality and Trading Policy. The chair of the Audit Committee directlyreceives, along with management, any “Whistleblower/Tip Line” complaints. Management presents all suchcomplaints to the Board on a quarterly basis.



Directors and nominees must fully disclose their relationships with the Company and update and providerelevant information annually through a disclosure questionnaire. Further, on a quarterly basis, the Boardreviews and considers any potential conflicts of interest that could interfere with a Director’s exercise of his orher independent judgment. The Board reviews the disclosure questionnaire and relationships having regardto the criteria NI 52-110 and whether any material relationships between a Director and the Company couldreasonably be expected to interfere with the exercise of the Director’s independent judgment.

The Board encourages a culture of ethical conduct by appointing officers of high integrity and monitoringtheir performance so as to set an example for all employees. Given the regulated nature of the Company’sbusiness operations, a culture of compliance is fostered and promoted throughout the entire organization.Management reports to the Board quarterly on all regulatory issues and deviations from material policies,together with action taken to address any issues.

BOARD’S ROLE IN STRATEGIC PLANNING AND RISK OVERSIGHTOur Board considers solid strategic planning and rigorous risk oversight as its two most fundamentalfunctions.

The Board reviews the Company’s corporate strategies and plans on an ongoing basis. Meetings are held bythe Board to assess and approve material transactions involving the Company and/or its subsidiaries, andthose matters which the Board is required to approve under applicable laws, including the payment ofdividends, acquisitions and dispositions of material assets and material expenditures by the Company and itssubsidiaries.

The Board also follows a diligent process for approving long-range business planning, including majoragreements and long-term leases outside the ordinary course of business, in accordance with the policies ofthe Company, including specific approval of entrance into new jurisdictions. On a regular basis, the Boardoversees corporate performance against the Company’s strategic priorities and objectives. The Board alsorequires reasonable assurance from management that the principal risks of the Company’s business,insurance coverages, conduct of material litigation and the effectiveness of internal controls are rigorouslymeasured and controlled. The Board understands that the principal risks of the Company can vary from timeto time, and the Board discusses and closely oversees pertinent risk factors as part of Board meetingagendas.

BOARD AND MANAGEMENT DIVERSITYThe Company recognizes the importance of having a diverse Board of Directors with a range of skills,perspectives and backgrounds, reflective of the Company’s customer and employee demographics both atthe Board level as well as at the senior management level.

While the Company is committed to an inclusive and diverse workplace, we have not yet adopted a formalgender diversity policy. We are taking active steps, as reflected in recent Director appointments, to increasegender diversity on our Board and we have made this a priority during the search process. The Board andGovernance Committee consider all aspects of diversity including gender, age, ethnicity and geographicbackground, in assessing Board composition and potential candidates. The Governance Committee seeks themost qualified candidates who meet the needs of the Company, which includes diversity of backgrounds.Currently the Board has two female Directors, Mses. Karen Prentice and Bernie Kollman, who represent 25%of the current Board and 22% of the nine Director nominees.

The Company is also committed to building gender diversity on the management team. There is a large groupof talented and high-potential females in mid-level and senior management roles throughout the Company. Atthe senior leadership level, we have one female Vice President and one female Senior Vice President, whichrepresents 13% of the senior leadership group. At the management level within our administrative head office,thirty-two (32) management roles are held by females which is 49% of the management team. With continuedprogress being made, the Company does not believe targets or a specific gender diversity policy arenecessary to continue to work towards greater gender diversity in executive officer positions.



DIRECTOR ORIENTATION AND CONTINUING EDUCATIONThe Governance Committee is responsible for developing, monitoring and reviewing our orientation andcontinuing education programs for Directors. The Governance Committee has developed a comprehensiveorientation program, providing new Directors with extensive information on the Company’s business, strategicand operational plans, key documents, operating performance, financial position and the governance systemof the Company and its subsidiaries. In addition, new Directors meet individually with the CEO and othersenior executives to discuss these matters.

After our last annual meeting of Shareholders, individual directors had various meetings with members ofmanagement, and the Board held a special meeting, with management presenting on a number of areasrelevant to the business of the Company.

The orientation program is designed to ensure that Directors (and candidates) understand the role of theBoard, their respective committees and the contribution that individual Directors are expected to make,including personal time commitment. In addition to meetings with members of management, as part of theorientation, Directors participated in tours of our stores as well as our competitors’ stores.

The Chairman of the Board, in consultation with the Governance Committee, monitors and reviews thecontinuing education programs for Directors and ensures that Directors have access to education andinformation.

All Directors are members of the Institute of Corporate Directors and have access to educational toolsprovided by this organization. All Directors are further encouraged to obtain the ICD.D designation granted bythe institute (at the cost of the Company). Karen Prentice and Bernie Kollman have ICD.D designations andseveral Directors participate in ICD continuing education programs. With specific reference to businessoperations, Directors take part in store tours, often held in conjunction with quarterly meetings. In 2017, newmembers to the Board toured the Edmonton area market. Additionally, members of management regularlypresent formally on business initiatives and attend dinners to informally discuss the business with Directorsalongside more formal product knowledge and educational sessions.

SHAREHOLDER ENGAGEMENTThe Company has a core objective of engaging with Shareholders on a frequent basis: (i) to encourage anopen two-way dialogue; and (ii) to build long-term relationships.

During 2017, our Directors and management team met with what management believes were the Company’sfive (5) largest (by number of Shares held) Shareholders on at least a quarterly basis to discuss concerns andareas of improvement in strategic direction and performance to ensure we are aligned with the interests ofShareholders. The Company also met with several Shareholders outside of the top five (5) on severaloccasions during 2017 and responds to other inquiries made by Shareholders as appropriate.

WHISTLEBLOWER POLICYOur Company has adopted a robust whistleblower policy that encourages all Directors, officers, employeesand consultants to promptly report, either orally or in writing to their immediate supervisor, all evidence ofactivity by the Directors, officers, employees or consultants that may constitute questionable accountingpractices, inadequate internal accounting controls, the misleading or coercion of auditors, disclosure offraudulent or misleading financial information, instances of corporate fraud, or any breaches of any lawgoverning the Company’s business and operations. All reports made to supervisors or the Audit Committeechair in respect of matters specifically covered by this policy are reported to the Audit Committee and then tothe Board of Directors.


DIRECTOR COMPENSATIONThe objective of the Company’s Director compensation philosophy is to compensate Directors and committeechairs in a form and amount which is competitive and appropriate for comparable North American companiesand is aligned with the interests of Shareholders, with the intent to attract and retain highly talented andexperienced Directors who are focused on the long-term success of the Company.

Compensation Component Amount ($)

Annual retainer for Board Chairman 120,000

Annual retainer for all other Directors 40,000

Standing committee membership fees:

Audit 6,000

Governance 4,000

Compensation 4,000

Standing committee chair fee:

Audit 12,000

Governance 8,000

Compensation 8,000

Per-meeting attendance fee for Directors other than Board Chairman:

Board in-person meeting/telephone meeting(1) 1,500/1,000

Committee in-person meeting/telephone meeting* 1,500/1,000

Equity compensation componentAmount

(# of DSUs)

DSU grant for Board Chairman 3,000

DSU grant for other Directors 1,000

(1) Compensation for short telephone meetings is at the discretion of the Board Chairman for Board meetings and at the discretion ofthe committee chairs in consultation with Board Chairman for committee meetings.

DEFERRED SHARE UNIT (“DSU”) PLANCertain features of the DSU plan are as follows:

• all non-employee Directors participate in the DSU plan, the purpose of which is to align the interests of theDirectors with those of the Company and Shareholders;

• a DSU entitles the holder to an amount in cash equal to the weighted average closing price of the Shareson the Toronto Stock Exchange (“TSX”) for the five trading days immediately preceding the payment date.The payment date in respect of a DSU is the date the participant ceases to be a Director;

• the number of DSUs to which a participant is entitled is adjusted for the payment of dividends on theShares in accordance with the DSU plan;

• the right to receive DSUs is personal to the Directors and may not be assigned (although Directors mayrequest that settlement payments be issued to other individuals as the Directors may so direct); and

• the Company retains the right to amend, from time to time, or to terminate the terms and conditions of theDSU plan by resolution of the Board of Directors. Any amendments are subject to the prior consent of anyapplicable regulatory bodies.

The compensation policy of the Board allows non-employee Directors to elect to receive any portion of cashfees in DSUs.


DIRECTOR COMPENSATION

DIRECTOR SUMMARY COMPENSATION TABLEThe following table summarizes, for the financial year ended December 31, 2017, the compensation paid orawarded to Directors who sat on the Board during 2017 and are standing for election at the Meeting. Forinformation on other Directors (“Former Directors”), please see “Other information – Summary compensationtable for Former Directors”.

NameCash fees earned

($)DSUs($)(1)

Total($)

John Barnett 8,474 42,269 50,743

Derek Burney 41,558 44,972 86,530

James Burns(2) 9,669 41,874 51,543

Peter Lynch(3) 47,279 41,711 88,990

Karen Prentice 10,380 42,228 52,608

Denis Ryan – 35,128 35,128

(1) Amounts are based on the grant date fair value of the DSUs awarded pursuant to the DSU plan, which consists of an annual DSUgrant and an election to receive a portion of Directors fees each quarter in DSUs rather than cash. Grant date fair values arecalculated by multiplying the weighted average closing price of the Shares on the TSX for the five trading days immediatelypreceding the grant date by the number of DSUs awarded.

(2) The total compensation shown is for the period from June 20, 2017 to December 8, 2017. Following Mr. Burns’ appointment as ViceChair and CEO on December 8, 2017, he no longer receives compensation as a Director. For details of Mr. Burns’ compensation asVice Chair and CEO, please see “Summary compensation table for current NEOs”.

(3) The total compensation shown is for the periods from January 1, 2017 to July 6, 2017 and from August 9, 2017 to December 31, 2017.During his tenure as an interim CEO, Mr. Lynch did not receive compensation as a Director. For details of Mr. Lynch’s compensationas former interim President and CEO, please see “Summary compensation table for former NEOs”.

The Company also reimburses Directors for out-of-pocket expenses in connection with their attendance atBoard meetings. No Directors’ compensation is paid to Directors who are members of management.

OUTSTANDING SHARE-BASED AWARDSThe following table sets forth, for each non-employee Director who sat on the Board during 2017 and isstanding for election at the Meeting, all Share-based awards outstanding (which consisted entirely of DSUs) atDecember 31, 2017. For information regarding Former Directors, please see “Other information – OutstandingShare-based awards for Former Directors”.

Name

Number of Sharesor units of Shares that

have not vested(1)

Market or payout value ofShare-based awards that

have not vested($)

Market or payout value ofvested Share-based awardsnot paid out or distributed

($)(2)

John Barnett — — 43,681

Derek Burney — — 45,945

James Burns(3) — — 43,297

Peter Lynch — — 73,649

Karen Prentice — — 43,628

Denis Ryan — — 36,259

(1) All DSUs vest immediately upon grant.(2) The market or payout value of vested Share-based awards not paid out or distributed was calculated by multiplying the number of

DSUs outstanding at December 31, 2017 by the closing market price of the Shares on the TSX on December 29, 2017 of $10.68.(3) The Outstanding Share-based awards table is for the DSUs that Mr. Burns received during the period from June 20, 2017 to

December 7, 2017 as a Director. Following Mr. Burns’ appointment as Vice Chair on December 8, 2017, he no longer receivescompensation as a Director.


DIRECTOR COMPENSATION

VALUE VESTED OR EARNED DURING THE YEARThe following table provides information, for each non-employee Director who sat on the Board during 2017and is standing for election at the Meeting, on the value that would have been realized upon vesting of Share-based awards during the year ended December 31, 2017. For information regarding Former Directors, pleasesee “Other information – Value vested or earned during the year for Former Directors”.

Name

Share-based awards – Valuevested during the year(1)

($)

John Barnett 42,269

Derek Burney 44,972

James Burns(2) 41,874

Peter Lynch 41,711

Karen Prentice 42,228

Denis Ryan 35,128

(1) All DSUs vest immediately at the time of the grant. Accordingly, the amount presented in the table is equal to the number of DSUsgranted to the Director in 2017 multiplied by the weighted average closing trading price of the Shares on the TSX for the five tradingdays ending immediately preceding the date of grant.

(2) The value vested or earned during the year is shown for the DSUs that Mr. Burns received during the period from June 20, 2017 toDecember 7, 2017 as a Director. Following Mr. Burns’ appointment as Vice Chair on December 8, 2017, he no longer receivescompensation as a Director.

SHARE OWNERSHIP GUIDELINESEffective December 7, 2017, the Board amended Share ownership guidelines for Directors: Directors are nowrequired to hold an aggregate minimum of $100,000 of Shares and DSUs within three (3) years of joining theBoard.

At the date hereof, all of the Directors hold in excess of this minimum requirement with the exception of DenisRyan, Terry Booth and Bernie Kollman, who all joined the Board within the previous eight (8) months.


COMPENSATION DISCUSSION AND ANALYSISThe following provides a detailed discussion of the structure of the Company’s executive compensationprogram, as well as the specific compensation decisions that were made for the fiscal year endedDecember 31, 2017.

NAMED EXECUTIVE OFFICERS OF THE COMPANYThe following compensation discussion and analysis is intended to provide Shareholders with a description ofthe processes and decisions involved in the design, oversight and implementation of the Company’scompensation programs for the named executive officers (“NEOs”). The NEOs during fiscal 2017 were asfollows:

Current NEOs refer to the NEOs who were employed by the Company as at December 31, 2017 and remain employed as of thedate of this circular

Name Title

James Burns Vice Chair and CEO

David Gordey President and Chief Operating Officer(1)

Matthew Rudd Senior Vice President, Chief Financial Officer (“CFO”)

David Crapper Senior Vice President, Marketing

(1) “COO”; and together with the President and Chief Operating Officer of our cannabis division, or our former COO – US, “COOs”.

Former NEOs refer to the NEOs who are not employed by the Company as of the date of this circular

Name Title

Stephen Bebis Former President and CEO (until July 7, 2017)

Ken Barbet Former CEO (August 9, 2017 to December 14, 2017)

Peter Lynch Former Interim President and COO (July 7 to August 8, 2017)

Steve Rop Former Executive Vice President & COO – US (until August 14, 2017)

Lieske Renz Former Senior Vice President, Shared Services (until August 14, 2017)

Richard Perkins Former Senior Vice President, Business Transformation (until February 20, 2018)

COMPENSATION OBJECTIVES & PHILOSOPHYThe objectives and philosophy of the Company’s new compensation strategy are to align long-term incentivecompensation with Share price performance. Shareholders voted for this strategy in June of 2017 and webelieve it is necessary to attract, retain and motivate the quality of key executives who are critical to our long-term success. Consistent with this long-term Shareholder-aligned philosophy, short-term bonuses will bebased on financial performance as well, as other performance factors, that measure our progress against thegoals of growing and diversifying our business.

Our compensation framework is designed to keep things simple and strategic to promote a commonunderstanding for our employees and transparency for Shareholders; and to emphasize a team-basedapproach to our STIP program – operate as a team and win as a team.

COMPENSATION COMMITTEE & COMPENSATIONGOVERNANCECOMPENSATION COMMITTEE CHARTER

The Compensation Committee has the responsibility to develop and recommend to the Board of Directors,policies regarding the total compensation for executives and Directors within the charter of the CompensationCommittee. The Compensation Committee reviews the pay for our non-CEO executive officers with the goalof setting compensation at the levels it believes to be comparable with executives in other similar companies,


COMPENSATION DISCUSSION AND ANALYSIS

but also being mindful of the growth strategy currently in place. Based on this review, the CompensationCommittee is responsible for: reviewing, and recommending for Board approval, target compensation rangesfor our executive officers; reviewing and approving our goals and objectives related to our strategy;evaluating the performance of our executive officers related to those goals and objectives; and approving theactual compensation, perquisites, and other benefits of our executive group. The Compensation Committeeconsiders recommendations from the CEO for cash-based and equity-based compensation for the executivegroup. In addition, the Compensation Committee reviews the performance of the CEO and makes itsrecommendations for the compensation of the CEO, CFO and COOs to the Board.

The Compensation Committee is also responsible for reviewing and recommending to our Board of Directorsnew or potential changes in executive compensation programs; reviewing the various design elements of ourcompensation programs to determine whether any of their aspects encourage excessive or inappropriaterisk-taking by our executive officers; and establishing and periodically reviewing policies for theadministration of our executive compensation programs.

COMPOSITION OF THE COMPENSATION COMMITTEE

The Compensation Committee is currently comprised of (4) Directors: Karen Prentice (chair), Derek Burney,Peter Lynch, and Bernie Kollman. John Barnett was a member of the Compensation Committee as atDecember 31, 2017 but is no longer a member. All members of the Compensation Committee are“independent” as per NI 52-110. All members of the Compensation Committee have had direct experience inexecutive compensation matters by virtue of their past executive and/or board positions with othercompanies (both public and private).

• Ms. Prentice was an Executive Vice-President of ENMAX Corporation, where she was responsible for legalservices, corporate governance, human resources, facilities, environment, health and safety, governmentrelations and corporate communication functions. Additionally, Ms. Prentice has the ICD.D designation fromthe Institute of Corporate Directors.

• Mr. Burney has also served as a compensation committee member and director of Quebecor World,Canwest Global Communications Corp., Moore Wallace Inc., and Shell Canada Limited in the past. In all ofthese positions, Mr. Burney was responsible for working with the board of directors to review and approvetheir respective annual executive compensation programs.

• Mr. Lynch is the former President, CEO and Chairman of the Board, of Winn-Dixie Stores Inc. Mr. Lynch hasalso held the roles of President and Chief Operating Officer and Executive Vice President-Operations withAlbertson’s, Inc. Mr. Lynch currently serves on the board of directors of Retail Properties of America, Inc. (aNYSE listed company) where he is a member of the compensation committee and chairman of thenominating and governance committee.

• Ms. Kollman currently serves on the HR committee of the United Way of the Alberta Capital Region whichestablishes executive compensation, as well through her board experience at Travel Alberta, EdmontonGlobal, Compute Canada and the Edmonton Chamber of Commerce. She has attained the ICD.Ddesignation from the Institute of Corporate Directors.

INDEPENDENT EXECUTIVE COMPENSATION CONSULTANT

The Board of Directors has retained the services of an external consultant to provide independent advice andinformation on:

• The Company’s compensation practices and program design;• Ongoing trends in executive compensation design and governance; and• Any other information in support of evaluating compensation recommendations and making effective

decisions.

In early 2017, the former Compensation Committee engaged Hugessen Consulting (“Hugessen”), anindependent consulting firm, to review and advise on the Company’s compensation framework.



Following the Board change in June 2017, the Compensation Committee retained Kingsdale Advisors(“Kingsdale”) to assist with the development of a new Executive Shareholder Alignment Plan to fulfillShareholders’ wishes expressed at the 2017 annual meeting. Compensation Committee members met withKingsdale on several occasions without members of management present. The new long-term incentive planis supported by Kingsdale as being consistent with the goals and objectives of the Company.

The consulting mandates mentioned above, as well as the associated fees for such mandates werepre-approved by the Compensation Committee. The following table summarizes the fees paid to all externalconsultants in each of the last two completed financial years:

2017 2016

Hugessen

Executive compensation-related fees(1) $ 42,254 $31,499

All other fees(2) nil nil

Kingsdale

Executive compensation-related fees(1) $65,000 nil

All other fees(2) nil nil

(1) Executive compensation-related fees are fees for services related to determining compensation for any of the Company’s Directorsand NEOs.

(2) Fees billed for all services other than executive compensation-related Fees.

The Compensation Committee must pre-approve other services provided to the Company by outsideconsultants at the request of management.

RISK MITIGATION

The Company designed its compensation programs with a view to ensuring that the programs will notpromote unintended behaviors that may be misaligned with Shareholder interests. The Company seeks toensure that, through the structure of its compensation programs, the actions and decisions of its executivesalign with the interests of the Company and its Shareholders. Certain elements of risk mitigation areembedded in compensation processes and executive compensation design, including the following:

PROCESS ELEMENTS

• The Compensation Committee plays a key role in assessing behavioral risk mitigation by reviewing ourcompensation program design, approving compensation awards and analyzing market data annually toensure that our compensation structure incentivizes the intended behaviors. Members of theCompensation Committee (often with all Directors present) typically meet at least four (4) times per year toreview both executive compensation and human resources issues generally.

• Engagement of advisors when appropriate to review executive compensation programs adds third-partyobjectivity and independent information.

COMPENSATION DESIGN ELEMENTS

• The principal design of the new Executive Shareholder Alignment Plan puts all long-term incentivecompensation for the Company’s top 15 executives “at risk” and tied directly to Share price in the form ofShare-based awards under the Company’s Incentive Award Plan. This “at risk” compensation alignsexecutive officer and Shareholder interests by discouraging decisions that are not in the long-term interestsof the Company.

• Pursuant to our policies respecting trading in the Company’s securities, Directors and executive officers arenot permitted to purchase financial instruments (including, for greater certainty, puts, options, calls, prepaidvariable forward contracts, equity swaps, collars or units of exchange funds) that are designed to hedge oroffset a change in the market value of Shares or other securities of the Company held by a Director or anexecutive officer.



• Our Incentive Award Plan provides protection from over-payment due to restated and/or fraudulentfinancial statements through a claw-back (recoupment) provision.

SHAREHOLDING REQUIREMENTSThe Board believes Directors, officers and employees should all have a stake in the future growth of theCompany and that their interests should be aligned with those of our Shareholders.

Going forward, the Company will align the interests of executive officers with the goal of creating long-termsustainable value for Shareholders. Minimum equity ownership levels for executives are as follows: i) CEO,three (3) times base salary; and ii) all other executives at the Senior-Vice President level or higher, one(1) times base salary. Executives have (5) years following commencement of employment to achieve therequired ownership level.

The table below illustrates the shareholdings of our current NEOs.

Named executive

Minimum ShareOwnership (multiple of

base salary)

# of SharesOwned at

December 31,2017

$ Value ofCurrent

Ownership(1)Meets

Guidelines1

James Burns 3x 100,000 1,068,000 Yes

David Gordey 1x 32,714 349,386 Yes

Matthew Rudd 1x 4,508 48,145 In-progress

David Crapper 1x 5,450 58,206 In-progress

(1) Valued based on closing Share price of $10.68 as at December 29, 2017.

EXECUTIVE COMPENSATION COMPONENTS FOR FISCAL 2018A key component of the new strategy implemented by the current Board is to more closely align thecompensation of management with Shareholder return. The current Board also recognized the significantincrease in competition for top-level talent in Alberta, which is expected to become increasingly challengingwith the emergence of retail recreational cannabis. The redesigned compensation philosophy is aimed atretaining key executives and employees and attracting new talent to the Company to achieve the Company’sgrowth strategy by balancing a fair base salary with meaningful incentive plans.

Descriptions of the key attributes of the components of compensation for NEOs are as outlined below:

Base salary – Base salaries established for each of our executive officers are intended to reflect appropriateand fair levels of compensation considering each individual’s responsibilities, experience, performance andexecution in business. The Compensation Committee and the Board reviewed and approved the salaries ofthe CEO, CFO, and COOs of the Company. The base salary review (and any salary adjustments arisingtherefrom) is based on factors such as current market competitive conditions, expectations of the role andindividual effectiveness. In determining the base salaries for all applicable NEOs, with the exception of theCEO, the Compensation Committee considered recommendations as presented by the CEO.



Short-term incentive plan (“STIP”) awards – 2018 NEO STIP award targets and measurements wereapproved by the Compensation Committee. STIP targets for the active NEOs of the Company are as follows:

Current NEO2018 Target STIP(% of base Salary)

James Burns Note 1

David Gordey 50%

Matthew Rudd 40%

Dave Crapper 43%

Note 1 – In lieu of a 2018 STIP award, Mr. Burns has accepted a shareholder alignment bonus where he will receive a cash bonus of$2,500 for each $0.01 increase in Share price above $10.25, using the trailing 30-day volume weighted average price (“VWAP”) of theShares immediately prior to December 31, 2018.

FINANCIAL TARGETS FOR STIP AWARDS

In 2018, the key financial targets for STIP awards will be designed to drive performance in accomplishing thekey milestones and achieving measurable targets to demonstrate significant progress made in 2018 on thepath to the achievement of the Company’s overall strategic plan, which is to restore the Company’s place asthe market leader in retail alcohol sales and establish a market-leading cannabis retail brand.

Following the end of the fiscal year, the CEO will present the Compensation Committee with an assessmentof overall job performance and an opinion as to the attainment of the STIP performance objectives for theCFO and COOs. Although the Compensation Committee takes into account these assessments andrecommendations, the Board determines whether an identifiable target has been met and the Board reservesthe right to make positive or negative adjustments to any STIP payment.

Long-term incentive plan (“LTIP”) awards – In March 2018, the Company made a grant of PerformanceShare Units (“PSUs”) to both current NEOs and other key executives within the organization. The PSUs willvest at the end of a three-year service period and will be settled by issuing Shares to each participant with amultiplier that will vary evenly depending on the 30-day VWAP of the Shares at December 31, 2018, 2019 and2020 (the “Measurement Dates”). A VWAP of the Shares below $12.00 at the Measurement Date will attracta multiplier of 0x, above $12.00 and below $15.00 will attract a multiplier of 0.5x, and above $15.00 will attracta multiplier of 1x. The PSUs are designed to encourage retention of key employees at a critical time in theexecution of the Company’s growth strategy, but also directly align a significant proportion of management’scompensation with increases in Shareholder value. See “Other information – Incentive Award Plan” later inthis circular for further information on the Incentive Award Plan.

EXECUTIVE COMPENSATION COMPONENTS FOR FISCAL 2017The 2017 compensation for the Company’s executives was set by the former Board.

Base salary – Base salaries were established for each executive officer to reflect factors deemed relevant bythe former Compensation Committee.

STIP awards – 2017 NEO STIP award targets and measurements were determined by the formerCompensation Committee. For the executives who remained with the Company as of December 31, 2017, theSenior Vice President and the Chief Financial Officer’s target was 40% of base salary and the President andChief Operating Officer, Liquor’s target was 50% of base salary. In 2017, NEOs had the ability to earn up totwo times (2x) their target STIP award in the event the Company exceeded its targets.

The former Board set individual and corporate performance objectives at the beginning of the year as a basisfor the STIP awards.



FINANCIAL TARGETS FOR STIP AWARDS

In 2017, the key financial targets were related to sales achievement, adjusted operating profit beforeamortization(1) and improvement in inventory turnover. For the purposes of NEO compensation thesemeasures were calculated as follows:

• Sales are the combined total sales for the Company. Excluded from the sales performance target in 2017are items that would unfairly skew the numbers potentially either positively or negatively: foreign exchangeimpact on sales; sales from the new store opened in Norwalk, CT (due to uncertain timing of opening); andsales from our 51% interest in Birchfield and the fifteen (15) stores in Kentucky, which were sold prior to theend of the fiscal year.

• Adjusted Operating Profit before Amortization has been derived by subtracting selling and distributionexpenses and administrative expenses from gross margin. Additional adjustments were made to thefinancial target, which include adjustments for Share-based payment expense, the impact of translating therevenues and expenses of U.S. subsidiaries to Canadian dollars, and certain non-recurring losses andadjusting items. Non-recurring losses and adjusting items may differ from those included in theManagement’s Discussion & Analysis for the year ended December 31, 2017. The measure excluded theoperating profit from our new store opened in Norwalk, CT (due to uncertain timing of opening), and theoperating profit from our 51% interest in Birchfield and the fifteen (15) stores in Kentucky which were soldprior to the end of the fiscal year.

• Inventory turnover is calculated as the cost of goods sold for the year-ended December 31, 2017 divided bythe average inventory levels of our stores in Canada and Alaska on December 31, 2017 and December 31,2016. The result of this calculation is compared to the cost of goods sold for the year-ended December 31,2016 divided by the average inventory levels of our stores in Canada and Alaska on December 31, 2016and December 31, 2015 to determine year-over-year improvement in the ratio.

ACHIEVEMENT OF PERFORMANCE OBJECTIVES IN 2017

The table below provides information regarding the corporate performance measurement categories, metrics,weightings and target performance goals and actual performance outcomes that were reviewed andapproved by the former Compensation Committee for the year ended December 31, 2017. A performanceachievement factor of 0% to 200% was applied to each performance metric, therefore executives could earnfrom 0% to 200% of the corporate performance portion of their annual bonus opportunity.

For 2017, the Company exceeded target performance in inventory turnover ratios. However, the target forsales was partially met and the target for adjusted operating profit before amortization was not met. Refer toour Management’s Discussion & Analysis for the year ended December 31, 2017 for further discussion of theCompany’s sales and operating profit performance, and the factors that put downward pressure on thesemetrics. Overall corporate performance in relation to pre-established targets resulted in a total “Team Goal”achievement multiplier of 62%.

MeasurementWeight

(A)

TargetAchievement

(B)

PayoutMultiplier

(C)

Operating profit(1) 40% 87% 0%

Sales(2) 40% 97% 55%

Inventory turnover(3) 20% 110% 200%

Total Team Goal Achievement Multiplier =(A1 x C1) + (A2 x C2) + (A3 x C3) = 62%

Share-based awards – The Board granted a Share-based award in the form of restricted awards andperformance awards (please see “Other information – Incentive Award Plan”) in 2017. Performance awardsare “cliff” vested on the third anniversary of the grant date to drive long-term Shareholder value.

(1) Please refer to “Non-IFRS financial measures” for more information.



COMPENSATION TABLES AND DISCLOSURES

SUMMARY COMPENSATION TABLE FOR CURRENT NEOS

The table below summarizes the total compensation earned by current NEOs during the last three financialyears ended December 31, 2015, 2016 and 2017. For information about former NEOs, please see “Otherinformation – Summary compensation table for former NEOs”.

Non-Equity IncentivePlan Compensation (C$)

Name andprincipal position Year

Salary(C$)

Share-Based

Awards(C$)(1)

Option-Based

Awards(C$)

AnnualIncentivePlans(2)

Long-termIncentivePlans(3)

All OtherCompensation

(C$)

TotalCompensation

(C$)

James Burns(4)

Vice Chair and CEO2017 13,808 – — 175,723 — — 189,531

David Gordey 2017 254,400 127,200 — 153,864 — — 535,464President and COO 2016 250,800 396,000 — 137,376 — — 784,176

2015 240,000 96,000 — 73,440 — — 409,440

Matthew Rudd(5) 2017 212,687 77,733 — 127,746 — — 418,166Senior Vice 2016 177,691 94,374 — 83,952 — — 356,017President, CFO 2015 161,496 — — 31,174 — — 192,670

David Crapper(6)

Senior VicePresident, Marketing

2017 79,452 200,000 — 20,848 — — 300,300

(1) Amounts are based on the grant date fair value of the restricted awards and performance awards issued to the applicable NEOspursuant to our Incentive Award Plan, which were calculated by multiplying the number of restricted awards and performance awardsgranted to the applicable NEO by the weighted average closing price of the Shares on the TSX for the five trading days immediatelypreceding the grant date.

(2) Consists solely of the Company’s STIP awards earned and included for 2017 performance that were paid in 2018. Similarly, awardsearned and included for 2016 and 2015 were paid in the year following the year in which they were earned. Mr. Rudd and Mr. Gordeywere granted an additional STIP award of $75,000 each in recognition of their efforts in assisting with the transition at the Board andexecutive level in 2017.

(3) Our long-term incentive plan, being the Incentive Award Plan, is Share-based and reflected under Share-based awards.(4) Mr. Burns was appointed as Vice Chair on December 8, 2017 and as CEO on December 15, 2017.(5) Mr. Rudd joined the Company in 2014 and was appointed Senior Vice President and CFO on July 7, 2016.(6) Mr. Crapper joined the Company on August 9, 2017.

OUTSTANDING OPTION-BASED AWARDS AND SHARE-BASED AWARDS FOR CURRENT NEOS

The following table provides information for all Share-based awards outstanding as at December 31, 2017held by current NEOs. The Company does not have any option-based awards outstanding. For informationregarding former NEOs, please see “Other information – Outstanding option-based awards and Share-basedawards for former NEOs”.

Name

Number ofSecurities

UnderlyingUnexercised

options(#)

OptionExercise

Price($)

OptionExpiration

Date

Value ofUnexercisedIn-the-Money

Options($)

Number of Units ofShares That Have

Not Vested(#)

Market orPayout Value

of Share-basedAwards That

Have NotVested(1)

($)

James Burns – – – – – –

David Gordey – – – – 52,406 559,696

Matthew Rudd – – – – 17,261 184,347

David Crapper – – – – 22,447 239,734



(1) The market or payout value of Share-based awards that were outstanding on December 31, 2017 was calculated by multiplying thenumber of restricted awards and performance awards (at an assumed payout multiplier of 1.0x) by the closing price of the Shares onthe TSX on December 29, 2017, being $10.68.

INCENTIVE PLAN AWARDS: VALUE VESTED OR EARNED DURING THE YEAR FOR CURRENT NEOS

The following table provides information for current NEOs regarding the value of Share-based awards whichvested during the year ended December 31, 2017 and the value of non-equity incentive plan compensationearned during the year ended December 31, 2017. The Company does not have any option-based awardsoutstanding. For information regarding former NEOs, please see “Other information – incentive plan awards:Value vested or earned during the year for former NEOs”.

Name

Option-based Awards– Value Vested

During the Year ($)

Share-basedAwards – ValueVested Duringthe Year ($)(1)

Non-equity IncentivePlan Compensation –Value Earned During

the Year ($)(2)

James Burns – – 175,723

David Gordey(3) – 142,076 153,864

Matthew Rudd – 15,155 127,746

David Crapper – – 20,848

(1) Value of Share-based awards vested during the year is equal to the number of restricted awards that vested multiplied by the volumeweighted average trading price of the Shares for the five days ending on the applicable vesting date. No performance awards vestedduring 2017.

(2) Non-equity incentive plan compensation consists of amounts earned by the NEO for the 2017 fiscal year pursuant to the STIP.(3) In addition to the above, Mr. Gordey had 12,633 PSUs that vested in 2017 but will not settle until November 14, 2019 (or earlier at

Mr. Gordey’s option), with a value that will depend on a 20-day VWAP of Shares that will trigger a multiplier between 0.5x (alreadyachieved) up to a maximum of 2.0x the number of Shares awarded in exchange for each PSU unit.

TERMINATION AND CHANGE OF CONTROL BENEFITS

The current NEOs have written employment agreements which provide for certain payments in connectionwith a termination without cause or in the event of a change of control.

James Burns – Vice Chair and CEO. The employment agreement with Mr. Burns is for an indefinite term andmay be terminated by Mr. Burns upon 60 days’ notice. If the Company terminates Mr. Burns’ employmentwithout cause, it will pay Mr. Burns in accordance with the following:

i) if such termination occurs within twenty-four (24) months of service, a lump-sum cash payment equal tosix (6) months of his base salary and:

(A) where the termination occurs on or before December 31, 2018, any Shareholder alignment bonus($2,500 for every $0.01 increase in the Share price between the closing price of the Shares onDecember 8, 2017, being $10.25, and the volume weighted average closing price of the Shares forthe 30 day period immediately prior to December 31, 2018, or such earlier date as expresslyprovided for by his employment agreement, less required statutory deductions) accrued to the dateof termination; or

(B) where the termination occurs after December 31, 2018, one half (0.5x) of any target bonus granted toMr. Burns at the sole discretion of the Board under the STIP; and

ii) if such termination occurs after twenty- four (24) months of service, a lump-sum cash payment equal toone times (1x) of any target STIP award.

Mr. Burns is entitled to a payment in the event of a change of control if, within twelve (12) months followingsuch change of control, Mr. Burns has terminated his employment agreement as a result of experiencing amaterial diminution in his position, duties, responsibilities, or base salary. In the event of this occurrence, theCompany must pay Mr. Burns an amount equal to what he is paid if terminated without cause. Theemployment agreement contains confidentiality, non-competition, and non-solicitation covenants by



Mr. Burns, which continue for six (6) months to twenty-four (24) months following cessation of employmentdepending on the date of the cessation.

David Gordey – President and COO, Liquor. The employment agreement with Mr. Gordey is for an indefiniteterm and may be terminated by Mr. Gordey upon 60 days’ notice. If the Company terminates Mr. Gordey’semployment without cause, it will pay Mr. Gordey an amount equal to: one times (1.0x) his annual base salaryat the time of termination, one times (1.0x) his target STIP award, and an amount equal to 25% of his annualbase salary in lieu of benefits and perquisites. Mr. Gordey is entitled to a payment in the event of a change ofcontrol if, within twelve (12) months following such change of control, Mr. Gordey has terminated hisemployment agreement as a result of experiencing a material diminution in his position, duties,responsibilities, or base salary or a material diminution in the authority, duties, or responsibilities of thesupervisor to whom he reports. In the event of this occurrence, the Company must pay Mr. Gordey an amountequal to what he is paid if terminated without cause. The employment agreement contains confidentiality,non-competition, and non-solicitation covenants by Mr. Gordey, which continue for twenty-four (24) monthsfollowing cessation of employment.

Matthew Rudd – Senior Vice President and CFO. The employment agreement with Mr. Rudd is for anindefinite term and may be terminated by Mr. Rudd upon 60 days’ notice. If the Company terminatesMr. Rudd’s employment without cause, it will pay him an amount equal to one times (1.0x) his annual basesalary at the time of termination. The employment agreement contains confidentiality, non-competition, andnon-solicitation covenants by Mr. Rudd, which continue for twenty-four (24) months following cessation ofemployment. Mr. Rudd’s employment agreement does not have a change of control provision.

David Crapper – Senior Vice President, Marketing. The employment agreement with Mr. Crapper is for anindefinite term and may be terminated by Mr. Crapper upon 30 days’ notice. If the Company terminatesMr. Crapper’s employment without cause, it will pay him an amount equal to: one half (0.5x) his annual basesalary and target STIP award at the time of termination, if the termination occurs within twelve (12) months ofservice; or one times (1.0x) his annual base salary and target STIP award, if such termination occurs aftertwelve (12) months of service. Mr. Crapper is entitled to a payment in the event of a change of control, if withintwelve (12) months following such change of control, Mr. Crapper has terminated his employment agreementas a result of experiencing a material diminution in his position, duties, responsibilities (unless otherwisepermitted), or base salary. In the event of this occurrence, the Company must pay Mr. Crapper an amountequal to what he is paid if terminated without cause. The employment agreement contains confidentiality,non-competition, and non-solicitation covenants by Mr. Crapper, which continue for twelve (12) monthsfollowing cessation of employment.



The Company’s Incentive Award Plan also has termination and change of control provisions that provide for“double-triggered” acceleration of the vesting of outstanding unvested awards in connection with a change ofcontrol and immediate vesting of such awards in connection with a termination without cause (please see“Other information – Incentive Award Plan”).

NEO

Terminationwithout Cause(1)

($)

Termination or Resignationfor Good Reason Following

a Change of Control(1)

($)

James BurnsLump-Sum Payment 180,000 180,000Accelerated Incentive Awards Vesting – –Total 180,000 180,000

David GordeyLump-Sum Payment 445,200 445,200Accelerated Incentive Awards Vesting – 559,696Total 445,200 1,004,896

Matthew RuddLump-Sum Payment 220,000 –Accelerated Incentive Awards Vesting – 184,347Total 220,000 184,347

David CrapperLump-Sum Payment 142,500 142,500Accelerated Incentive Awards Vesting – –Total 142,500 142,500

(1) Assuming each of the NEOs listed here ceased to be employed by the Company on December 31, 2017, as a result of terminationwithout cause or in the event of a change of control. Except as described above, there is no compensatory plan, contract, orarrangement where an NEO is entitled to receive a payment in the event of a termination, change of control or resignation.

PERFORMANCE GRAPH

The Shares trade on the TSX. The following chart compares the cumulative total Shareholder return,assuming the reinvestment of dividends, for the five-year period from January 1, 2013 to December 31, 2017for a $100 investment in the Shares effective January 1, 2013, with the cumulative total return from the S&P/TSX Consumer Staples Index and the S&P/TSX Composite Index:

2013 2013 2014 2015 2016 2017

$0

$50

$100

$150

$200

$250

$300

LIQ S&P/TSX Composite S&P/TSX Consumer Staples



Performance Graph Values

BasePeriod January 1, December 31,

2013 2013 2014 2015 2016 2017

LIQ $100.00 $ 80.83 $ 96.32 $ 57.13 $ 75.94 $ 79.71

S&P/TSX Composite $100.00 $ 112.98 $124.90 $ 114.50 $ 138.64 $ 151.22

S&P/TSX Consumer Staples $100.00 $123.46 $183.09 $204.01 $222.49 $239.59

Source: Bloomberg

COMPARISON OF CUMULATIVE TOTAL RETURN

From January 1, 2013 to December 31, 2017, the price of the Shares decreased by 20.3% while the S&P/TSXComposite Index and S&P/TSX Consumer Staples increased by 51.2% and 139.6% respectively.

In 2017, through the transition in leadership and strategy of the Company, the Company began seeing anincrease in total Shareholder return. Due to the change in several of NEOs in 2017, as a result of thesestrategic changes, our compensation paid in 2017 is not directly comparable with the previous year. Thecompensation philosophy for 2018 is to have a significant proportion of the compensation of the NEOs in theform of PSUs granted under the LTIP. This reinforces the Compensation Committee’s and the Board’scommitment to ensure alignment of compensation of management with total Shareholder return.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table summarizes information with respect to securities authorized for issuance under theIncentive Award Plan, the Company’s only equity compensation plan, as at December 31, 2017.

Number ofsecurities to be

issued uponexercise of

outstandingoptions,

warrants andrights

Weightedaverageexerciseprice of

outstandingoptions,warrants

and rights

Number ofsecuritiesremaining

available forfuture issuances

under equitycompensation

plans (excludingsecurities

reflected incolumn (a))

Plan Category (a) (b) (c)

Equity compensation plans approved by security holders 180,523(1) N/A(2) 1,209,055(3)

Equity compensation plans not approved by security holders N/A N/A N/A

(1) Represents Shares issuable pursuant to outstanding awards under the Company’s Incentive Award Plan. At December 31, 2017, therewere 58,201 Shares issuable pursuant to outstanding restricted awards and 122,322 Shares issuable pursuant to outstandingperformance awards (assuming a payout multiplier of 1.0x).

(2) The restricted and performance awards granted under the Incentive Award Plan do not have an exercise price. Rather, they vest andare settled in cash, Shares or a combination thereof at predetermined dates, with the value of any cash settlement determined basedon the weighted average trading price of the Shares for the five trading days immediately preceding such date.

(3) Represents 5% of the issued and outstanding Shares, less the number of Shares issuable pursuant to outstanding restricted andperformance awards, in each case as at December 31, 2017.



BURN RATE

The following table discloses the annual burn rate for each of the three most recently completed fiscal yearsfor the Incentive Award Plan.

The burn rate for a given period is calculated by dividing the number of Share unit awards granted duringsuch period by the weighted average number of Shares outstanding during such period. A payout multiplierof 0.0x-2.0x has been assigned to PSUs for each annual grant.

Burn Rate

Period 0x 1x 2x

2015 0.20% 0.44% 0.68%

2016 0.65% 1.10% 1.55%

2017 0.34% 1.04% 1.74%


OTHER INFORMATIONINCENTIVE AWARD PLAN

The purpose of the Incentive Award Plan is to: (i) attract and retain qualified Directors, officers, employees andother eligible service providers of the Company and its subsidiaries (a “Service Provider”); (ii) promote aproprietary interest in the Company by such Service Providers; and (iii) to focus on the growth and profitabilityof the Company. Incentive-based compensation is an integral component of the Company’s compensationdesign. The attraction and retention of qualified Service Providers has been identified as one of the key risksto our long-term strategic growth plan and the Incentive Award Plan ensures a competitive response to thisrisk. In addition, this incentive-based compensation rewards Service Providers for meeting pre-defined goalswhich result in increased long-term total Shareholder return.

OVERVIEW

Under the terms of the Incentive Award Plan, any Service Provider may be granted restricted awards orperformance awards (collectively, “Incentive Awards”). In determining the Service Providers to whomIncentive Awards may be granted (“Grantees”), the number of the Shares to be covered by each IncentiveAward and the allocation of the Incentive Award between restricted awards and performance Awards, theCompensation Committee may take into account any one or more of the following factors:

a) The duties, responsibilities, position and seniority of the Grantee;

b) The corporate performance measures for the applicable period compared with internally establishedperformance measures approved by the Compensation Committee and/or similar performance measuresof members of the peer comparison group or among other comparison groups for such period;

c) The individual contributions and potential contributions of the Grantee to the success of the Company;

d) Any bonus payments paid or to be paid to the Grantee in respect of his or her individual contributionsand potential contributions to the success of the Company;

e) The fair market value or current market price of the Shares at the time of such Incentive Award;

f) Any Incentive Awards currently held by the Grantee; and

g) Such other factors as the Compensation Committee shall deem relevant in its sole discretion inconnection with accomplishing the purposes of the Incentive Award Plan.

RESTRICTED AWARDS

Subject to the terms and conditions of the Incentive Award Plan, restricted awards entitle the holder to anamount (the “Restricted Award Value”) equal to the number of restricted awards multiplied by the fair marketvalue of the Shares on the Restricted Award Payment Date (as hereinafter defined), with the “fair marketvalue” being the volume weighted average trading price of the Shares on the TSX for the five (5) trading daysimmediately preceding such date. Unless otherwise determined by the Compensation Committee, one-thirdof the aggregate Restricted Award Value shall be paid or settled on each of the first, second and thirdanniversary of the date of grant of the Restricted Awards (the “Restricted Award Payment Dates”).

PERFORMANCE AWARDS

Subject to the terms and conditions of the Incentive Award Plan, performance awards entitle the holder to anamount (the “Performance Award Value”) equal to the number of performance awards, adjusted by thepayout multiplier, and multiplied by the fair market value of the Shares on the Performance Award PaymentDate (as hereinafter defined). Unless otherwise determined by the Compensation Committee, the aggregatePerformance Award Value shall be paid or settled on the third anniversary of the date of grant of theperformance awards (the “Performance Award Payment Date”). Prior to the amendment and restatement ofthe Incentive Award Plan in April 2017, performance awards vested, or the Performance Award Valueotherwise became payable, as to one-third on each of the first, second and third anniversaries of the date ofgrant unless otherwise determined by the Compensation Committee at the time of grant.


OTHER INFORMATION

The payout multiplier is determined by the Compensation Committee based on an assessment of theachievement of pre-defined corporate performance measures in respect of the applicable period asdetermined by the Compensation Committee. Corporate performance measures may include: absolute orrelative total Shareholder return; the market price of the Shares; the financial performance or results of theCompany or a business unit or division thereof; other operational or performance criteria relating to theCompany or a business unit or division thereof; activities related to the growth of the Company or a businessunit or division thereof; the execution of our strategic plan; other performance criteria relating to the Grantee;and such additional measures as the Compensation Committee shall consider appropriate in thecircumstances. The payout multiplier may not be less than 0% or more than 200% of the underlying numberof performance awards granted.

METHOD OF PAYMENT OF AWARD VALUE

On the payment date of an Incentive Award, the Company shall have the option of settling the RestrictedAward Value or Performance Award Value, as the case may be, payable in respect of the Incentive Award byany of the following methods or by a combination of such methods:

a) payment in cash

b) delivering Shares issued from the treasury of the Company; or

c) delivering Shares acquired by the Company or its agents on the TSX.

In 2017, 54,651 Shares (representing approximately 0.20% of the issued and outstanding Shares) were issuedfrom treasury in settlement of outstanding Incentive Awards.

DIVIDENDS AND DIVIDEND EQUIVALENTS

The Incentive Award Plan provides for cumulative adjustments to the Incentive Awards to take into accountthe payment of dividends on the underlying Shares. Unless otherwise determined by the CompensationCommittee, immediately prior to a Payment Date the number of Incentive Awards to which such payment dateapplies will be adjusted by multiplying the Incentive Awards by the adjustment ratio, which shall initially beone, and shall be cumulatively adjusted thereafter on each dividend payment date by increasing it by anamount equal to a fraction having as its numerator the amount of the dividend per Share and having as itsdenominator the price, expressed as an amount per Share, paid by participants in the Company’s dividendreinvestment plan, if any, to reinvest their dividends in additional Shares on the applicable dividend paymentdate, provided that if the Company has suspended the operation of such plan or does not have such a plan,then the reinvestment price shall be equal to the fair market value of the Shares on the trading dayimmediately preceding the dividend payment date.

In the case of a non-cash dividend, including Shares or other securities or other property, the Company will,subject to any required approval of the TSX, determine whether or not such non-cash dividend will beprovided to the Incentive Award holder and, if so provided, the form in which it shall be provided.

LIMITATION ON THE SHARES RESERVED

The Incentive Award Plan provides that the maximum number of Shares reserved for issuance from time totime pursuant to Incentive Awards and pursuant to any other security-based compensation arrangements ofthe Company shall not exceed 5% of the aggregate number of issued and outstanding Shares from time totime. For purposes of such calculation, it shall be assumed that all issued and outstanding Incentive Awardswill be settled by the issuance of Shares from treasury, notwithstanding the Company’s right to settle theaward value underlying the Incentive Awards in cash or by purchasing Shares on the open market.

LIMITATIONS ON INCENTIVE AWARDS

The aggregate number of Shares issuable to insiders at any time, or issued to insiders within any one-yearperiod, under all security-based compensation arrangements of the Company, shall not exceed 5% (10% priorto the amendment and restatement of the Incentive Award Plan in April 2017) of the issued and outstandingShares. Incentive Awards may not be granted to non-management Directors.


OTHER INFORMATION

PAYMENT DATES

If (i) a Grantee is prohibited from trading in securities of the Company as a result of the imposition by theCompany of a trading blackout (a “Blackout Period”), (ii) the payment date of an Incentive Award held by suchGrantee falls within a Blackout Period, and (iii) the Company has determined to settle the Award Value inShares, then the payment date of such Incentive Award shall be extended to the date that is ten businessdays following the end of such Blackout Period.

CHANGE OF CONTROL

In the event a Grantee is terminated in connection with a change of control of the Company or gives noticethat it elects to no longer be a Service Provider for Good Reason, unless otherwise determined by theCompensation Committee, the payment date(s) applicable to the Grantee’s Incentive Awards will beaccelerated to the date of such termination or the date of such notice.

EARLY TERMINATION EVENTS

Pursuant to the Incentive Award Plan, unless otherwise determined by the Compensation Committee orunless otherwise provided in an Incentive Award agreement pertaining to a particular Incentive Award or anywritten employment or consulting agreement governing a Grantee’s role as a Service Provider, the followingprovisions shall apply in the event that a Grantee ceases to be a Service Provider:

a) Death – If a Grantee ceases to be a Service Provider as a result of the Grantee’s death, the payment datefor all the Incentive Awards awarded to such Grantee shall be accelerated to the cessation date,provided that the President and Chief Executive Officer of the Company in the case of a Grantee who isnot an officer, and the Compensation Committee in all other cases, taking into consideration theperformance of such Grantee and the performance of the Company since the date of grant of theIncentive Award(s), may determine in its sole discretion the payout multiplier to be applied to anyPerformance Awards held by the Grantee.

b) Termination for Cause – If a Grantee ceases to be a Service Provider as a result of termination for cause,effective as of the cessation date all outstanding Incentive Awards, whether restricted awards orperformance awards, shall be immediately terminated and all rights thereunder shall be forfeited by theGrantee.

c) Voluntary Resignation – If a Grantee ceases to be a Service Provider as a result of a voluntaryresignation, effective as of the day that is fourteen (14) days after the cessation date, all outstandingIncentive Awards of such Grantee, whether restricted Awards or performance awards, shall beterminated and all rights thereunder shall be forfeited by the Grantee.

d) Other Termination – If a Grantee ceases to be a Service Provider for any reason other than as providedfor in (a), (b) and (c) above, effective as of the date that is sixty (60) days after the cessation date andnotwithstanding any other severance entitlements or entitlement to notice or compensation in lieuthereof, all outstanding Incentive Awards of such Grantee, whether restricted awards or performanceawards, shall be terminated and all rights thereunder shall be forfeited by the Grantee.

ANTI-DILUTION ADJUSTMENTS

In the event: (i) of any change in the Shares through subdivision, consolidation, reclassification, amalgamation,merger or otherwise; (ii) that any rights are granted to all Shareholders to purchase Shares at pricessubstantially below the fair market value; or (iii) that, as a result of any recapitalization, merger, consolidationor other transaction, the Shares are converted into or exchangeable for any other securities, then, in any suchcase, the Board may, subject to any required approval of the TSX, make such adjustments to the IncentiveAward Plan, to any Incentive Awards and to any Incentive Award agreements outstanding under the IncentiveAward Plan as the Board may, in its sole discretion, consider appropriate in the circumstances to preventdilution or enlargement of the rights granted to Grantees thereunder.

ASSIGNMENT

Except in the case of death, no assignment, sale, transfer, pledge or charge of an Incentive Award, whethervoluntary, involuntary, by operation of law or otherwise, vests any interest or right in such Incentive Award


OTHER INFORMATION

whatsoever in any assignee or transferee and, immediately upon any assignment, sale, transfer, pledge orcharge or attempt to assign, sell, transfer, pledge or charge, such Incentive Award shall terminate and be ofno further force or effect.

RIGHTS AS A SHAREHOLDER

Until the Shares issuable in settlement of an Incentive Award have been issued in accordance with the termsof the Incentive Award Plan, the Grantee shall not possess any rights of ownership of such Shares including,for greater certainty and without limitation, the right to receive dividends on such Shares and the right toexercise voting rights in respect of such Shares. Such Grantee shall only be considered a Shareholder inrespect of such Shares when such issuance has been entered upon the records of the duly authorizedtransfer agent of the Company.

RECOUPMENT POLICY

Under the recoupment provisions of the Incentive Award Plan, the Board may, at its sole discretion, require orseek the reimbursement, return or recovery from a Grantee of all or a portion of an Incentive Award grantedor awarded to such Grantee or the cash or Shares paid or delivered to such Grantee in settlement of theAward Value of an Incentive Award where:

a) the amount or number of Incentive Awards granted or awarded to the Grantee or the Award Valuethereof (the “Incentive Compensation”) was calculated based upon, or contingent on, the achievementof certain financial results that were subsequently the subject of or affected by a restatement of all or aportion of Liquor Stores’ financial statements;

b) the Grantee engaged in gross negligence, intentional misconduct or fraud that caused or partially causedthe need for the restatement; and

c) the Incentive Compensation amount granted, awarded, paid or delivered to the Grantee would havebeen lower had the financial results been properly reported.

AMENDMENT AND TERMINATION OF PLAN

The Incentive Award Plan and any Incentive Awards granted pursuant thereto may, subject to any requiredapproval of the TSX, be amended, modified or terminated by the Board without the approval of Shareholders;provided that the Incentive Award Plan or any Incentive Award may not be amended without Shareholderapproval to:

a) increase the percentage of Shares reserved for issuance pursuant to Incentive Awards in excess of thelimit currently prescribed;

b) extend the payment date of any Incentive Awards issued under the Incentive Award Plan beyond thelatest payment date specified in the Incentive Award (other than as permitted by the terms andconditions of the Incentive Award Plan) or extend the term beyond the original expiry date;

c) increase or remove the limitations on the granting of Incentive Awards described above under“Limitations on Incentive Awards”; and

d) change the amending provision of the Incentive Award Plan.

In addition, no amendment to the Incentive Award Plan or any Incentive Awards granted pursuant theretomay be made without the consent of a Grantee if it adversely alters or impairs the rights of such Grantee inrespect of any Incentive Award previously granted to such Grantee under the Incentive Award Plan.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERSAGGREGATE INDEBTEDNESSOther than “routine indebtedness”, there is no indebtedness outstanding on the date hereof owed to (i) theCompany or any of its subsidiaries, or (ii) another entity where that indebtedness is the subject of a guarantee,support agreement, letter of credit or other similar arrangement or understanding provided by the Companyor any of its subsidiaries, by any present or Former Directors, executive officers and employees, as applicable,of the Company and its subsidiaries.


OTHER INFORMATION

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS UNDER SECURITIES PURCHASE ANDOTHER PROGRAMSSince the commencement of the Company’s most recently completed financial year, there has been noindebtedness (other than routine indebtedness) owed to (i) the Company or any of its subsidiaries, or(ii) another entity where such indebtedness is or has been the subject of a guarantee, support agreement,letter of credit or other similar arrangement or understanding provided by the Company or any of itssubsidiaries, by any individual who is, or at any time during our most recently completed financial year was, aDirector or executive officer of the Company, a proposed nominee for election as a Director of the Company,or an associate of any such Director, executive officer or proposed Director.

INTEREST OF INFORMED PERSONS IN MATERIALTRANSACTIONSNone of the directors or officers of the Company or, to the knowledge of the directors and officers of theCompany, any of their respective associates or affiliates, has any material interest, direct or indirect, by way ofbeneficial ownership of securities or otherwise in any matter to be acted upon at the Meeting, other than inconnection with the Additional Aurora Investment. Terry Booth is the President, Chief Executive Officer and adirector of Aurora, the indirect parent company of the Investor.

MANAGEMENT CONTRACTSThere are no management functions of the Company or any of its subsidiaries that are to any substantialdegree performed by a person other than the Directors or executive officers, as applicable, of the Companyor the subsidiary.

INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTEDON AT THE MEETINGNone of the Directors or officers of the Company or, to the knowledge of the Directors and executive officersof the Company, any of their respective associates or affiliates, has any material interest, direct or indirect, byway of beneficial ownership of securities or otherwise in any matter to be acted upon at the Meeting, otherthan in connection with the Additional Aurora Investment (as detailed in Schedule A), with the exception ofthe following: Director nominees Terry Booth is the CEO, Co-founder and a Director and Mr. Neil Belot is theChief Global Business Development Officer at Aurora, the indirect parent company of the Investor.

SUMMARY COMPENSATION TABLE FOR FORMER DIRECTORSThe following table summarizes, for the financial year ended December 31, 2017, the compensation paid orawarded to Former Directors.

NameCash fees earned

($)Share-basedawards ($)(1) Total ($)

Kenneth Barbet(2) 8,201 1,798 9,999

Henry Bereznicki(4) 58,000 4,905 62,905

Gary Collins(3) 75,024 34,614 109,638

Jim Dinning(4) 90,000 14,724 104,724

Susan Doniz(4) 37,500 4,905 42,405

Rob Green(4) 50,750 15,155 65,905

David Margolus(4) 44,500 4,905 49,405

Richard Perkins(5) 9,916 3,921 13,837

Harry Taylor(4) 13,000 29,905 42,905


OTHER INFORMATION

(1) Amounts are based on the grant date fair value of the DSUs awarded pursuant to the DSU plan, which was calculated by multiplyingthe weighted average closing price of the Shares on the TSX for the five trading days immediately preceding the grant date by thenumber of DSUs awarded.

(2) The total compensation shown is for the period June 20 – August 8, 2017. Following Mr. Barbet’s appointment as President and CEOon August 9, 2017, he no longer received compensation as a Director. For details of Mr. Barbet’s compensation as President andCEO, please see “Other Information – Summary compensation table for former NEOs”.

(3) Mr. Collins resigned as Director effective on February 16, 2018.(4) Messrs. Dining, Bereznicki, Green, Taylor, Margolus and Ms. Doniz did not stand for re-election at the 2017 annual meeting.(5) The total compensation shown is for the period from June 20, 2017 to August 7, 2017. Following Mr. Perkins’ appointment as SVP,

Business Transformation on August 8, 2017, he no longer received compensation as a Director. For details of Mr. Perkins’compensation as SVP, Business Transformation, please see “Other Information – Summary compensation table for former NEOs”.

OUTSTANDING SHARE-BASED AWARDS FOR FORMERDIRECTORSThe following table summarizes for each of the Former Directors, all Share-based awards outstanding atDecember 31, 2017.

Name

Number of Sharesor units of Shares that

have not vested(1)

Market or payout value ofShare-based awards that

have not vested($)

Market or payout value ofvested Share-based awardsnot paid out or distributed

($)(2)

Kenneth Barbet(3) – – –

Henry Bereznicki(4) – – –

Gary Collins(5) – – 346,214

Jim Dinning(4) – – –

Susan Doniz(4) – – –

Rob Green(4) – – –

David Margolus(4) – – –

Richard Perkins(6) – – –

Harry Taylor(4) – – –

(1) All DSUs vest immediately upon grant.(2) The market or payout value of vested Share-based awards not paid out or distributed was calculated by multiplying the number of

deferred Shares outstanding at December 31, 2017 by the closing market price of the Shares on the TSX on December 29, 2017 of$10.68.

(3) Effective December 14, 2017, Mr. Barbet resigned as the CEO and a Director of the Company.(4) Messrs. Dining, Bereznicki, Green, Taylor, Margolus and Ms. Doniz did not stand for re-election at the 2017 annual meeting.(5) Mr. Collins resigned as a Director effective on February 16, 2018.(6) Mr. Perkins served as a director for the period from June 20, 2017 to August 7, 2017. Following Mr. Perkins’ appointment as SVP,

Business Transformation on August 8, 2017, he no longer received compensation as a Director.


OTHER INFORMATION

VALUE VESTED OR EARNED DURING THE YEAR FOR FORMERDIRECTORSThe following table provides information for each of the Former Directors on the value that would have beenrealized upon vesting of Share-based awards during the year ended December 31, 2017.

Name

Share-based awards – Valuevested during the year(1)

($)

Kenneth Barbet(2) 1,798

Henry Bereznicki(3) 4,905

Gary Collins(4) 34,614

Jim Dinning(3) 14,724

Susan Doniz(3) 4,905

Rob Green(3) 15,155

David Margolus(3) 4,905

Richard Perkins(5) 3,921

Harry Taylor(3) 29,905

(1) All DSUs vest immediately at the time of the grant. Accordingly, the amount presented in the table is equal to the number of DSUsgranted to the Director in 2017 multiplied by the weighted average closing trading price of the Shares for the five trading days endingimmediately preceding the date of grant.

(2) Effective December 14, 2017, Mr. Barbet resigned as the CEO and a Director of the Company.(3) Messrs. Dining, Bereznicki, Green, Taylor, Margolus and Ms. Doniz did not stand for re-election at the 2017 AGM.(4) Mr. Collins resigned as Director effective on February 16, 2018.(5) Mr. Perkins served as a director for the period from June 20, 2017 to August 7, 2017. Following Mr. Perkins’ appointment as SVP,

Business Transformation on August 8, 2017, he no longer received compensation as a Director.


OTHER INFORMATION

SUMMARY COMPENSATION TABLE FOR FORMER NEOSThe table below summarizes the total compensation earned by former NEOs during the last three financialyears ended December 31, 2015, 2016 and 2017.

Non-Equity IncentivePlan Compensation (C$)

Name andprincipal position Year

Salary(C$)

Share-Based

Awards(C$)(1)

Option-Based

Awards(C$)

AnnualIncentivePlans(2)

Long-termIncentivePlans(3)

All OtherCompensation(4)

(C$)

TotalCompensation

(C$)

Stephen Bebis 2017 459,704 893,662 – – – 5,336,065 6,689,431Former President and 2016 886,958 880,459 – 721,632 – 182,673 2,671,722Chief Executive Officer 2015 849,790 813,242 – 513,153 – 180,121 2,356,306

Ken Barbet(5) 2017 140,274 385,000 – – – 342,500 867,774Former President andChief Executive Officer

Peter Lynch(6) 2017 63,150 – – – – – 63,150Former Interim President andChief Executive Officer

Steve Rop 2017 224,328 182,170 – – – 1,112,440 1,518,938Former Executive Vice President 2016 356,489 435,455 – 196,136 – 38,640 1,026,720and Chief Operating Officer – U.S. 2015 326,842 125,114 – 105,262 – 557,218

Lieske Renz 2017 200,283 130,115 – – – 490,268 820,666Former Senior Vice President, 2016 318,279 120,937 – 140,091 – – 579,307Shared Services 2015 290,786 110,100 – 93,979 – – 494,865

Richard Perkins(7) 2017 111,233 280,000 – – – – 391,233Former Executive Vice President,Business Transformation

(1) Amounts are based on the grant date fair value of the restricted awards and performance awards issued to the applicable NEOspursuant to our Incentive Award Plan, which were calculated by multiplying the number of Restricted Awards and PerformanceAwards granted to the applicable NEO by the weighted average closing price of the Shares on the TSX for the five trading daysimmediately preceding the grant date.

(2) Consists solely of the Company’s STIP awards earned and included for 2016 and 2015 were paid in the year following the year inwhich they were earned.

(3) Our long-term incentive plan, being the Incentive Award Plan, is Share-based and reflected under Share-Based Awards.(4) Mr. Bebis ceased to be the President and CEO on July 7, 2017 and he received a cash severance payment of $5,255,702. Mr. Barbet

was the former CEO from August 9, 2017 to December 14, 2017 and he received a cash payment of $337,500 in connection with hisemployment agreement. Mr. Rop ceased to be the Executive Vice President and COO – U.S. on August 14, 2017 and he received acash severance payment of $1,107,122. Mr. Renz ceased to be the Senior Vice President, Shared Services on August 14, 2017 and hereceived a cash severance payment of $488,144.

(5) Mr. Barbet was the former CEO from August 9, 2017 to December 14, 2017.(6) Mr. Lynch was the Interim President and CEO from July 7, 2017 to August 8, 2017 and has been a Director since May 13, 2014.(7) Mr. Perkins was the Senior Vice President, Business Transformation from August 9, 2017 to February 20, 2018. Pursuant to his

employment agreement, he was entitled to an amount equal to one half (0.5x) his annual base salary and target STIP award at thetime of termination.


OTHER INFORMATION

OUTSTANDING OPTION-BASED AWARDS AND SHARE-BASEDAWARDS FOR FORMER NEOSThe following table provides information for all Share-based awards outstanding as at December 31, 2017held by former NEOs. The Company does not have any option-based awards outstanding.

Name

Number ofSecurities

UnderlyingUnexercised

options(#)

Option ExercisePrice

($)

OptionExpiration

Date

Value ofUnexercisedIn-the-Money

Options($)

Numberof Units

of SharesThat

Have NotVested

(#)

Market or PayoutValue of Share-based AwardsThat Have Not

Vested(1)

($)

Stephen Bebis – – – – – –

Kenneth Barbet – – – – – –

Peter Lynch – – – – – –

Steve Rop – – – – – –

Lieske Renz – – – – – –

Richard Perkins – – – – 31,426 335,630

(1) The market or payout value of Share-based awards that were outstanding on December 31, 2017 was calculated by multiplying thenumber of Restricted Awards and Performance Awards (at an assumed payout multiplier of 1.0x) by the closing price of the Shares onthe TSX on December 29, 2017, being $10.68.

INCENTIVE PLAN AWARDS: VALUE VESTED OR EARNEDDURING THE YEAR FOR FORMER NEOSThe following table provides information for former NEOs the value of Share-based awards which vestedduring the year ended December 31, 2017 and the value of non-equity incentive plan compensation earnedduring the year ended December 31, 2017. The Company does not have any option-based awardsoutstanding.

Name

Option-based Awards –Value Vested During the

Year($)

Share-basedAwards – Value

Vested During theYear($)(1)

Non-equity Incentive PlanCompensation – Value Earned

During the Year($)(2)

Stephen Bebis – 435,560 –

Kenneth Barbet – – –

Peter Lynch – – –

Steve Rop – 90,763 –

Lieske Renz – 38,969 –

Richard Perkins – – –

(1) Value of Share-based awards vested during the year is equal to the number of restricted awards that vested multiplied by the volumeweighted average trading price of the Shares for the five days ending on the applicable settlement date. No performance awardsvested during 2017.

(2) Non-equity incentive plan compensation consists of amounts earned by the NEO for the 2017 fiscal year pursuant to the STIP.

ADDITIONAL INFORMATIONAdditional information relating to the Company may be found on SEDAR at www.sedar.com. Financialinformation is provided in the Company’s comparative annual financial statements and management’sdiscussion and analysis for our most recently completed financial year. A copy of the Company’s financialstatements and management’s discussion and analysis is available upon written request to the Senior VicePresident & Chief Financial Officer of the Company at 101, 17220 Stony Plain Road, Edmonton, Alberta, T5S 1K6.


SCHEDULE A: NON-ROUTINE RESOLUTIONS ANDBACKGROUND INFORMATION1. NAME CHANGE

SPECIAL RESOLUTION TO CHANGE THE NAME OF THE COMPANY FROM LIQUOR STORES N.A. LTD. TOALCANNA INC.

“BE IT RESOLVED THAT:

1. the Company is hereby authorized, pursuant to paragraph 173(1)(a) of the Canada Business CorporationsAct, to amend its articles to change the name of the Company from “Liquor Stores N.A. Ltd.” to “AlcannaInc.” (the “Name Change”), or such other name as may be determined by the Board of Directors and isacceptable to the Director appointed under the Canada Business Corporations Act and all otherregulatory authorities having jurisdiction in that regard;

2. notwithstanding that this special resolution has been passed by Shareholders, the Board of Directors ishereby authorized and empowered to revoke this special resolution at any time prior to the issuance of aCertificate of Amendment giving effect to the Name Change to the articles of the Company set forthabove and to determine not to proceed with the Name Change without further approval of theShareholders;

3. the Company is hereby authorized to fully restate its articles to more clearly and accurately reflect allamendments made thereto up to the date hereof, including the amendments contemplated by theseresolutions;

4. any officer or director of the Company is hereby authorized and directed for and on behalf of theCompany to execute or cause to be executed, under the corporate seal of the Company or otherwise,and deliver or cause to be delivered, for filing with the Director under the Canada Business CorporationsAct, articles of amendment and such other documents as are necessary or desirable to give effect tothese resolutions, such determination to be conclusively evidenced by the execution and delivery ofsuch articles of amendment and any such other documents; and

5. any officer or director of the Company is hereby authorized and directed for and on behalf of theCompany to execute or cause to be executed, under the corporate seal of the Company or otherwise,and deliver or cause to be delivered all such other documents and instruments and to perform or causeto be performed all such other acts and things as such person determines may be necessary or desirableto give full effect to the foregoing resolutions and the matters authorized thereby, such determination tobe conclusively evidenced by the execution and delivery of such document or instrument or the doing ofany such act or thing.”

2. INCREASE BOARD SIZE

SPECIAL RESOLUTION RELATING TO THE INCREASE IN THE SIZE OF THE BOARD OF DIRECTORS


1. the Company is hereby authorized, pursuant to paragraph 173(1)(m) of the Canada Business CorporationsAct, to amend its articles to increase the maximum number of Directors of the Company from eleven(11) to twelve (12);

2. any officer or director of the Company is hereby authorized and directed for and on behalf of theCompany to execute or cause to be executed, under the corporate seal of the Company or otherwise,and deliver or cause to be delivered, for filing with the Director under the Canada Business CorporationsAct, articles of amendment and such other documents as are necessary or desirable to give effect tothese resolutions, such determination to be conclusively evidenced by the execution and delivery ofsuch articles of amendment and any such other documents; and

3. any officer or director of the Company is hereby authorized and directed for and on behalf of theCompany to execute or cause to be executed, under the corporate seal of the Company or otherwise,

2018 INFORMATION CIRCULAR A-1

SCHEDULE A: NON-ROUTINE RESOLUTIONS AND BACKGROUND INFORMATION

and deliver or cause to be delivered all such other documents and instruments and to perform or causeto be performed all such other acts and things as such person determines may be necessary or desirableto give full effect to the foregoing resolutions and the matters authorized thereby, such determination tobe conclusively evidenced by the execution and delivery of such document or instrument or the doing ofany such act or thing.”

3. APPROVE ADDITIONAL AURORA INVESTMENT

ORDINARY RESOLUTION RELATING TO THE APPROVAL OF THE ADDITIONAL AURORA INVESTMENT


1. the conversion of 2,300,000 subscription receipts of the Company (the “Subscription Receipts”) intocommon shares in the capital of the Company (the “Shares”) by 2095173 Alberta Ltd. (the “Investor”), asdescribed in the Company’s management information circular dated March 28, 2018 (the “Circular”), ishereby consented to and approved;

2. the exercise from time to time of 10,130,000 Share purchase warrants (the “Sunshine Warrants”) intoShares by the Investor, at an exercise price of $15.75 per Sunshine Warrant, as described in the Circular,is hereby consented to and approved;

3. the exercise from time to time of 1,750,000 Share purchase warrants (the “Pro Rata Warrants”) intoShares by the Investor, at an exercise price of $15.00 per Pro Rata Warrant, as described in the Circular,is hereby consented to and approved;

4. any officer or director of the Company is hereby authorized and directed for and on behalf of theCompany to execute or cause to be executed, under the corporate seal of the Company or otherwise,and deliver or cause to be delivered all such other documents and instruments and to perform or causeto be performed all such other acts and things as such person determines may be necessary or desirableto give full effect to the foregoing resolutions and the matters authorized thereby, such determination tobe conclusively evidenced by the execution and delivery of such document or instrument or the doing ofany such act or thing; and

5. all acts performed and any documents executed, delivered, filed or registered prior to the date of theseresolutions by any director or officer of the Company relating to matters dealt with in these resolutionsare approved, ratified and confirmed.”

BACKGROUND INFORMATIONWHAT AM I VOTING ON?Shareholders are voting on a resolution that will permit Aurora to indirectly increase its investment in theCompany from approximately 19.9% to 25% of the Shares, with the option for Aurora to further increase itsShare ownership to approximately 40%, as more particularly described below.

More specifically, Shareholders are being asked to approve: (i) the conversion of 2,300,000 SubscriptionReceipts into Shares; (ii) the exercise of 10,130,000 Sunshine Warrants into Shares; and (iii) the exercise of upto 1,750,000 Pro Rata Warrants into Shares (these additional investments collectively referred to as, the“Additional Aurora Investment”).

All of the Subscription Receipts, Sunshine Warrants and Pro Rata Warrants are held by the Investor, anindirect wholly-owned subsidiary of Aurora.

WHY SHOULD I VOTE IN FAVOUR OF THE ADDITIONAL AURORA INVESTMENT?The Additional Aurora Investment is part of a larger transaction (the “Private Placement”) that includes theInvestor’s initial approximately 19.9% equity investment in the Company. Although the Investor currently holdsapproximately 19.9% of the Shares, the Additional Aurora Investment would result in the Investor holding alarger equity stake of approximately 25% upon conversion of the Subscription Receipts, with the option for

A-2 LIQUOR STORES N.A. LTD.


the Investor to increase its equity stake to approximately 40%, assuming that the Sunshine Warrants are fullyexercised. For a more complete discussion of the dilution caused by the Additional Aurora Investment, pleasesee “Description of the Private Placement” below.

The Board of Directors believes that the Additional Aurora Investment will create a greater alignmentbetween Aurora and the Company regarding the establishment of a leading retail brand in the cannabissector in Western Canada. In particular, the Board of Directors believes that an increased level of ownershipwill lead to a stronger commitment from Aurora to leverage its brand leadership, quality products, customercare, innovation and deep product knowledge in furtherance of the Company’s long-term success. In addition,the conversion of the Subscription Receipts will result in $34,500,000 being released to the Company, whichfunds will be used to accelerate the Company’s retail cannabis strategy as well as renovate existing retailliquor stores. The proceeds from the exercise of the Pro Rata Warrants or the Sunshine Warrants, being$185,797,500 assuming the full exercise of such warrants, will be further deployed for the previouslydiscussed purposes and for general corporate purposes. Please see “Business of the Meeting” for moreinformation on the use of the proceeds.

In making its recommendation that Shareholders vote for the Additional Aurora Investment, the Board ofDirectors carefully considered a number of factors described in this circular, including the receipt of aFairness Opinion from Paradigm Capital Inc. (“Paradigm Capital”), in respect of the consideration payablepursuant to the Private Placement. Based upon and subject to the assumptions, qualifications and limitationsset out in the Fairness Opinion, Paradigm Capital is of the opinion that, as of February 4, 2018, theconsideration offered pursuant to the Private Placement is fair, from a financial point of view, to the Company.The Fairness Opinion of Paradigm Capital does not opine on the Additional Aurora Investment on astandalone basis.

See “Reasons for the Recommendation of the Board of Directors”, “Background to the Private Placement”and “Fairness Opinion” in this Schedule A.

WHAT HAPPENS IF THE ADDITIONAL AURORA INVESTMENT IS NOT APPROVED?If Shareholder approval is not obtained, the Subscription Receipts will be deemed to be immediatelycancelled, the Subscription Receipt Funds (as defined below under “Description of the Private Placement”)will be returned to the Investor and both the Sunshine Warrants and the Pro Rata Warrants will be deemed tobe immediately cancelled, for no consideration. The Investor’s shareholdings in the Company will remain atapproximately 19.9% and the Investor will be entitled to maintain its pro rata ownership of the Shares pursuantto anti-dilution rights granted to it pursuant to the Investor Rights Agreement.

If the Additional Aurora Investment is not approved, the market price of the Shares may be impacted to theextent that the market price reflects a market assumption that the Additional Aurora Investment will beapproved and Aurora will increase its ownership of Shares.

See “Risk Factors – Risk Factors Relating to the Additional Aurora Investment”.

DESCRIPTION OF THE PRIVATE PLACEMENT

On February 5, 2018, the Company and Aurora announced that Aurora had agreed to indirectly acquire up to40% of the Shares on a private placement basis in two phases: (i) the Initial Investment; and (ii) the AdditionalAurora Investment.

The first phase of the Aurora equity investment (the “Initial Investment”) was completed on February 14, 2018when Aurora indirectly acquired: (i) 6,900,000 Shares at a price of $15.00 per Share, for aggregatesubscription proceeds of $103,500,000; (ii) 2,300,000 Subscription Receipts at a price of $15.00 perSubscription Receipt, for aggregate proceeds of $34,500,000; (iii) 10,130,000 Sunshine Warrants for noadditional consideration; and (iv) up to 1,750,000 Pro Rata Warrants for no additional consideration.



The 6,900,000 Shares acquired indirectly by Aurora pursuant to the Initial Investment representapproximately 19.9% of the outstanding Shares.

Assuming Shareholder approval of the Additional Aurora Investment, the Investor will own 9,200,000 Sharesfollowing the conversion of the Subscription Receipts, representing 24.86% of the Shares (calculated on afully diluted basis) as of February 5, 2018. In addition, assuming the full exercise of the Sunshine Warrants, theCompany will issue 19,330,000 Shares representing 69.6% of the Shares outstanding as of February 5, 2018,resulting in the Investor owning 41% of the Shares at that time. If the Pro Rata Warrants are exercised in full(and assuming the conversion of the Subscription Receipts and the full exercise of the Sunshine Warrants),the Investor will own 21,080,000 Shares. The Pro Rata Warrants are not dilutive to Shareholders as thesewarrants adjust for dilution caused by the conversion of the Convertible Debentures, and accordingly will notaffect the Investor’s equity interest in the Company.

Assuming the conversion of the Subscription Receipts and the full exercise of each of the Sunshine Warrantsand the Pro Rata Warrants, the Investor will hold 41% of the Shares, based on the number of Shares issuedand outstanding on the date hereof.

i. The SharesEach Share issued in connection with the Initial Investment was issued at a price of $15.00 per Share, whichrepresented a 28.4% premium to the 5-day volume-weighted average price (the “VWAP”) of the Shares onthe TSX ending as of the close of trading on February 2, 2018 (the last trading day before the publicannouncement of the Private Placement).

ii. The Subscription ReceiptsEach Subscription Receipt issued in connection with the Initial Investment was issued at a price of $15.00 perSubscription Receipt and entitles the Investor to receive one Share without the payment of additionalconsideration if certain conditions (the “Release Conditions”) are satisfied. In particular, the SubscriptionReceipts only convert into Shares if Computershare receives notice, on or prior to 5:00 p.m. (Edmonton time)on June 29, 2018 (the “Release Deadline”), that the Release Conditions have been satisfied. The ReleaseConditions include: (i) Competition Act (Canada) approval in respect of the Additional Aurora Investment; and(ii) the receipt of Shareholder approval for the conversion of the Subscription Receipts into Shares.

If Computershare does not receive notice that the Release Conditions have been satisfied before the ReleaseDeadline, the Subscription Receipts will be automatically cancelled and the Investor will be entitled to arefund of the aggregate purchase price of the Subscription Receipts plus any earned interest (together, the“Subscription Receipt Funds”). If notice that the Release Conditions have been satisfied is delivered beforethe Release Deadline, the Subscription Receipt Funds, less any fees, will be released to the Company andeach Subscription Receipt will automatically convert into one Share. No additional consideration is payable bythe Investor in connection with the conversion of the Subscription Receipts. The conversion of theSubscription Receipts will result in 2,300,000 Shares being issued to the Investor, resulting in the Investorincreasing its ownership to approximately 25% of the Shares.

iii. The Sunshine WarrantsEach Sunshine Warrant entitles the Investor to purchase, at an exercise price of $15.75, one Share untilAugust 14, 2019. The Sunshine Warrants can only be exercised after the Company receives: (i) Shareholderapproval for the exercise of the Sunshine Warrants into Shares; and (ii) Competition Act (Canada) approval inrespect of the Additional Aurora Investment. If the required approvals are obtained, the Investor has the right,but not the obligation, to exercise some or all of the 10,130,000 Sunshine Warrants, with each SunshineWarrant representing the right to acquire one Share, subject to adjustment in certain circumstances. Toexercise the Sunshine Warrants, the Investor must pay the Company the exercise price of $15.75 perSunshine Warrant. If Aurora exercises all of the Sunshine Warrants, the Company will receive $159,547,500 inproceeds from the exercise and the Investor will hold approximately 40% of the Shares. If such approvals arenot obtained, the Sunshine Warrants will be deemed to be immediately cancelled for no consideration.



iv. The Pro Rata WarrantsEach Pro Rata Warrant entitles the Investor to purchase, at an exercise price of $15.00, one Share untilJanuary 31, 2022. The Investor may only exercise the Pro Rata Warrants upon any conversion of the$77,625,000 aggregate principal amount of the 4.70% convertible unsecured subordinated debentures dueJanuary 31, 2022 issued by the Company pursuant to the Third Supplemental Indenture dated September 29,2016 (the “Convertible Debentures”). Upon a conversion of the Convertible Debentures, such number of ProRata Warrants will become exercisable as is necessary to permit the Investor to maintain its pro rata equityinterest in the Company following the conversion. However, the Pro Rata Warrants can only be exercised afterthe Company receives: (i) Shareholder approval for the exercise of the Pro Rata Warrants; and (ii) CompetitionAct (Canada) approval in respect of the Additional Aurora Investment. If the required approvals are obtained,the Investor has the right, but not the obligation, to exercise some number of the 1,750,000 Pro RataWarrants, with each Pro Rata Warrant representing the right to acquire one Share, subject to adjustment incertain circumstances. The number of Pro Rata Warrants that the Investor is permitted to exercise depends onthe number of Convertible Debentures that have been converted into Shares. If Convertible Debentures areconverted into Shares, the Investor will have the right, but not the obligation, to exercise such number of ProRata Warrants as is required to maintain its pro rata equity interest in the Company following the conversionof the Convertible Debentures. To exercise the Pro Rata Warrants, the Investor must pay the Company theexercise price of $15.00 per Pro Rata Warrant. The maximum proceeds from the exercise of the Pro RataWarrants available to the Company are $26,250,000. As the Pro Rata Warrants adjust for dilution caused bythe conversion of the Convertible Debentures, the exercise of the Pro Rata Warrants will not affect theInvestor’s equity interest in the Company. If such approvals are not obtained, the Pro Rata Warrants will bedeemed to be immediately cancelled, for no consideration.

SHAREHOLDER APPROVAL OF THE ADDITIONAL AURORAINVESTMENTThe Initial Investment did not require Shareholder approval under the rules of the TSX on the basis that theissuance of 6,900,000 Shares did not materially affect control of the Company.

The Additional Aurora Investment will result in the Investor acquiring a voting interest of greater than 20% ofthe Shares and, in accordance with the rules of the TSX, will materially affect control of the Company. Inaddition, when taken together, the Initial Investment and the Additional Aurora Investment, constitute dilutionof greater than 25% at a deemed discount as a result of the issuance of the Sunshine Warrants and the ProRata Warrants. The Additional Aurora Investment is therefore subject to approval by not less than a majority ofthe votes cast by Shareholders at the Meeting (excluding Shares held by the Investor, Aurora and theirrespective associates and affiliates). The Additional Aurora Investment is also subject to Competition Act(Canada) approval.

If Shareholder approval is obtained, the Subscription Receipts will be converted into Shares and each of thePro Rata Warrants and the Sunshine Warrants will become exercisable.

ADDITIONAL AURORA INVESTMENT RESOLUTIONAt the Meeting, Shareholders will be asked to consider and, if thought advisable, approve an ordinaryresolution approving the Additional Aurora Investment.

An ordinary resolution means a resolution passed by a majority of the votes cast by Shareholders who votedin respect of that resolution, either in person or by proxy at the Meeting. As explained above, the 6,900,000votes held indirectly by Aurora (representing approximately 19.9% of the issued and outstanding Shares) willbe excluded from this vote.

The enclosed form of proxy or voting instruction form permits Shareholders to vote FOR or AGAINST thisresolution. If you do not specify how you want your Shares voted, the persons named as proxyholders in



the enclosed form of proxy intend to cast the votes represented by proxy at the Meeting FOR the ordinaryresolution approving the Additional Aurora Investment.

RECOMMENDATION OF THE BOARD OF DIRECTORSThe Board of Directors, after consultation with its legal and financial advisors, unanimously determined thatthe Private Placement (including the Additional Aurora Investment) is in the best interests of the Company.The Board of Directors unanimously recommends that Shareholders vote FOR the Additional AuroraInvestment.

REASONS FOR THE RECOMMENDATION OF THE BOARD OFDIRECTORSIn making its recommendation that Shareholders vote for the Additional Aurora Investment, the Board ofDirectors carefully considered a number of factors, including those listed below. The Board of Directors basedits recommendation upon the totality of the information presented to and considered by it in light of itsknowledge of the business, finances and prospects of the Company, after having undertaken a thoroughreview of, and having carefully considered the terms of the Private Placement, and after consulting withfinancial and legal advisors, including receiving the fairness opinion of Paradigm Capital in respect of theconsideration offered pursuant to the Private Placement (the “Fairness Opinion”).

The following summary of the information and factors considered by the Board of Directors is not intended tobe exhaustive, but includes a summary of the material information and factors considered in the review of thePrivate Placement (including the Additional Aurora Investment). In view of the variety of factors and theamount of information considered in connection with the consideration of the Private Placement, the Board ofDirectors did not find it practicable to, and did not, quantify or otherwise attempt to assign any relative weightto each of the specific factors considered in reaching its conclusions and recommendations. The PrivatePlacement was approved by the Board of Directors and the Board of Directors was unanimous in itsrecommendation to Shareholders to vote FOR the Additional Aurora Investment.

• Establishes Aurora as a Cornerstone Investor. Although the Investor currently holds approximately 19.9%of the Shares, the Additional Aurora Investment would result in the Investor holding a significantly largerequity stake of approximately 25% with the ability to reach a maximum of approximately 40% at Aurora’sdiscretion. The Board of Directors believes that the significant additional equity investment represented bythe Additional Aurora Investment will help establish the Company as a leading retail brand in the cannabissector, which is anticipated to be, over time, one of the strongest growth markets in Canada’s retail sector.However, the Board also believes that the cannabis retail industry will take time to develop and beaccepted by Canadians and the Additional Aurora Investment gives the Company the financial strength totake a long-term view in building our brand and establishing the trust and loyalty of our customers andsociety as a whole. In particular, the Board of Directors believes that this level of ownership will lead to astronger commitment from Aurora to leverage its brand leadership, quality products, customer care,innovation and deep product knowledge in furtherance of the Company’s long-term success.

• Accelerates Strategic Plan. The proceeds received from the Private Placement, including the AdditionalAurora Investment, will be used to execute on the Company’s retail cannabis strategy by convertingexisting retail liquor stores into retail cannabis stores and opening new locations. These funds will allow theCompany to proceed quickly with the rollout of a retail cannabis brand and stores, should the Companyreceive licenses to operate retail cannabis stores from the applicable provincial regulatory authorities inAlberta and British Columbia once the sale of cannabis for recreational use is legalized in Canada. Thespeed at which the Company can access the retail cannabis market (a “first-mover advantage”) isanticipated to give it a competitive advantage over other entrants who may lack sufficient capital andexpertise. In addition, the proceeds will also be used to expedite the renovation of existing liquor storeswhich has been identified by the Company as a key factor in recovering the Company’s market share inAlberta.



• Attractive Premium. The value of the consideration payable pursuant to the Additional Aurora Investmentrepresents a significant premium to the closing price of the Shares on February 2, 2018 (the last trading dayprior to the public announcement of the Private Placement).

• Cash Consideration. The consideration payable pursuant to the Additional Aurora Investment will be paidentirely in cash, which will provide the Company with immediate liquidity and certainty of value.

• Special Committee of Independent Directors. The assessment by the Special Committee of the Board ofDirectors (the “Special Committee”) of the current and anticipated future opportunities and risks associatedwith the business, operations, assets, financial performance and financial condition of the Company andtheir recommendation of the Private Placement to the Board of Directors, following the receipt of financialand legal advice.

• Shareholder Approval. The Additional Aurora Investment must be approved by not less than a majority ofthe votes cast at the Meeting by Shareholders, excluding Shares held by the Investor, Aurora and theirrespective associates and affiliates.

• Fairness Opinion. The Company received the Fairness Opinion in respect of the consideration payablepursuant to the Private Placement from Paradigm Capital as described in greater detail below under“Fairness Opinion”.

In the course of its deliberations, the Board of Directors also identified and considered a variety of risks (asdescribed in greater detail under “Risk Factors”) and potentially negative factors relating to the AdditionalAurora Investment, including the following:

• Pursuant to an investor rights agreement between the Company, Aurora and the Investor (the “InvestorRights Agreement”), until February 14, 2019, the Investor is generally prohibited from transferring anyShares that it indirectly holds. Pursuant to the Investor Rights Agreement, the Investor has been grantedanti-dilution rights to maintain its ownership position but is otherwise not contractually committed tomaintaining its shareholdings in the Company at current levels or at all. If the Investor sells some or all of itsShares, including the Shares to be issued pursuant to the Additional Aurora Investment, the Company maynot realize all of the benefits of the Additional Aurora Investment.

• The Additional Aurora Investment will result in the Investor holding a greater voting interest than it currentlyhas, giving it greater influence over the Company.

The Board of Directors’ reasons for approving the Private Placement and recommending the AdditionalAurora Investment include certain assumptions relating to forward-looking information, and such informationand assumptions are subject to various risks. See “Forward-looking statements” and “Risk Factors”.

BACKGROUND TO THE PRIVATE PLACEMENT

On April 13, 2017, the Government of Canada introduced legislation to legalize, regulate and restrict access tocannabis. As a leading participant in the adult recreational use market, the Company identified the cannabisretail market as an attractive opportunity to complement its existing liquor retail business. To pursue thisopportunity, the Company announced that James Burns would become Vice Chair and Chief ExecutiveOfficer of the Company, assuming primary responsibility for the development of a cannabis strategy.

The Company was approached by several Licensed Producers (as such term is defined in the Access toCannabis for Medical Purposes Regulations) in late 2017 to explore a possible investment in the Company.The Company decided to continue these discussions and that attracting an investment from a LicensedProducer would be beneficial to the Company’s retail cannabis strategy.

The Board of Directors met on December 15, 2017 to discuss a proposal received from Aurora, the duties andresponsibilities of the Board of Directors and the implications of the potential transaction on the Company. Asa result of Aurora’s proposal, the Board of Directors authorized the formation of the Special Committee toreview the potential transaction. The Special Committee engaged Norton Rose Fulbright LLP as specialcounsel and Paradigm Capital as financial advisor. Over the course of the next several weeks, representatives



from the Company and Aurora continued to negotiate the terms of the Private Placement; with the ChiefExecutive Officer of the Company providing regular updates on the status of negotiations to the SpecialCommittee.

A non-binding term sheet between the Company and Aurora was signed on December 23, 2017, whichsubstantially reflected the terms of the Private Placement. Following the execution of the non-binding termsheet, the parties conducted due diligence investigations in respect of each other and commenced thepreparation and negotiation of definitive agreements.

On February 3, 2018, the Company provided formal notice to the TSX regarding the proposed PrivatePlacement with Aurora. On February 4, 2018 the TSX granted conditional listing approval for the InitialInvestment. The TSX advised that the Additional Aurora Investment was subject to disinterested Shareholderapproval.

At the Special Committee meeting on February 4, 2018, Paradigm Capital delivered its oral fairness opinion,which was confirmed by subsequent delivery of its written Fairness Opinion dated as of February 4, 2018.Following the Special Committee meeting, the Board of Directors met to receive the report andrecommendation of the Special Committee, following which it authorized the Company to enter into aninvestment agreement with Aurora and the Investor (the “Investment Agreement”) and approved the forms ofsubscription receipt agreement, warrant certificates and the Investor Rights Agreement (collectively, the“Private Placement Agreements”), each on the terms presented to the Board of Directors.

Later that evening, the parties entered into the Investment Agreement and the next morning Aurora and theCompany issued a joint press release to announce the Private Placement.

On February 14, 2018, the Company completed the Initial Investment by issuing to the Investor: 6,900,000Shares, 2,300,000 Subscription Receipts, 10,130,000 Sunshine Warrants and 1,750,000 Pro Rata Warrants, allpursuant to the terms of the Private Placement Agreements.

MATERIAL TERMS OF THE INVESTOR RIGHTS AGREEMENTThe following is a summary of the material terms of the Investor Rights Agreement between the Company,Aurora and the Investor. The following is a summary only, is not exhaustive and is subject to, and qualified inits entirety, by reference to the full text of the Investor Rights Agreement, which may be found on SEDAR atwww.sedar.com.

ANTI-DILUTION RIGHTSThe Investor Rights Agreement provides the Investor certain rights to protect its investment from beingdiluted by subsequent Share issuances (“Anti-Dilution Rights”). The Anti-Dilution Rights grant the Investor theright to subscribe for additional Shares if Liquor Stores proposes to issue voting securities or convertiblesecurities. Pursuant to the Anti-Dilution Rights, the Investor may subscribe for such number of Shares as willpermit the Investor to maintain its pro rata Share ownership following the proposed issuance. The Investor isentitled to purchase such Shares at the same price as the securities being offered for sale. The Anti-DilutionRights terminate if the Investor directly or indirectly owns less than 10% of the issued and outstanding Shares.

NOMINATION RIGHTSPursuant to the Investor Rights Agreement, the Investor has the right to designate nominees to be nominatedand, if elected, serve as Directors (the “Nomination Rights”). The Nomination Rights permit the Investor todesignate one nominee if it beneficially owns or controls between 10% and 33.33% of Shares. If the Investorbeneficially owns or controls more than 33.33% of Shares, the Investor may designate two nominees. If theInvestor beneficially owns or controls less than 10% of Shares, the Investor will cease to have NominationRights.



QUALIFICATION RIGHTSThe Investor has the right to require Liquor Stores to undertake certain actions to facilitate the sale of Sharesheld by the Investor. Such rights take the form of demand registration rights (“Demand Registration Rights”)and piggy-back registration rights (“Piggy-Back Registration Rights”). Pursuant to the Demand RegistrationRights, upon a request by the Investor, Liquor Stores must prepare and file a prospectus to qualify thedistribution of some or all of the Shares held by the Investor. Pursuant to the Piggy-Back Registration Rights, ifLiquor Stores proposes to file a preliminary prospectus or prospectus supplement in connection with votingsecurities or convertible securities through a public offering, Liquor Stores must give the Investor advancednotice. The Investor may then require Liquor Stores to use commercially reasonable efforts to cause some orall of the Shares held by the Investor to be included in, and sold pursuant to, the prospectus or prospectussupplement. The Investor ceases to have either Demand Registration Rights or Piggy-Back RegistrationRights if it holds less than 5% of Shares.

RESTRICTIONS ON DISPOSITIONS AND STANDSTILL COVENANTSThe Investor Rights Agreement also imposes restrictions on Aurora and the Investor’s ability to transferShares that they hold. Until February 14, 2019, Aurora is generally prohibited from any transfer of Shareswithout Liquor Stores’ prior consent (the “Transfer Restrictions”). However, the Transfer Restrictions will ceaseto be in effect if a law or regulation is enacted that prohibits Aurora or the Investor’s ownership of securities inLiquor Stores.

Aurora, the Investor and their respective affiliates (collectively, the “Aurora Group”) are also subject to atwelve month standstill covenant in respect of Liquor Stores. Subject to certain exceptions, until February 14,2019, the Aurora Group is prohibited from undertaking, directly or indirectly, actions such as:

• acquiring Shares or rights or options to acquire Shares that would result in the Aurora Group holding anaggregate of over 40% of Shares;

• a take-over bid, merger, amalgamation, plan of arrangement, reorganization or other business combinationinvolving Liquor Stores or any of its affiliates or any of their assets;

• a recapitalization, restructuring, liquidation, dissolution, or other extraordinary transaction with respect toLiquor Stores or any of its affiliates or any of their assets;

• soliciting proxies or any other activity to vote, advise or influence any person with respect to the voting ofShares; and

• participating in an attempt to influence the conduct of Shareholders or taking any action to control orinfluence the Board, management or policies of Liquor Stores or to obtain representation on the Board,except in accordance with the Nomination Rights.

CANNABIS MANAGEMENTThe Investor Rights Agreement defines the respective rights, duties and obligations of Liquor Stores andAurora regarding the management of a cannabis retail business. In accordance with the Investor RightsAgreement, Liquor Stores will use a portion of the net proceeds from the Private Placement to establish,subject to applicable law, a retail cannabis business by opening retail cannabis stores in Alberta and BritishColumbia (each a “Cannabis Retail Store”). In particular, Liquor Stores agreed to use commercially reasonableefforts to open thirty (30) Cannabis Retail Stores in Alberta and ten (10) Cannabis Retail Stores in BritishColumbia on or before July 1, 2018. Liquor Stores and Aurora also agreed to work collaboratively regardingthe set-up and operation of the Cannabis Retail Stores. Subject to applicable law, Aurora will have controlover branding, design, layout and staffing, but must consult with Liquor Stores on each of the foregoingmatters. Liquor Stores will be responsible for administration, logistics and distribution support.

FAIRNESS OPINIONThe following is only a summary of the Fairness Opinion of Paradigm Capital and is qualified in its entirety bythe full text of the Fairness Opinion, a copy of which is attached hereto as Schedule C, which forms part of thecircular. The Fairness Opinion was prepared as of February 4, 2018 for the exclusive use of the Special



Committee and for inclusion in the circular. Shareholders are urged to read the full text of the FairnessOpinion and should consider the same in its entirety. The Fairness Opinion does not constitute arecommendation to any Shareholder as to how such Shareholder should vote in respect of the AdditionalAurora Investment. The Fairness Opinion does not opine on the Additional Aurora Investment on astandalone basis.

Based upon and subject to the assumptions, qualifications and limitations set out in the Fairness Opinion,Paradigm Capital is of the opinion that, as of February 4, 2018, the consideration payable pursuant to thePrivate Placement is fair, from a financial point of view, to the Company.

FAIRNESS OPINION OF PARADIGM CAPITAL

Engagement of Paradigm CapitalThe Board of Directors initially contacted Paradigm Capital during the week of December 19, 2017 todetermine its ability to act as financial advisor to the Special Committee in connection with a potential equityinvestment into the Company. Paradigm Capital was formally engaged by the Company on January 10, 2018,pursuant to an engagement agreement dated December 22, 2017 (the “Engagement Agreement”).

The Engagement Agreement provides for the payment to Paradigm Capital of a fixed fee in respect of thepreparation and delivery of a Fairness Opinion. Paradigm Capital’s fees are not contingent on the completionof the Private Placement or on the conclusions reached in the Fairness Opinion. Under the terms of theEngagement Agreement, Paradigm Capital received $350,000.00 upon delivery of the Fairness Opinion tothe Special Committee. In addition, Paradigm Capital is to be reimbursed for its reasonable out-of-pocketexpenses and is to be indemnified by the Company in certain circumstances.

Credentials of Paradigm CapitalParadigm Capital is an independent Canadian investment banking firm with a sales, trading, research andcorporate finance focus, providing services for institutional investors and companies. Paradigm Capital wasfounded in 1999 and is a member of the TSX, the TSX Venture Exchange and the Investment IndustryRegulatory Organization of Canada. Paradigm Capital has participated in many transactions involving bothpublic and private companies.

Independence of Paradigm CapitalParadigm Capital is not an insider, associate or affiliate (as those terms are defined in the Securities Act(Ontario)) of the Company, Aurora or any of their respective associates or affiliates.

Paradigm Capital is not an advisor to any person or company other than the Special Committee with respectto the Private Placement. Paradigm Capital has not provided any financial advisory or capital raising servicesto the Company, Aurora or any of their respective associates or affiliates for which it has receivedcompensation in the past twenty-four months, other than services provided under the EngagementAgreement.

As of the date of the Fairness Opinion, there were no other understandings, agreements or commitmentsbetween Paradigm Capital and the Company, Aurora or any of their respective associates or affiliates withrespect to any current or future business dealings which would be material to the Fairness Opinion.

Assumptions, Qualifications and LimitationsParadigm Capital has relied upon, without independent verification, all financial and other information thatwas obtained by it from public sources or that was provided to it by the Company and its affiliates, associates,advisors or otherwise. Paradigm Capital has assumed that such information was complete and accurate as ofthe date thereof, and no necessary or material facts were omitted that may make the information misleading.Paradigm Capital has not conducted any independent investigation to verify the completeness or accuracy ofsuch information. With respect to the financial forecasts and budgets provided to Paradigm Capital and usedin its analysis, Paradigm Capital has assumed that they have been prepared using the best currently available



estimates and reasonable judgments of management of the Company as to the matters covered thereby.

The Fairness Opinion is based on the securities markets, economic, financial and general business conditionsprevailing as of the date of the Fairness Opinion and the conditions and prospects, financial and otherwise, ofthe Company as they were reflected in the information reviewed by Paradigm Capital.

In preparing the Fairness Opinion, Paradigm Capital made a number of assumptions with respect to industryperformance, general business and economic conditions, and other matters, many of which are beyond thecontrol of Paradigm Capital, the Company, Aurora and any other party involved in the Private Placement.Paradigm Capital has not taken a view on the future prospects of the Company in the cannabis industry.

Paradigm Capital expresses no opinion concerning any legal, tax, or accounting matters concerning thePrivate Placement.

In preparing the Fairness Opinion, Paradigm Capital assumed that the representations and warranties in thePrivate Placement Agreements are accurate and that the final terms of the Private Placement will be fullycomplied with, and will be substantially the same as those described by the Company’s senior officers toParadigm Capital and those contained in the draft Private Placement Agreements provided to ParadigmCapital.

Paradigm Capital has assumed that all material governmental, regulatory or other required consents andapprovals necessary for the consummation of the Private Placement will be obtained without any materialadverse effect on the Company.

Approach to FairnessIn considering the fairness, from a financial point of view, of the consideration payable in connection with thePrivate Placement, Paradigm Capital considered, among other things, the following factors:

1. the consideration for the Shares represented a premium of 28.4% over the closing price per Share on theTSX on February 2, 2018, the last trading day prior to the date of the Fairness Opinion and a premium of26.6% to the volume weighted average price per Share based on TSX volume over the 20 trading daysending February 2, 2018 and 44.6% over the closing price per Share on the TSX on December 23, 2017,the date of signing of the non-binding term sheet;

2. the implied transaction multiples derived from the consideration payable in connection with the PrivatePlacement compare favourably with the precedent transactions reviewed by Paradigm Capital and, whileconsidered less relevant, the consideration compares favourably with the Company’s publicly tradedpeer group;

3. the consideration payable in connection with the Private Placement is above the upper range of valuesfor implied Share price as indicated by the discounted cash flow analysis;

4. the consideration payable in connection with the Private Placement is all cash and will provide theCompany with the opportunity to de-lever and strengthen the Company’s balance sheet, invest capital forother initiatives and gain a foothold in the cannabis industry; and

5. without commenting on the merits of the Company’s strategy in entering into the Private Placement,Paradigm Capital acknowledged the opportunity for the Company to develop a relationship with acannabis producer and marketer, potentially gaining a foothold in the burgeoning cannabis industry.

Paradigm Capital Fairness OpinionBased upon and subject to the foregoing, and the assumptions, qualifications and limitations set out in theFairness Opinion, Paradigm Capital is of the opinion that, as of February 4, 2018, the consideration payablepursuant to the Private Placement is fair, from a financial point of view, to the Company.

Intentions of Directors and Executive OfficersEach Director and executive officer of the Company has agreed to vote all of such individual’s Shares FOR theresolution approving the Additional Aurora Investment.



RISK FACTORSRISK FACTORS RELATING TO THE ADDITIONAL AURORA INVESTMENT

Dilution of Shareholders of the CompanyIf the Additional Aurora Investment is completed, the Company will issue an additional 2,300,000 Sharespursuant to the conversion of the Subscription Receipts (approximately 5.1% of the Shares and subject toadjustment) and may issue up to an additional 11,880,000 Shares (approximately 14.9% of the Shares andsubject to adjustment) upon the full exercise of the Pro Rata Warrants and the Sunshine Warrants. As a result,the current holdings of the Shareholders will be diluted if the Additional Aurora Investment is approved.

Aurora’s influence over the Company on completion of the Additional Aurora InvestmentOn completion of the Additional Aurora Investment, assuming the full exercise of the Sunshine Warrants, theInvestor will beneficially own approximately 40% of the outstanding Shares, making it the Company’s singlelargest Shareholder by an extensive margin. Pursuant to the Investor Rights Agreement, until February 14,2019, the Investor is contractually prohibited from taking several actions under “standstill” provisions thataffect control of the Company. However, after February 14, 2019, such restrictions will cease to apply. For solong as the Investor maintains or increases its shareholdings, it could be in a position to exercise influenceover matters requiring Shareholder approval, including the election of Directors. Furthermore, if the Investoracquires 33.3% or more of the outstanding Shares, it will have the ability to veto any fundamental transactionsthat would require the vote of Shareholders. Aurora has influence over the Company and there can be noassurance that Aurora’s interests will align with the interests of the Company or other Shareholders.

Use of proceeds from the Additional Aurora InvestmentPursuant to the Investor Rights Agreement, the Company agreed to use a portion of the net proceeds fromthe Private Placement to establish, subject to applicable law, a retail cannabis business by opening retailcannabis stores in Alberta and British Columbia either through the conversion of some number of theCompany’s existing retail liquor outlets or the acquisition of new stores. However, beyond this conditionalcommitment, the Company cannot specify the particular uses of the net proceeds it will receive from theAdditional Aurora Investment and the Board of Directors will have broad discretion in the application of thenet proceeds to fund general purposes. Accordingly, Shareholders will have to rely upon the judgment of theBoard of Directors with respect to the use of the proceeds.

RISK FACTORS RELATED TO THE BUSINESS OF THE COMPANYWhether or not the Additional Aurora Investment is completed, the Company will continue to face many of therisks that it currently faces with respect to its business and affairs. A description of the risk factors(incorporated by reference into this circular) applicable to the Company is contained under the heading “RiskFactors” in the Management’s Discussion & Analysis for the year ended December 31, 2017 and in theCompany’s other filings with securities regulatory authorities.


SCHEDULE B: BOARD MANDATEAdopted March 14, 2018

LIQUOR STORES N.A. LTD.MANDATE FOR THE BOARD OF DIRECTORSPURPOSEThe board of directors (“Board”) of Liquor Stores N.A. Ltd. (the “Corporation”) is elected by the shareholdersof the Corporation and is directly, and through its committees, responsible for the stewardship of the businessand affairs of the Corporation. The Board seeks to discharge such responsibility by reviewing and discussingthe strategies and plans of management of the Corporation and its subsidiaries and supervising managementand monitoring the performance of the Corporation and its subsidiaries.

CULTURE OF INTEGRITYThe Board is responsible for establishing and maintaining a culture of integrity in the conduct of the businessand affairs of the Corporation and by supervising management to ensure a culture of integrity is maintained.

Except for those boards of directors that a member of management is asked by the Corporation to join, theBoard will establish a limit on the number of boards of directors of unrelated corporations or entities anindividual member of management may participate.

Although directors may be nominated or elected by shareholders to bring special expertise or a point of viewto Board deliberations, they are not chosen to represent a particular constituency. The best interests of theCorporation and its shareholders must be paramount at all times.

COMPOSITION OF BOARD

(a) Nominees for directors are initially considered and recommended by the Governance Committee of theBoard, approved by the entire Board and elected annually by the shareholders of the Company.

(b) The Board must be comprised of a majority of members who have been determined by the Board to beindependent. A member is independent if the member has no direct or indirect relationship which could,in the view of the Board, be reasonably expected to interfere with the exercise of a member’sindependent judgment.

(c) Directors who are not members of management will meet on a regular basis to discuss matters ofinterest independent of any influence from management; whether at standalone meetings or “in camera”at regularly scheduled meetings.

(d) Certain responsibilities of the Board referred to herein may be delegated to committees of the Board.The responsibilities of those committees will be as set forth in their Charter, as amended from time totime.

POSITION DESCRIPTIONS

(a) The Board has delegated authority to the Chief Executive Officer (“CEO”) for the overall managementand operations of the Corporation to ensure the long-term success of the Corporation. The CEO will workin conjunction with the Chairman on strategy-related issues to ensure the long term success of theCorporation. Such delegation to the CEO is subject to prior authorization by the Board or periodic reviewby the Board in respect of specified matters, as the case may be.

(b) The Board has delegated authority to the Corporation’s Officers (as defined below) subject to anyspecified limits that may be in place from time to time subject to Delegation of Authority Guidelines orsimilar policies.

2018 INFORMATION CIRCULAR B-1

SCHEDULE B: BOARD MANDATE

DUTIES AND RESPONSILIBITIESThis Board operates by delegating certain authorities to management and reserving certain powers for itself.Subject to the provisions of applicable law, the articles and by-laws of the Corporation and any particularresolution of the Board, the Board retains the responsibility for the following:

1. GOVERNANCE

(a) establishing and approving composition and membership of Board committees, including theCompensation Committee, the Governance Committee and the Audit Committee and any ad hoccommittees to address certain issues of a more short-term nature;

(b) reviewing the size, composition, policies and procedures of the Board;

(c) monitoring the performance of management with respect to the operations of the Corporation;

(d) assessing and evaluating the Board, its committees and individual directors in fulfilling theirresponsibilities; and

(e) approving director compensation.

2. MANAGEMENT AND HUMAN RESOURCES

(a) approving the appointment of the Chairman, Vice Chair, CEO and any other officers of the Corporation orsubsidiaries (collectively, the “Officers”);

(b) approving the removal of any of the Officers;

(c) approving the compensation of the CEO and other Officers and senior employees of the Corporationfollowing a review of the recommendations of the Compensation Committee;

(d) evaluating the performance of the Chairman, Vice Chair and the CEO;

(e) reviewing the Officers’ succession plans;

(f) approving employment contracts of the Officers including special termination provisions or payments;

(g) approving the adoption of incentive compensation arrangements, if any; and

(h) approving short-term and long-term incentive plan criteria, targets and awards, if any, in so far as suchplans are a direct activity of the Corporation.

3. RISK MANAGEMENT AND STRATEGIC PLANNING

(a) reviewing systems for managing the principal risks of the Corporation’s business including insurancecoverages, conduct of material litigation and the effectiveness of internal controls;

(b) considering appropriate measures if performance of the Corporation falls short of their goals or otherspecial circumstances warrant;

(c) reviewing and questioning the strategies and plans of the Corporation (and its subsidiaries);

(d) reviewing and approving material transactions involving the Corporation and/or its subsidiaries, andthose matters which the Board is required to approve under applicable laws, including the payment ofdividends, acquisitions and dispositions of material assets and material expenditures by the Corporationand/or its subsidiaries;

(e) approving long range business planning, including major agreements and long-term leases outside theordinary course of business, in accordance with the policies of the Corporation, including specificapproval of entrance into new jurisdictions;

(f) approving major changes to the organization of the Corporation or its respective subsidiaries;

(g) approving adoption of or changes to the Corporation’s policies, articles or by-laws with application to theconduct of directors or management; and

B-2 LIQUOR STORES N.A. LTD.

SCHEDULE B: BOARD MANDATE

(h) approving policies and procedures designed to ensure that the Corporation operates at all times inaccordance with applicable laws and regulations and to the highest ethical and moral standards.

4. BUDGETS AND FINANCING

(a) reviewing and approving the annual budget of the Corporation or its respective subsidiaries;

(b) reviewing operating and financial performance relative to budgets and objectives;

(c) reviewing significant changes in accounting practices or policies; and

(d) reviewing effectiveness of internal control procedures.

5. CORPORATE AND PUBLIC DISCLOSURE

(a) approving changes in authorized capital, issuance or repurchase of shares, debt securities and relatedprospectuses or indentures, if any;

(b) reviewing and approving significant disclosure documents, including financial statements; and

(c) ensuring the timely disclosure by the Corporation of any material facts or material changes to enable theCorporation to comply with its timely disclosure obligations under applicable laws.

2018 INFORMATION CIRCULAR B-3

SCHEDULE C: FAIRNESS OPINION

February 4, 2018

Special Committee of the Board of DirectorsLiquor Stores N.A. Ltd.101, 17220 Stony Plain Road NWEdmonton, AlbertaT5S 1K6

Dear Sirs/Mesdames:

Paradigm Capital Inc. (“Paradigm Capital”, “we” or “us”) understands that Liquor Stores N.A. Ltd.(“Liquor Stores” or the “Company”) intends to enter into an investment agreement (the “InvestmentAgreement”) with Aurora Cannabis Inc. (the “Investor”) to be dated on or about February 4, 2018. TheInvestment Agreement outlines the proposed investment in Liquor Stores by the Investor (the “Transaction”)whereby the Investor will purchase, by way of private placement:

• 6,900,000 common shares of the Company (“Shares”) for $15.00 per share in cash; and• 2,300,000 subscription receipts (the “Subscription Receipts”) that automatically convert into one Share per

Subscription Receipt upon approval by the Toronto Stock Exchange (the “TSX”) and a simple majority of thevotes cast by Liquor Stores’ shareholders at a duly called meeting of shareholders, for $15.00 perSubscription Receipt in cash,

for total cash consideration of $138,000,000 (the “Consideration”).

In addition, the Investor shall receive:

• 10,130,000 common share purchase warrants, each exercisable for one Share, to permit the Investor toincrease its pro-rata equity ownership in Liquor Stores to 40.0% on a fully diluted basis at an exercise priceof $15.75 per share in cash for a period of 18 months following the closing of the Transaction; and

• 1,750,000 common share purchase warrants, each exercisable for one Share, exercisable upon theconversion of any of Liquor Stores 4.7% convertible unsecured subordinated debentures due January 31,2022 in order to permit the Investor to maintain its then pro rata ownership interest in Liquor Stores at anexercise price of $15.00 per share in cash.

Paradigm Capital further understands that (i) the Transaction will be subject to the consent and listing approvalof the TSX; and (ii) the material terms of the Transaction are as described in the Investment Agreement.

The special committee of the Board of Directors of Liquor Stores (the “Special Committee”) has retainedParadigm Capital to assist it in judging the financial fairness of the Consideration payable pursuant to theTransaction and to prepare and deliver to the Special Committee this opinion (the “Opinion”) as to thefairness of the Transaction, from a financial point of view, to the Company. Paradigm Capital has not prepareda formal valuation (as defined in Multilateral Instrument 61-101 Protection of Minority Securityholders in SpecialTransactions) of Liquor Stores or its securities, and this Opinion should not be construed as such. The Opiniondoes not constitute a recommendation to the members of the Special Committee, Board of Directors, nor arecommendation to shareholders of the Company, as to whether they should vote in favour of the Transactionand this Opinion should not be considered as an opinion concerning the trading price or value of anysecurities following the announcement or completion of the Transaction.

Unless otherwise noted, all dollar values stated in the Opinion are denominated in Canadian dollars.

95 Wellington Street West, Suite 2101, Toronto, Ontario M5J 2N7 | Telephone (416) 361-9892

2018 INFORMATION CIRCULAR C-1


PARADIGM CAPITAL ENGAGEMENT AND BACKGROUND

Paradigm Capital was initially contacted by Liquor Stores during the week of December 19, 2017 to determineits ability to act as financial advisor to the Special Committee in connection with a potential equity investmentinto the Company by a third party. On December 22, 2017, Liquor Stores and Paradigm Capital held aconference call, where Liquor Stores informed Paradigm Capital that it planned to sign a non-exclusive,non-binding term sheet with respect to the Investor’s proposed investment into Liquor Stores with a view toannouncing a transaction as soon as practicable. A non-binding term sheet was subsequently signed onDecember 23, 2017. Liquor Stores informed Paradigm Capital that it would require the fairness presentationbe completed in advance of such announcement. Paradigm Capital began work immediately, and agreed topresent its conclusions to the Special Committee on such date as reasonably requested by the SpecialCommittee, and to issue this Opinion thereafter. Paradigm Capital was formally engaged by Liquor Stores onJanuary 10, 2018, pursuant to an engagement agreement dated December 22, 2017 (the “EngagementAgreement”). Paradigm Capital presented its conclusions to the Special Committee on February 4, 2018 andissued a verbal Opinion.

The Engagement Agreement provides that Paradigm Capital is to be paid a fixed fee for the provision of theOpinion, and to be reimbursed for reasonable costs and expenses incurred in connection therewith (the“Fee”). The Fee is not contingent on the completion of the Transaction or on the conclusions reached in theOpinion. The Fee is payable upon delivery of the Opinion to the Special Committee. Liquor Stores has alsoagreed to indemnify Paradigm Capital, its affiliates and subsidiaries, and their respective officers, directors,employees, consultants, partners and shareholders for certain liabilities arising from the services performedby Paradigm Capital under the Engagement Agreement.

Subject to the terms of the Engagement Agreement, Paradigm Capital understands that this Opinion and itsconclusion may be filed publicly with securities commissions or similar regulatory authorities, and the Opinionand its conclusions may be included or referred to in press releases and/or other publicly filed documents.

CREDENTIALS AND INDEPENDENCE OF PARADIGM CAPITAL

Paradigm Capital is an independent Canadian investment banking firm with a sales, trading, research andcorporate finance focus, providing services for institutional investors and corporations. Paradigm Capital wasfounded in 1999 and is a member of the TSX, the TSX Venture Exchange and the Investment IndustryRegulatory Organization of Canada (“IIROC”). Paradigm Capital has participated in many transactionsinvolving both public and private companies.

The opinion expressed herein represents that of Paradigm Capital and the form and content hereof has beenapproved for release by a committee of directors and other professionals of Paradigm Capital, each of whomis experienced in mergers, acquisitions, business combinations, divestitures, valuation and fairness opinionmatters.

Paradigm Capital is independent of Liquor Stores and the Investor and none of Paradigm Capital or itsassociates or affiliates is an insider, associate or affiliate (as those terms are defined in the Securities Act(Ontario)), or holds any securities, of Liquor Stores or the Purchaser or any of its associates or affiliates.


C-2 LIQUOR STORES N.A. LTD.


Paradigm Capital is not an advisor to any person or company other than the Special Committee with respectto the Transaction. Paradigm Capital has not previously provided any financial advisory or capital raisingservices to Liquor Stores or the Investor or any of its associates or affiliates for which it has receivedcompensation in the past 24 months.

There are no understandings, agreements or commitments between Paradigm Capital and the Company orthe Investor, or any of their respective affiliates or associates with respect to any future business dealings.However, Paradigm Capital may, in the ordinary course of its business, provide financial advisory orinvestment banking services to Liquor Stores and/or the Investor from time to time. Additionally, in theordinary course of its business, Paradigm Capital may actively trade common shares and other securities ofLiquor Stores and/or the Investor for its own account and for its client accounts, and, accordingly, may at anytime hold a long or short position in such securities. As an investment dealer, Paradigm Capital conductsresearch on securities and may, in the ordinary course of its business, provide research reports andinvestment advice to its clients on investment matters, including with respect to Liquor Stores and/or theInvestor or the Transaction, when disclosed.

SCOPE OF THE REVIEW

In connection with the Transaction, Paradigm Capital has reviewed and relied upon and in some cases carriedout, among other things, the following:

a) The executed term sheet between the Investor and Liquor Stores dated December 23, 2017;

b) The Investment Agreement, Investor Rights Agreement and Subscription Receipt Agreement(collectively, the “Definitive Documents”) between the Investor and Liquor Stores in the draft formreceived by Paradigm Capital on January 15, 2018 and updated on February 4, 2018;

c) Liquor Stores’ audited annual consolidated financial statements and management’s discussion andanalysis for the fiscal years ended December 31, 2016 and 2015;

d) Liquor Store’s unaudited quarterly consolidated financial statements and management’s discussion andanalysis for the fiscal quarters ended September 30, 2017, June 30, 2017 and March 31, 2017;

e) Certain internal financial forecasts provided by management of Liquor Stores;

f) Press releases and material change reports issued by Liquor Stores during the 12-month period endedDecember 22, 2017;

g) Various independent and institutional research reports on Liquor Stores and other retailer companiesand the growth sector generally;

h) Precedent transaction disclosure;

i) Comparable company disclosure;

j) The certificate of representation (the “Certificate”) signed by the Chief Executive Officer and ChiefFinancial Officer of Liquor Stores and dated February 4, 2018;

k) Certain other non-public documents requested by Paradigm Capital that it felt were relevant to thecompletion of the Fairness Opinion; and

l) Discussions with management of Liquor Stores.




Paradigm Capital has not, to the best of its knowledge, been denied access by Liquor Stores to anyinformation requested. Paradigm Capital did not meet with the auditors of Liquor Stores, and has assumed theaccuracy and fair presentation of the audited consolidated financial statements of Liquor Stores and thereports of the auditors thereon.

This Opinion has been prepared in accordance with the Disclosure Standards for Formal Valuations andFairness Opinions of IIROC but IIROC has not been involved in the preparation or review of this Opinion.

ASSUMPTIONS AND LIMITATIONSWith the approval of the Special Committee and as provided in the Engagement Agreement, Paradigm Capitalhas relied upon, without independent verification, all financial and other information that was obtained by usfrom public sources or that was provided to us by Liquor Stores and its affiliates, associates, advisors orotherwise. We have assumed that this information was complete and accurate as of the date thereof, and nonecessary or material facts were omitted that may make the information misleading. In accordance with theterms of our engagement, but subject to the exercise of our professional judgment, we have not conductedany independent investigation to verify the completeness or accuracy of such information. This Opinion isconditional upon such completeness and accuracy. With respect to the financial forecasts and budgetsprovided to us and used in our analysis, we have assumed that they have been prepared using the bestcurrently available estimates and reasonable judgments of management of Liquor Stores as to the matterscovered thereby. The Chief Executive Officer and Chief Financial Officer, respectively, of Liquor Stores haverepresented to us in the Certificate, among other things, that (i) the information, opinions and other materials(the “Information”) provided to us by or on behalf of Liquor Stores are complete and accurate as of the dateof the Information and that, since the date the Information was provided, except as publicly disclosed, therehas been no material change, financial or otherwise, in Liquor Stores or in its assets, liabilities (contingent orotherwise), business, financial condition or operations and there has been no change in any material factwhich is of a nature as to render the Information untrue or misleading in any material respect, except to theextent disclosed in subsequent Information, and (ii) Liquor Stores has no knowledge of any facts orcircumstances, public or otherwise, not contained in or referred to in the Information that could reasonably beexpected to affect the Opinion, including the assumptions used, procedures adopted, the scope of the reviewundertaken or the conclusions reached.

This Opinion is based on the securities markets, economic, financial and general business conditionsprevailing as of the date of this Opinion and the conditions and prospects, financial and otherwise, of LiquorStores as they were reflected in the information reviewed by us. In its analysis and in preparing this Opinion,Paradigm Capital has made a number of assumptions with respect to industry performance, general businessand economic conditions, and other matters, many of which are beyond the control of Paradigm Capital,Liquor Stores, the Investor and any other party involved in the Transaction. Paradigm Capital has not taken aview on the future prospects of Liquor Stores in the cannabis industry.

Paradigm Capital is not a legal, tax, or accounting expert and expresses no opinion concerning any legal, tax,or accounting matters concerning the Transaction or the sufficiency of the Opinion for the SpecialCommittee’s purposes.

Paradigm Capital has also assumed that the representations and warranties of the parties in the DefinitiveDocuments are accurate and that the final terms of the Transaction will be fully complied with, and will be




substantially the same as those described by Liquor Stores’ senior officers to Paradigm Capital and thosecontained in the draft Definitive Documents provided to Paradigm Capital. Finally, Paradigm Capital hasassumed that all material governmental, regulatory or other required consents and approvals necessary forthe consummation of the Transaction will be obtained without any material adverse effect on Liquor Stores.

This Opinion has been provided for use by the Special Committee and, other than as contemplated herein,may not be used or relied upon by any other person without the express written consent of Paradigm Capital.This Opinion is given as of the date hereof and Paradigm Capital disclaims any undertaking or obligation toadvise any person of any change in any fact or matter affecting this Opinion which may come or be brought toParadigm Capital’s attention after such date. The Opinion is limited to Paradigm Capital’s understanding of theTransaction as of the date hereof and Paradigm Capital assumes no obligation to update this Opinion to takeinto account any changes regarding the Transaction after such date.

OPINIONS OF FINANCIAL ADVISORSIn preparing this Opinion, Paradigm Capital performed a variety of financial and comparative analyses,including those described below. The summary of Paradigm Capital’s analyses described below is not acomplete description of the analyses underlying this Opinion. The preparation of a fairness opinion is acomplex analytical process involving various determinations as to the most appropriate and relevant methodsof financial analyses, and the application of those methods to the particular circumstances. Therefore, afairness opinion is not readily susceptible to partial analysis or summary description. In forming the Opinion,Paradigm Capital made qualitative judgements as to the significance and relevance of each analysis andfactor that it considered. Accordingly, Paradigm Capital believes that its analyses must be considered as awhole, and that selecting portions of its analyses and factors, without considering all analyses and factors,including the narrative description of the analyses, could create a misleading or incomplete view of theprocesses underlying its analyses and this Opinion. This Opinion is not to be construed as a determination asto whether the Transaction is consistent with the best interests of Liquor Stores or the shareholders of LiquorStores.

In its analyses, Paradigm Capital considered industry performance, general business, economic, market,political and financial conditions and other matters, many of which are beyond the control of Liquor Stores. Nocompany, transaction or business used in Paradigm Capital’s analyses as a comparison is identical to LiquorStores or the Transaction, and an evaluation of the results of those analyses is not entirely mathematical.Rather, the analyses involve complex considerations and judgements concerning financial and operatingcharacteristics and other factors that could affect investment into Liquor Stores, public trading of LiquorStores or other values of the companies, business segments or transactions being analyzed. The estimatescontained in Paradigm Capital’s analyses, and the ranges of valuations resulting from any particular analysisare not necessarily indicative of actual values or predictive of future results or values, which may besignificantly more or less favourable than those suggested by the analyses. In addition, analyses relating tothe value of businesses or securities do not purport to be appraisals or to reflect the prices at whichbusinesses or securities actually may be sold. Accordingly, Paradigm Capital’s analyses and estimates areinherently subject to substantial uncertainty and the Opinion is conditional upon the correctness of all of theassumptions indicated herein. This Opinion should be read in its entirety.




LIQUOR STORES OVERVIEW

Liquor Stores is the largest North American liquor retailer with stores in Western Canada and Alaska. Its storesinclude a selection of wine, spirits, coolers, liqueurs, beer and specialty products with its retail brandsincluding Liquor Depot/Liquor Barn, Wine and Beyond, Wine Cellar and Brown Jug. The Company alsosupplies liquor on a wholesale basis to restaurants, lounges, nightclubs and other licensees in Alberta. LiquorStores (the successor to the Liquor Stores Income Fund) commenced operations as such on December 31,2010 and is headquartered in Alberta, Canada.

FAIRNESS METHODOLOGY

The Opinion has been prepared based on techniques that Paradigm Capital considers appropriate in thecircumstances, after considering all relevant facts and taking into account Paradigm Capital’s assumptions, inorder to determine the fairness, from a financial point of view, of the Consideration payable pursuant to theTransaction to Liquor Stores.

Paradigm Capital relied on a variety of financial and comparative analyses, including those described below:

a) Precedent transaction enterprise value (“EV”)/EBITDA;

b) Comparable EV/Revenue;

c) Comparable EV/EBITDA; and

d) Discounted cash flow (“DCF”) analysis.

A) PRECEDENT TRANSACTION EV/EBITDAParadigm Capital identified a list of eight comparable global retail and consumables minority investmenttransactions and five global change of control transactions involving liquor store and retail companiesannounced in the past three years, where public information was available (the “Precedent Transactions”).Paradigm Capital applied the median range of transaction EV/EBITDA multiples to Liquor Stores’ estimatedpro-forma 2017 EBITDA, adjusted to exclude the divested businesses.

B) COMPARABLE EV/REVENUEParadigm Capital identified a list of seven comparable global liquor retailers, nine comparable North Americangrocers and five Canadian specialty retailers. Paradigm Capital believes that Liquor Stores should trade mostsimilarly to North American grocers, due to its relatively mature, limited growth business profile and similarmargins. In addition, Paradigm Capital selected one global liquor retailer comparable, due to the similarity ofits business operations, revenue scale and margins. Paradigm Capital applied the average North Americangrocery EV/Revenue multiple and that of the selected liquor comparable to Paradigm Capital’s estimates forLiquor Stores’ 2018 and 2019 revenue.

C) COMPARABLE EV/EBITDAParadigm Capital identified a list of seven comparable global liquor retailers, nine comparable North Americangrocers and five Canadian specialty retailers. Paradigm Capital believes that Liquor Stores should trade mostsimilarly to North American grocers, due to its relatively mature, limited growth business profile and similar




margins. In addition, Paradigm Capital selected one global liquor retailer comparable, due to the similarity ofits business operations, revenue scale and margins. Paradigm Capital applied the average North Americangrocery EV/EBITDA multiple and that of the selected liquor comparable to Paradigm Capital’s estimates forLiquor Stores’ 2018 and 2019 EBITDA.

D) DCF ANALYSISDCF Analysis was conducted on Liquor Stores based on management forecasts. The DCF considered thepresent value of the free cash flows to the firm generated by Liquor Stores using an appropriate discount ratedefined as the company’s weighted average cost of capital. This approach took into account the timing andrelative certainty of projected cash flows, and required that certain assumptions be made regarding, amongother things, revenue growth, operating expenses, timing and discount rates.

FAIRNESS CONSIDERATIONSIn preparing the Opinion as to the fairness, from a financial point of view, of the Consideration to be receivedby the Company, Paradigm Capital has considered, among other things, the following factors:

a) the Consideration represented a premium of 28.4% over the closing price per share on the TSX onFebruary 2, 2018, the last trading day prior to the date of this Opinion and a premium of 26.6% to thevolume weighted average price per share based on TSX volume over the last 20 trading days endingFebruary 2, 2018 and 44.6% over the closing price per share on the TSX on December 23, 2017, the dateof signing of the non-binding term sheet;

b) the implied transaction multiples derived from the Consideration compare favourably with the PrecedentTransactions and, while considered less relevant, the Consideration compares favourably with LiquorStores’ publicly traded peer group;

c) the Consideration is above the upper range of values for implied share price as indicated by the DCF;

d) the Consideration is all cash and will provide the Company with the opportunity to de-lever andstrengthen the Company balance sheet, invest capital for other initiatives and gain a foothold in thecannabis industry; and

e) without commenting on the merits of the Company’s strategy in entering into the Transaction, we dorecognize the opportunity for the Company to develop a relationship with a cannabis producer andmarketer, potentially gaining a foothold in the burgeoning cannabis industry.

CONCLUSIONBased upon and subject to the foregoing and such other factors as Paradigm Capital considered relevant,Paradigm Capital is of the opinion that, as of the date hereof, the Consideration payable pursuant to theTransaction is fair, from a financial point of view, to the Company.

Yours very truly,

PARADIGM CAPITAL INC.



LIQUOR STORES N.A. LTD.101, 17220 Stony Plain RoadEdmonton, AlbertaT5S 1K6

www.liquorstoresna.ca