High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

This management’s discussion and analysis (this “MD&A”) of High Tide Inc. (“High Tide” or the “Company”) for the Quarter ended April 30, 2023, and 2022 is dated June 14, 2023. This MD&A should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company for the Quarter ended April 30, 2023 and 2022 together with the notes thereto and the audited consolidated financial statements of the Company for the years ended October 31, 2022 and 2021 (hereafter the “Financial Statements”). The financial information presented in this MD&A has been derived from the Financial Statements and prepared in accordance with the International Accounting Standard (“IAS”) 34 Interim Financial Reporting as issued by the International Accounting Standards Board. The Company’s continuous disclosure materials, including interim filings, audited annual consolidated financial statements, annual information form and annual report on Form 40-F can be found on SEDAR at www.sedar.com, with the Company’s filings with the SEC at www.sec.gov.

In this MD&A, the terms “we”, “us” and “our” refer to High Tide. This MD&A also refers to the Company’s three reportable operating segments: (i) the “Retail” Segment represented by brands, including Canna Cabana, Grasscity, Smoke Cartel, FABCBD, Daily High Club, DankStop, Blessed CBD and NuLeaf Naturals, (ii) the “Wholesale” Segment represented by brands Valiant, and (iii) the “Corporate” Segment (each as defined below under the heading – Glossary of Terms).

High Tide is a leading retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company’s shares are listed on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “HITI” as of June 2, 2021, the TSX Venture Exchange (“TSXV”) under the symbol “HITI”, and the Frankfurt Stock Exchange under the securities identification code ‘WKN: A2PBPS’ and the ticker symbol “2LYA”. The address of the Company’s corporate and registered office is # 120 – 4954 Richard Road SW, Calgary, Alberta, T3E 6L1, while the address of the Company’s headquarters is #112, 11127 15 Street NE, Calgary, Alberta, T3K 2M4.

Glossary of Terms

In this MD&A, unless otherwise indicated or if the context otherwise requires, “2018 Farm Bill” means the Agriculture Improvement Act of 2018, including any regulations promulgated thereunder, as amended; “Adjusted EBITDA” has the meaning ascribed thereto under the heading “EBITDA and Adjusted EBITDA”; “ECL” means expected credit loss; “Agents” means collectively ATB Capital Markets Inc. and ATB Capital Markets USA Inc.; “Applicable Securities Laws” means, as applicable, the securities legislation, securities regulation and securities rules, and the policies, notices, instruments and blanket orders of each Canadian securities regulator having the force of applicable law and in force from time to time; “ATM Program” means the at-the-market equity offering program of the Company established pursuant to the ATM Prospectus Supplement on December 6, 2021, which allows the Company to issue up to $40,000,000 (or the equivalent in U.S. dollars) of Common Shares from its treasury to the public from time to time, at the Company’s discretion and subject to regulatory requirements; “ATM Prospectus Supplement” means the prospectus supplement of the Company dated December 3, 2021 relating to the ATM Program; “Authorizations” means, collectively, all consents, licenses, registrations, permits, authorizations, permissions, orders, approvals, clearances, waivers, certificates, and declarations issued, granted, given or otherwise made available by or under the authority of any government entity or pursuant to any requirement under applicable law; “Blessed CBD” means Enigmaa Ltd.; “Board” means the board of directors of the Company, as constituted from time to time; “Bought Deal Offering” has the meaning ascribed thereto under the heading “July 2022 Bought Deal”; “Bud Heaven” means Livonit Foods Inc.; “Bud Room” means Bud Room Inc.; “Business” means the business carried on by High Tide and its subsidiaries as at the date of this MD&A, and where the context so requires, includes the business carried on by High Tide and its subsidiaries prior to the date of this MD&A; “Canadian Shelf Prospectus” means the Company’s final base shelf prospectus dated April 22, 2021 filed with the securities commissions or similar regulatory authorities in each of the provinces and territories of Canada; “Canna Cabana” means Canna Cabana Inc.; “Cannabis Act” means the Cannabis Act (Canada), including any regulations promulgated thereunder, as amended; “Cannabis” or “cannabis” means the plant Cannabis sativa L; “Cannabinoid” means a group of closely related compounds which include cannabiol and the active constituents of cannabis; “CBD” means industrial Hemp-based cannabidiol; “CBG” means industrial Hemp-based cannabigerol; “CGU” means cash-generating unit; “Choom” means Choom Holdings Inc. and its subsidiaries and their respective stores; “Common Shares” means the common shares in the capital of the Company; “connectFirst” means Connect First Credit Union Ltd.; “connectFirst Credit Facility” has the meaning ascribed thereto under the heading “connectFirst Credit Facility”; “Corporate segment” means corporate support service to assist retail and wholesale segments; “Crossroads Cannabis” means the cannabis stores operating under the brand Crossroads Cannabis; “DankStop” means DS Distribution Inc., operating as ‘Dankstop.com’; “DEA” means

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

the U.S Drug Enforcement Administration; “Delta-8” means delta-8 tetrahydrocannabinol; “Delta-9” or “THC” means delta-9 tetrahydrocannabinol; “DSHEA” means the Dietary Supplement Health and Education Act of 1994; “Daily High Club” means DHC Supply, LLC; “EBITDA” means earnings before interest, taxes, depreciation and amortization; “Equity Distribution Agreement” means the equity distribution agreement dated December 3, 2021 entered into among the Company and Agents associated with the ATM Program; “Exchange Act” means the Securities Exchange Act of 1934; “FABCBD” means Fab Nutrition, LLC; “Federal Paraphernalia Law” means U.S. Code Title 21 Section 863; “FDA” means U.S. Food and Drug Administration; “FDCA” means the Federal Food, Drug, and Cosmetic Act; “FOFI” means future oriented financial information; “FTC” means the U.S. Federal Trade Commission; “FTCA” means the Federal Trade Commission Act; “FVLCD” means fair value less costs of disposal; “FVTPL” means fair value through profit and loss; “GBP” means British pound sterling; “Grasscity” means collectively, High Tide B.V., SJV B.V., and SJV2 B.V.; “Halo Kushbar” means the sale of three operating Kushbar retail cannabis assets to Halo Labs Inc.; “Hemp” means the plant cannabis sativa L. and any part of that plant, including the seeds thereof, and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a THC concentration of not more than 0.3% on a dry weight basis; “IAS” means International Accounting Standards ; ”ICFR” means internal control over financial reporting; “IFR” means Interim Final Rule; “IFRS Committee” means IFRS Interpretations Committee; “IND” means Investigational New Drug Application; “IND Preclusion” means section 201(ff)(3)(B)(ii) of the FDCA; “Kensington” means the licensed cannabis retail store location in Alberta purchased on June 4, 2022 ; “Key Personnel” means collectively Management and certain consultants; “Jimmy’s” means 1171882 B.C. Ltd., operating as Jimmy’s Cannabis Shop BC; “July 2022 Warrant” has the meaning ascribed thereto under the heading “July 2022 Bought Deal”; “Lender” means ATB Financial; “Licensed Producers” means any Person duly authorized by Health Canada pursuant to applicable laws to engage in the cultivation, production, growth and/or distribution of cannabis; “Person” includes any individual, partnership, association, body corporate, organization, trust, estate, trustee, executor, administrator, legal representative or government (including any governmental entity), syndicate or other entity, whether or not having legal status; “Management” means the management of the Company, as constituted from time to time; “Material Adverse Effect” means a material adverse effect on the Business carried on by the Company and its subsidiaries as at the date of this MD&A, the properties, assets, liabilities (including contingent liabilities), results of operations, financial performance, financial condition, or the market and trading price of the securities, of the Company and its subsidiaries, taken as a whole; “Meta Growth” means Meta Growth Corp.; “NI 52-109” means National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings; “SEC” means the U.S. Securities and Exchanges Commission; “SPPI” means solely payment of principal and interest; “NDI” means New Dietary Ingredient; “NuLeaf Naturals” means NuLeaf Naturals, LLC; “Omnibus Plan” means the 20% fixed compensation incentive plan of the Company, as amended from time to time; “Ontario Lottery Winner” means the third winner of the lottery conducted by the Alcohol and Gaming Commission of Ontario on January 11, 2019, for the allocation of one of the 25 limited opportunities to apply for a Retail Store Authorization to operate a cannabis retail store in the Province of Ontario whom the Company entered into an option agreement with and ultimately purchased stores from; “Registration Statement” means the Company’s registration statement on Form F-10 in connection with the Company becoming a registrant effective June 2, 2021 with the SEC upon the Company’s Form 40-F registration statement becoming effective; “Retail Store Authorization” means, collectively, the Authorizations required to engage in the retail sale and distribution of adult-use cannabis and cannabis products at licensed premises; “RSU” means restricted share units of the Company granted pursuant to the Omnibus Plan; “Sarbanes-Oxley” means the Sarbanes-Oxley Act (United States); “SKU” means stock keeping unit; “Smoke Cartel” means Smoke Cartel USA Inc.; “U.K.” means the United Kingdom; “Unit” has the meaning ascribed thereto under the heading “July 2022 Bought Deal”; “U.S.” means United States of America; “U.S. Base Prospectus” means the Company’s U.S. base prospectus dated September 17, 2021 included in the Registration; “U.S. Prospectus Supplements means the prospectus supplement dated December 3, 2021 to the U.S. Base Prospectus; “USD” United States dollars; “USDA” means the U.S. Department of Agriculture; “Valiant” means Valiant Distribution Canada Inc.; “Warrants” means the Common Share purchase warrants of the Company.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Corporate Overview

Nature of Operations

The Company’s vision is to offer a full range of best-in-class products and services to cannabis consumers, while growing organically and through acquisitions, to become the world’s premier retail-focused and vertically integrated cannabis enterprise.

The Company’s retail operations are focused on business-to-consumer markets. The operations of Canna Cabana is focused on the retail sale of recreational cannabis products for adult use as well as consumption accessories in Canada. The Company’s e-commerce operations are made up of Grasscity, Smoke Cartel, FABCBD, Daily High Club, DankStop, Blessed CBD and NuLeaf Naturals. Grasscity has been operating as a major e-commerce retailer of consumption accessories for over 20 years. It has significant brand equity in the United States and around the world, while providing an established online sales channel for High Tide to sell its proprietary products. Smoke Cartel was founded in 2013 and has grown to become one of the most searchable sites of its kind. FABCBD was founded in 2017 and has grown to be one of the leading online retailers in the Hemp-derived CBD space in the United States, and with over one million consumption accessories sold under the Daily High Club name, Daily High Club has become one of the leading online retailers of in demand consumption accessories and monthly subscription boxes. DankStop is a leading online consumption accessories retailer. With an industry leading and innovative website and a dedicated support team, DankStop has been raising the bar for online consumption supply industry since 2014. Blessed CBD is one of the leading online retailers for CBD products in the U.K. Blessed CBD provides a marketplace with a wide variety of high-quality products and formulas, affordable pricing, rapid dependable shipping, and surprisingly personable customer service. Blessed CBD has been featured as the best U.K. CBD oil in several publications including The Mirror, Reader’s Digest, and Maxim Magazine, further establishing the Company’s e-commerce presence. NuLeaf Naturals is one of America’s leading CBD companies. Since 2014, NuLeaf Naturals has been committed to creating the world’s highest quality CBD products in their most pure and potent form. NuLeaf Naturals’ products are produced at a cGMP-certified facility enabling them to manufacture groundbreaking CBD formulations while exceeding the highest levels of regulatory compliance. NuLeaf Naturals is committed to creating safe, consistent, and effective products and has proudly received over 25,000 verified 5-star customer reviews through their e-commerce platform.

The wholesale operations of Valiant helps with the overall product strategy of the retail operations of the Company and are primarily focused on the manufacturing and distribution of consumption accessories. Valiant designs and distributes a proprietary suite of branded consumption accessories including overseeing their contract manufacturing by third parties. Valiant also focuses on acquiring celebrity licenses, designing, and distributing branded consumption accessories. Additionally, it also distributes a minority of products that are manufactured by third parties. Valiant does not sell its products directly to consumers but operates an e-commerce platform for wholesale customers.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Competitive Landscape

As of the date of this MD&A, the Company operates 153 branded retail cannabis stores across Canada. The Company operates 150 corporately owned retail cannabis locations represented by 77 locations in Alberta, 48 locations in Ontario, 10 locations in Saskatchewan, 7 locations in British Columbia, and 8 locations in Manitoba. Further, the Company has a 50% interest in a partnership that operates a branded retail Canna Cabana location in Sudbury, Ontario and two joint venture operations with a 49% interest that operates two branded retail locations in Manitoba.

The Company’s retail recreational cannabis products operation operates amongst many competitors, both consolidated chains and independent operators. Notable competitors include Fire & Flower Holdings Corp. and NOVA Inc., as well as numerous independent retailers.

Most of the Company’s competitors applicable to its Wholesale Segment operate primarily as product distributors, while Valiant designs, sources and distributes most of their own products. This creates advantages through vertical integration, thereby enabling Valiant to bring unique product designs to market and offer wholesale customers favourable terms, proprietary products, and flexible pricing.

In the future, the Company expects that its brick-and-mortar retail operations will experience slightly reduced competition to what it has faced in prior quarters from the recreational cannabis industry as a greater number of third-party stores are realizing negative or flat growth across Canada. As the legalization of Cannabis in Canada occurred on October 2018, the Company expects that a significant amount of leases are coming due after hitting the standard five-year renewal period. Our expectation is that a few competitors will not renew their leases. The Company believes through its innovative discount club model, that its vertically integrated e-commerce and wholesale operations, product and industry knowledge, robust loyalty program, and operational expertise will enable it to operate profitably over the long term. While the Company is presently focused on its existing markets in the Provinces of Ontario, Alberta, Saskatchewan, British Columbia, and Manitoba, the Company is looking to expand its presence in Ontario and other provinces which we anticipate in fiscal year 2023. The Company is currently evaluating entering other provinces and territories including Northwest Territories, and the Yukon as regulations permit and anticipates being able to grow both organically as well as through acquisitions in the future.

Select Financial Highlights and Operating Performance


	Three months ended April 30			Six months ended April 30
	2023	2022	Change	2023	2022	Change
	$	$		$	$
Revenue	118,136	81,031	46%	236,212	153,249	54%
Gross Profit	31,569	22,694	39%	63,751	45,676	40%
Gross Profit Margin	27%	28%	(1%)	27%	30%	(3%)
Total Operating Expenses⁽ⁱ⁾	(34,211)	(30,272)	(13%)	(70,314)	(59,401)	(18%)
Adjusted EBITDA⁽ⁱⁱ⁾	6,589	2,401	174%	12,089	5,357	126%
Loss from Operations	(2,642)	(7,578)	65%	(6,563)	(13,725)	52%
Net loss	(1,568)	(8,277)	81%	(5,429)	(15,629)	65%
Loss per share (Basic)	(0.02)	(0.14)	85%	(0.07)	(0.28)	74%

Note:

(i)

Total operating expenses is a non-IFRS financial measure.

(ii)

Adjusted EBITDA is a non-IFRS financial measure. A reconciliation of the Adjusted EBITDA to Net (Loss) income is found under “EBITDA and Adjusted EBITDA” in this MD&A.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Revenue increased by 46% to $118,136 in the second quarter of 2023 (2022: $81,031) and gross profit increased by 39% to $31,569 in the second quarter of 2023 (2022: $22,694). Loss from operations was $2,642 in the second quarter of 2023 (2022: loss $7,578).

The key factors affecting the results for the quarter ended April 30, 2023, were:

● Merchandise Sales – Merchandise sales increased by 46% for the quarter ended April 30, 2023, as compared to 2022. Growth in revenue was largely driven by organic growth and continued increase in same store sales. Same-store sales increased by 30% compared to 2022.

●

Gross Profit Margin – Gross Profit Margin decreased by 1% for the quarter ended April 30, 2023, as compared to 2022. The decrease in gross profit margin was driven due to the strategic shift in our retail strategy with the launch of the discount club model and decrease in volume in the e-commerce business that has higher margins compared to the brick and mortar retail segment.

● Operating Expenses – Operating expenses increased by 13% for the quarter ended April 30, 2023, compared to 2022, and as a percentage of revenue decreased by 8% in the second quarter of 2023 to 29% (2022: 37%). Operating expenses increased over the same period in 2022 due to the Company’s continued growth of their Retail Segment through new store openings, the acquisitions of Jimmy’s, Choom, Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Bud Heaven, Halo Kushbar, Ontario Lottery Winner, and Kensington.

Revenue

Revenue increased by 46% to $118,136 in the second quarter of 2023 (2022: $81,031) and by 54% to $236,212 in six-month period ended April 30, 2022 (2022: $153,249).

The increase in revenue was driven primarily by the Company’s Retail Segment through the acquisitions of Bud Room on Feb 9, 2022, 2080791 Alberta Ltd. on April 21, 2022, Crossroads Cannabis on April 26, 2022, Ontario Lottery Winner on May 10, 2022, Bud Heaven on June 1, 2022, Kensington on June 4, 2022, and Halo Kushbar on July 15, 2022, Choom on August 2, 2022, Jimmy’s Cannabis on December 29, 2022 and was also due to the shift in the retail pricing strategy, and launch of our discount club model and organic growth.

Canna Cabana provides a unique customer experience focused on retention and loyalty through the Cabana Club membership platform. Members of Cabana Club receive member-only pricing, short message service and email communications highlighting new and upcoming product arrivals, member-only events, and other special offers. The database communicates with highly relevant consumers who are segmented at the local level by delivering regular content that is specific to their local Canna Cabana. As of the date of this MD&A, over 1,040,000 members have joined Cabana Club, with over 90% of our average daily transactions conducted by club members. Additionally, approximately 13,500 members have joined Cabana ELITE, an optional paid membership upgrade for Cabana Club members, generating over $405 in membership fees.

Gross Profit

For the quarter ended April 30, 2023, gross profit increased by 39% to $31,569 (2022: $22,694) and by 40% to $63,751 for the six-month period ended April 30, 2022 (2022: $45,676). The increase in gross profit was driven by an increase in sales volume due to the change in retail pricing strategy as well as the acquisitions of Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Bud Heaven, Halo Kushbar, Ontario Lottery Winner, Kensington, Choom, and Jimmy’s. The gross profit margin decreased to 27% for the quarter ended April 30, 2023 (2022: 28%). The decrease in gross profit margin was driven by the decrease in volume in the e-commerce business that has higher margins compared to the retail segment.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Operating Expenses

Total operating costs increased by 13% to $34,211 in the second quarter of 2023 (2022: $30,272) and by 18% to $70,314 for the six-month period ended April 30, 2023 (2022: $59,401). For the second quarter of 2023 operating expenses as a percentage of revenue decreased to 29% compared to 37% in Q2 2022. Operating expenses increased over the same period in 2022 due to the Company’s continued growth of our Retail Segment through new store openings and acquisitions.

Salaries, wages, and benefits expenses increased by 45% to $13,940 in the second quarter of 2023 (2022: $9,592) and by 45% to $28,242 for the six-month period ended April 30, 2023 (2022: $19,479). The increase in staffing was due primarily to acquisitions, as well as an additional corporate level personnel to facilitate the integration of acquisitions and to support the growth in the number of cannabis locations.

Share-based compensation decreased to $1,532 for the quarter ended April 30, 2023 (2022: $2,353) and to $2,968 for the six-month period ended April 30, 2023 (2022: $4,255). The decrease in share-based compensation was primarily due to lower amount being granted for options and RSUs to employees, directors, and consultants of the Company.

General and administrative expenses decreased by 6% to $6,191 in the second quarter of 2023 (2022: $5,815) and increased by 39% to $13,688 for the six-month period ended April 30, 2023 (2022: $9,843).

Professional fees expense increased by 39% to $2,684 for the second quarter of 2023 (2022: $1,932) and by 7% to $5,112 for the six-month period ended April 30, 2023 (2022: $4,765), due to increased additional costs related to tax and accounting services for newly acquired entities, and legal fees in the normal course of Business.

Advertising and promotion expense decreased by 50% to $1,048 for the second quarter of 2023 (2022: $2,095) and by 44% to $2,537 for the six-month period ended April 30, 2023 (2022: $4,498). The decrease in advertising and promotion costs was primarily driven by the reduction in online traffic due to the pandemic impact lessening in late 2022 and the change in the strategy where the Company is moving towards a centralize marketing approach for all CBD business.

Depreciation and amortization expense on property, equipment, intangibles, and right-of-use assets of $7,699 for the second quarter of 2023 (2022: $7,627) and $15,685 for the six-month period ended April 30, 2023 (2022: $14,738) for the second quarter of 2023 increased by 6% compared to 2022 primarily due to the acquisitions of Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Bud Heaven, Halo Kushbar, Ontario Lottery Winner, Kensington, Choom, Jimmy’s, and the building of 10 new stores.

Interest and bank charges increased by 30% to $1,117 for the second quarter of 2023 (2022: $858) and by 20% to $2,082 for the six-month period ended April 30, 2023 (2022: $1,734). The increase in interest and bank charges is primarily due to increased merchant charges incurred through the normal course of business through the acquired operations of Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Bud Heaven, Halo Kushbar, Ontario Lottery Winner, Kensington, Choom, Jimmy’s, and the building of 10 new stores.

Financing and Other Costs

Financing and other costs were flat with $2,194 recorded for the quarter ended April 30, 2023 (2022: $2,210) and $4,672 for the six-month period ended April 30, 2023 (2022: $4,670). The increase in Interest bearing loans and borrowings was partially offset by a reduction in transaction costs.

Revaluation of Derivative Liability

The Company recorded a gain from the revaluation of derivative liability of $1,288 during the second quarter of 2023 (2022: gain of $728) and $2,549 for the six-month period ended April 30, 2023 (2022: gain of $1,253). During the quarter the derivative liability increased as a result of a revaluation of put options associated with the acquisitions of NuLeaf Naturals, Blessed CBD, and FABCBD.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

ATM Program

Pursuant to the ATM Program, during the second quarter ended April 30, 2023, the Company issued an aggregate of 22,000 Common Shares over the TSXV and Nasdaq, for aggregate gross proceeds to the Company of $41 (Quarter ended April 30, 2022: 1,336,313 Common Shares; $7,407), with most of this amount raised between Dec 2022 and January 2023. We have not issued any shares under the ATM since the end of the quarter.

Pursuant to the Equity Distribution Agreement, a cash commission of $1 on the aggregate gross proceeds raised was paid to the Agents in connection with their services under the Equity Distribution Agreement during the second quarter ended April 30, 2023.

The Company intends to use the net proceeds of the ATM Program, if any, and at the discretion of the Company, to fund strategic initiatives it is currently developing, to support the growth and development of the Company’s existing operations, funding future acquisitions as well as working capital and general corporate purposes.

Common Shares issued pursuant to the ATM Program will be issued pursuant to the ATM Prospectus Supplement to the Canadian Shelf Prospectus and U.S. Prospectus Supplement. The Canadian Prospectus Supplement and Canadian Shelf Prospectus are available for download from SEDAR at www.sedar.com, and the U.S. Prospectus Supplement, U.S. Base Prospectus and Registration Statement are accessible via EDGAR on the SEC’s website at www.sec.gov.

The ATM Program is effective until the earlier of (i) the date that all Common Shares available for issue under the ATM Program have been sold, (ii) the date the Canadian Prospectus Supplement in respect of the ATM Program or Canadian Shelf Prospectus is withdrawn and (iii) the date that the ATM Program is terminated by the Company or Agents.

July 2022 Bought Deal

On July 22, 2022, the Company completed a bought deal short-form base shelf prospectus supplement offering pursuant to the Canadian Shelf Prospectus (the “Bought Deal Offering”) of units (each, a “Unit”). In connection with the Bought Deal Offering, the Company issued an aggregate of 4,956,960 (including the exercise in full of the underwriters’ over-allotment option) Units at a price of $2.32 per Unit, for aggregate gross proceeds of $11,500. Each Unit was comprised of one Common Share and one Common Share purchase warrant (each, a “July 2022 Warrant”). Each July 2022 Warrant entitles the holder thereof to purchase one additional Common Share at an exercise price of $2.73 per July 2022 Warrant for a period of 60 months from closing of the Bought Deal Offering.

connectFirst Credit Facility

On August 15, 2022, the Company entered into a $19,000 demand term loan with connectfirst (the “connectFirst Credit Facility”) with the first tranche, $12,100, available in a single advance, and the second tranche, $6,900, available in multiple draws subject to certain pre-disbursement conditions. The demand loan bears interest at connectFirst’s prime lending rate plus 2.50% per annum and matures on October 7, 2027.

The first tranche is repayable on demand, but until demand is made the connectFirst Credit Facility is repaid in monthly blended payments of principal and interest of $241. Blended payments may be adjusted from time to time, if necessary, based on connectFirst’s prime lending rate, the principal outstanding, and amortization period remaining. On October 7, 2022, the Company received the inflow of funds for the first tranche. The purpose of the first tranche was to pay outstanding loans.

The second tranche is also repayable on demand, but until demand is made the connectFirst Credit Facility is repaid in monthly blended payments of principal and interest of $147. Blended payments may be adjusted from time to time, if necessary, on the basis of connectFirst’s prime lending rate, the principal outstanding and amortization period remaining. On October 25, 2022, the Company

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

received the inflow of funds for the second tranche. Interest rate and terms (60 months) are the same as the first tranche. However, the purpose of the second tranche is to finance working capital and set up new organic stores.

In connection with the connectFirst Credit Facility, the Company provided:

(a)

A general security agreement comprising a first charge security interest over all present and after acquired personal property, registered at Personal Property Registry and provided an unlimited guarantee and postponement of claim granted by Canna Cabana (including supporting corporate documents);

(b)

A general security agreement comprising a first charge security interest over all present and after-acquired personal property, registered at Personal Property Registry and provided an unlimited guarantee and postponement of claim granted by Meta Growth (including supporting corporate documents);

(c)

A general security agreement comprising a first charge security interest over all present and after-acquired personal property, registered at Personal Property Registry and provided an unlimited guarantee and postponement of claim granted by 2680495 Ontario Inc. (including supporting corporate documents);

(d)

A general security agreement comprising a first charge security interest over all present and after-acquired personal property, registered at Personal Property Registry and provided an unlimited guarantee and postponement of claim granted by Valiant Distributions (including supporting corporate documents); and

(e)

A general security agreement comprising a first charge security interest over all present and after-acquired personal property, registered at Personal Property Registry.

Covenants attached to the connectFirst Credit Facility:

(a)

The Company’s debt service coverage ratio shall be not less than 1.40:1, to be tested at the end of each fiscal quarter of the Company based on a trailing four-quarters basis using consolidated financial statements beginning April 30, 2023. As at April 30, 2023, the Company was in compliance with the debt service coverage ratio.

(b)

The Company shall at all times maintain in the Company’s account with connectFirst the greater of $7,500 and 50% of the aggregate debt of the Company to connectFirst. A five-business day cure period is permitted. Included in the Cash and cash equivalents is $8,967 held in the Company’s account with connectFirst.

(c)

The Company shall at all times maintain a current ratio of not less than 1.25:1, to be tested monthly using consolidated financial statements. As at April 30, 2023, the Company was in compliance with the current ratio.

(d)

The Company shall at all times maintain a funded debt to EBITDA ratio of not more than 3:1, to be tested quarterly on a consolidated basis beginning April 30, 2023. As at April 30, 2023, the Company was in compliance with the funded debt to EBITDA ratio.

As at April 30, 2023, the Company has met all the requirements of the connectFirst Credit Facility.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Segment Operations

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

For the three months ended April 30,

2023

2022

2023

2022

2023

2022

2023

2022

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

117,529

80,045

428

973

179

118,136

81,031

Gross profit

31,339

22,536

135

176

31,569

22,694

(Loss) income from operations

5,624

(1,021)

(781)

(592)

(7,485)

(5,965)

(2,642)

(7,578)

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

For the six months ended April 30,

2023

2022

2023

2022

2023

2022

2023

2022

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

234,455

151,011

1,578

2,186

179

236,212

153,249

Gross profit

63,280

45,304

296

314

175

63,751

45,676

(Loss) income from operations

9,479

(1,588)

(1,723)

(910)

(14,319)

(11,227)

(6,563)

(13,725)

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

As at April 30, 2023 and October 31, 2022

2023

2022

2023

2022

2023

2022

2023

2022

($)

($)

($)

($)

($)

($)

($)

($)

Total assets

227,935

241,394

8,357

11,949

31,801

21,400

268,093

274,743

Total liabilities

66,126

71,780

340

3,054

37,248

37,876

103,714

112,710

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Canada

Canada

USA

USA

International

International

Total

Total

For the three months ended April 30,

2023

2022

2023

2022

2023

2022

2023

2022

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

103,606

63,456

13,661

15,937

869

1,638

118,136

81,031

Gross profit

24,843

13,922

6,370

8,756

356

31,569

22,694

(Loss) income from operations

(2,788)

(8,420)

322

520

(2,642)

(7,578)

Canada

Canada

USA

USA

International

International

Total

Total

For the six months ended April 30,

2023

2022

2023

2022

2023

2022

2023

2022

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

203,368

115,898

30,734

33,381

2,110

3,970

236,212

153,249

Gross profit

48,251

25,874

14,580

17,147

920

2,655

63,751

45,676

(Loss) income from operations

(7,719)

(17,155)

709

1,460

447

1,970

(6,563)

(13,725)

Canada

Canada

USA

USA

International

International

Total

Total

As at April 30, 2023 and October 31, 2022

2023

2022

2023

2022

2023

2022

2023

2022

($)

($)

($)

($)

($)

($)

($)

($)

Total assets

182,061

183,640

76,524

77,247

9,508

13,856

268,093

274,743

Total liabilities

84,869

85,925

17,210

24,897

1,635

1,888

103,714

112,710

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Retail Segment Performance

The Company’s Retail Segment demonstrated yearly sales growth with an increase in revenue of 47% to $117,529 for the quarter ended April 30, 2023 compared to Q2 2022. Revenue growth is primarily attributable to the Company’s shift in the retail pricing strategy and launch of our discount club model. Additionally, the increase in revenue was due to the acquisitions of Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Ontario Lottery Winner, Bud Heaven, Kensington, Halo Kushbar, Choom, Jimmy’s, and the building of 10 new stores.

For the three-month period ended April 30, 2023 the Company recognized $6,366 in revenue generated from its proprietary data analytics service named Cabanalytics^TM. The Cabanalytics^TMprogram provides subscribers with a monthly report of anonymized consumer purchase data, in order to assist them with forecasting and planning their future product decisions and implementing appropriate marketing initiatives.

Gross profit for the quarter ended April 30, 2023, increased by $8,803 compared to prior year and the gross profit margin decreased to 27% (2022: 28%). The major decrease in gross profit margin was driven by the decrease in volume in the e-commerce business that has higher margins compared to the retail segment. As well as the decrease in the gross margin was due to a change in pricing strategy to maintain and grow market share. The shift in pricing strategy was due to competitive landscape and the Company’s launch of its innovative discount club model.

For the quarter ended April 30, 2023, the Retail Segment recorded an income from operations of $5,624 compared to loss from operations of $1,021 for the same quarter in the prior year. The increase in income from operations was primarily due to continued same store sales increases in the companies’ bricks and mortar stores as well as the acquisitions of Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Ontario Lottery Winner, Bud Heaven, Kensington, Halo Kushbar, Choom, and Jimmy’s.

Same-store retail sales

Same-store sales refers to the change in revenue generated by the Company’s existing retail cannabis locations over the quarter and is based on the number of stores that have been fully operational during the full current and comparison year. The Company had 104 cannabis locations that were operational for the quarter ended April 30, 2023 and 2022. For these 104 cannabis locations, same-store sales increased by 30% compared to 2022. The increase was due to the Company’s shift in the retail pricing strategy and launch of our discount club model. The Company’s bricks-and-mortar locations generated same store sales growth of 30% compared to last year and 1% sequentially in the second fiscal quarter of 2023. Calculated daily same store sales increased by 5% as there are three fewer days in Q2 2023.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Grasscity.com

During the fiscal year 2023, Grasscity processed 73,454 orders (Fiscal year 2022: 74,635). High Tide continues to invest in Grasscity to refresh its online sales platform, increasing the number of items available for sale, increase its searchability, align its supply chain with Valiant, and optimize its distribution channels. Grasscity enables the Company to leverage its vertical integration to improve order fulfillment, customer reach, product margins and its overall profitability. Grasscity began selling Cannabis seed in the United States on December 13, 2022.

Smokecartel.com

On March 24, 2021, the Company closed the acquisition of Smoke Cartel. Founded in 2013, SmokeCartel.com has grown to become one of the leaders in global online retailers of high-tech consumption accessories. During the fiscal year 2023, Smoke Cartel processed 106,006 orders (Fiscal year 2022: 97,582). Smoke Cartel began selling cannabis seed in the United States on December 13, 2022.

Fabcbd.com

On May 10, 2021, the Company closed the acquisition of an 80% interest in FABCBD with an option to acquire the remaining 20% over the three years from the date of acquisition. Founded in 2017, Fabcbd.com has grown to become one of the leading online retailers in hemp derived CBD products. During the fiscal year 2023, FABCBD processed 25,994 orders (Fiscal year 2022: 21,814). The Company also launched a CBD Subscribe-and-Save discount program. Under this program, members are able to customize their orders each month to suit their specific needs.

Dailyhighclub.com

On July 6, 2021, the Company closed the acquisition of Daily High Club. Daily High Club has grown to become one of the leading online retailers in on demand consumption accessories, selling over one million Daily High Club branded consumption accessories. During the fiscal year 2023, Daily High Club processed 83,218 orders (Fiscal year 2022: 93,386).

Dankstop.com

On August 12, 2021, the Company closed the acquisition of DankStop. DankStop is a leading online consumption accessories retailer. With an industry leading and innovative website, and dedicated support team, DankStop has raised the bar for the online consumption supply industry since 2014. During the fiscal year 2023, DankStop processed 19,147 (Fiscal year 2022: 19,656) orders.

Blessedcbd.co.uk

On October 19, 2021, the Company closed the acquisition of an 80% interest in Blessed CBD, with an option to acquire the remaining 20% over the three years from the date of acquisition. Blessed CBD is one of the leading online retailers of Hemp-derived CBD products in the U.K. Blessed CBD provides a marketplace with a wide variety of high-quality products and formulas, affordable pricing, rapid dependable shipping, and surprisingly personable customer service. Blessed CBD has been featured as the best UK CBD Oil in several publications including The Mirror, Reader’s Digest, and Maxim Magazine. During the fiscal year 2023, Blessed CBD processed 15,847 orders (Fiscal year 2022: 34,748). The Company also launched a CBD Subscribe-and-Save program called the Wellness Club. Under the Wellness Club program, members can customize their orders each month with various items across the Company’s product lines. On March 9, 2022, Blessed CBD entered the German market with online sales of its full spectrum CBD oils, gummies, capsules, creams, and balms via its official website at www.BlessedCBD.de. Additionally, on June 13, 2022, the Company entered into an agreement with Amazon.com, Inc. to sell its products on their ecommerce platforms.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Geographical Markets

Geographical markets represent revenue based on the geographical locations of the customers who have contributed to the revenue. The following is a representation of these geographical markets:

* United States and international revenues are related to sale of consumption accessories and CBD and not related to sale of cannabis.

The following presents information related to the Company’s geographical markets:


For the three months ended April 30	2023	2022	2023	2022	2023	2022	2023	2022
	Retail	Retail	Wholesale	Wholesale	Corporate	Corporate	Total	Total
	$	$	$	$	$	$	$	$
Primary geographical markets ⁽ⁱ⁾
Canada	103,380	62,891	47	552	179	13	103,606	63,456
United States	13,280	15,516	381	421	-	-	13,661	15,937
International	869	1,638	-	-	-	-	869	1,638
Total revenue	117,529	80,045	428	973	178	13	118,136	81,031

Note:

⁽ⁱ⁾	Represents revenue based on geographical locations of the customers who have contributed to the revenue generated in the applicable segment.

Revenue for the year increased with Canna Cabana leading Canadian sales and NuLeaf Naturals contributing to sales in the United States. Revenue from US entities decreased to $30,734 for the year ended April 30, 2023 (2022: $33,381). Public DTC ecommerce growth rates have been in decline over 2022, with the trend continuing into 2023. Macroeconomic factors like inflation will continue to have an impact as well, as consumers continue to prioritize cannabis consumption over accessories and CBD. Despite these facts, Q2 is traditionally a slower quarter with 3 fewer days than the previous quarter, which also includes holiday revenues.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Summary of Quarterly Results


(C$ in thousands, except per share amounts)	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2
	2023	2023	2022	2022	2022	2022	2021	2021	2021
Revenue	118,136	118,076	108,249	95,354	81,031	72,218	53,867	48,069	40,868
Adjusted EBITDA ⁽ⁱ⁾	6,589	5,500	5,018	4,246	2,401	2,955	1,642	1,540	4,720
Loss from Operations	(2,642)	(3,922)	(53,908)	(4,670)	(7,578)	(6,147)	(4,851)	(7,267)	(4,511)
Net loss	(1,568)	(3,862)	(52,505)	(2,717)	(8,277)	(7,352)	(4,176)	(1,750)	(12,266)
Basic net loss per share ⁽ⁱⁱ⁾	(0.02)	(0.05)	(0.85)	(0.04)	(0.14)	(0.14)	(0.09)	(0.03)	(0.30)

Notes:

⁽ⁱ⁾	Adjusted EBITDA is a non-IFRS financial measure. A reconciliation of the Adjusted EBITDA to Net Loss is found under “EBITDA and Adjusted EBITDA” in this MD&A.

⁽ⁱⁱ⁾	Net loss per share (Basic) for the quarters Q4 2020 to Q2 2021 have been retroactively adjusted to reflect the one-to-fifteen (1:15) reverse share split of all of the Company’s issued and outstanding Common Shares that was completed on May 13, 2021.

Aside from the seasonal increase in consumer spending leading up to the winter holiday period, which occurs in the first quarter of the Company’s fiscal year, quarter over quarter revenues increased as the Company aggressively expanded Canna Cabana operations and integrated the acquired businesses of Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Ontario Lottery Winner, Bud Heaven, Kensington, Choom, Jimmy’s, and the building of 10 new stores.

Adjusted EBITDA increased by 174% or $4,188 for the quarter ended April 30, 2023 compared to the same quarter in the prior year as a result of an increase in revenue due to business combinations and organic growth, which is offset by a decrease in gross margin percentage in the bricks and mortar business due to a shift in retail pricing strategy which is in-line with the current market. Another main driver for the decrease in gross profit margin was by the decrease in volume in the e-commerce business that has higher margins compared to the retail segment. Further impacting adjusted EBITDA is the acquisition of Bud Room, 2080791 Alberta Ltd., Crossroads Cannabis, Bud Heaven, Halo Kushbar, Ontario Lottery Winner, Kensington, Choom, Jimmy’s, and the building of 10 new stores.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

EBITDA and Adjusted EBITDA

The Company defines EBITDA and Adjusted EBITDA as per the table below. It should be noted that these performance measures are not defined under IFRS and may not be comparable to similar measures used by other entities. The Company believes that these measures are useful financial metrics as they assist in determining the ability to generate cash from operations. Investors should be cautioned that EBITDA and Adjusted EBITDA should not be construed as an alternative to net earnings or cash flows as determined under IFRS. Management defines “Adjusted EBITDA” as the net (loss) income for the quarter, before income tax (recovery) expense, accretion and interest expense, depreciation and amortization, and adjusted for foreign exchange (gain) losses, transaction and acquisition costs, gain on debt restructuring, (gain) or loss on revaluation of derivative liabilities, (gain) or loss on extinguishment of debenture, impairment loss, share-based compensation, (gain) or loss on revaluation of marketable securities, (gain) or loss on extinguishment of financial liability and gain on disposal of property and equipment.

The reconciling items between net earnings, EBITDA, and Adjusted EBITDA are as follows:


	2023⁽ⁱ⁾		2022⁽ⁱⁱ⁾				2021⁽ⁱⁱⁱ⁾
	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2
Net loss	(1,568)	(3,862)	(52,502)	(2,717)	(8,277)	(7,352)	(4,176)	(1,750)	(12,266)
Income tax expense (recovery)	(2,041)	(1,236)	(1,782)	731	(800)	(1,064)	(1,418)	224	(124)
Accretion and interest	1,759	1,813	782	1,048	1,541	1,551	1,515	1,095	2,838
Depreciation and amortization	7,699	7,986	8,249	7,182	7,627	7,111	1,458	8,299	7,714
EBITDA	5,849	4,701	(45,253)	6,244	91	246	(2,621)	7,868	(1,838)
Foreign exchange loss (gain)	2	(15)	(14)	120	107	97	473	(28)	5
Transaction and acquisition costs	435	665	2,444	1,436	669	909	483	1,939	889
(Gain) loss revaluation of derivative liability	(1,288)	(1,261)	(3,166)	(6,078)	(728)	(525)	(1,564)	(5,919)	3,988
Loss (gain) on extinguishment of debenture	-	-	609	(140)	(133)	18	73	-	-
Impairment loss	-	-	48,592	-	-	89	2,676	57	-
Share-based compensation	1,532	1,436	2,091	1,734	2,353	1,902	2,301	508	1,517
(Gain) loss on revaluation of marketable securities	(19)	(8)	81	146	43	219	291	112	159
(Gain) loss on extinguishment of financial liability	78	(18)	(366)	784	-	-	(161)	-	-
Gain on disposal of property and equipment	-	-	-	-	-	-	(309)	(2,997)	-
Adjusted EBITDA	6,589	5,500	5,018	4,246	2,401	2,955	1,642	1,540	4,720

Notes:

⁽ⁱ⁾	Cash outflow for the lease liabilities during the three months ended April 30, 2022, were $2,691 and three-months ended January 31, 2023 were $2,715

⁽ⁱⁱ⁾	Cash outflow for the lease liabilities during the three-months ended October 31, 2022 were $2,599, three-months ended July 31, 2022 were $3,060, three months ended April 30, 2022, were $1,934 and $2,238 for the three months ended January 31, 2022.

⁽ⁱⁱⁱ⁾

Cash outflow for the lease liabilities during the three-months ended October 31, 2021 were $2,179, three months ended July 31, 2021 were $2,917, three months ended April 30, 2021 were $1,265.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Free Cash Flow


	Q2 2023	Q1 2023	Q2 2022
Operating Cashflow	1,365	2,114	(2,236)
Sustaining Capex	(625)	(246)	(1,614)
Lease Liabilities	(2,691)	(2,715)	(1,934)
Free Cash Flow ⁽ⁱ⁾	(1,951)	(846)	(5,784)

⁽ⁱ⁾

The Company defines free cash flow as net cash provided by (used in) operating activities, minus sustaining capex, minus lease liability payments. Sustaining Capex is defined as leasehold improvements and maintenance spend required in the existing business. The most directly comparable financial measure is net cash provided by operating activities, as disclosed in the consolidated statement of cash flows. It should not be viewed as a measure of liquidity or a substitute for comparable metrics prepared in accordance with IFRS. The Company has revised how it calculates Free Cash Flow from the previously disclosed definition, to further clarify for investors the subset of Capex that relates to growth versus sustaining Capex, and to better reflect the cash flow generation from ongoing operations of the existing business. The Company believes this new calculation more accurately represents the cash generation activities of the Company from ongoing operations and Free Cash Flow available for growth. It should be noted that these performance measures are not defined under IFRS and may not be comparable to similar measures used by other entities.

Financial Position, Liquidity and Capital Resources

Assets

As of April 30, 2023, the Company had a cash balance of $22,487 (October 31, 2022: $25,084).

Working capital including cash as of April 30, 2023, was a surplus of $5,455 (October 31, 2022: surplus $4,119). Working capital is a non-IFRS measure and is calculated as the difference between total current assets and total current liabilities. The change is mainly due to various acquisitions that have occurred in 2022, as well as the closing of the Bought Deal Offering, connectFirst Credit Facility, and proceeds from the ATM Program. These transactions provide the Company enough liquidity for its working capital needs.

Total assets of the Company were $268,093 on April 30, 2023, compared to $274,743 on October 31, 2022.

Liabilities

Total liabilities decreased to $103,714 as at April 30, 2023, compared to $112,710 as at October 31, 2022, primarily due to an increase in long-term debt, accounts payable and accrued liabilities from expansion of the Business through acquisitions and organic growth.

As of the date of this MD&A the Company’s total principal value of debt has remained the same at approximately $38,500 compared to October 31, 2022.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Summary of Outstanding Share Data

The Company had the following securities issued and outstanding as at April 30, 2023:


Securities ⁽ⁱ⁾		Units Outstanding ⁽ⁱⁱ⁾
Common shares		—
Warrants ⁽ⁱⁱⁱ⁾		8,743,758
Stock options		2,489,631
RSUs		486,335
Convertible debentures		1,405,119

⁽ⁱ⁾	Refer to the Financial Statements for a detailed description of these securities.

⁽ⁱⁱ⁾	Units outstanding are post-consolidation of Common Shares on May 14, 2021.

⁽ⁱⁱⁱ⁾

As of the date of this MD&A the Company had gross Warrants of 46,418,572 that can be converted on the basis of 15 Warrants to 1 Common Share.

Cash Flows

During the quarter ended April 30, 2023, the Company had an overall decrease in cash and cash equivalents of $2,597 (2022: increase $985).

Total cash provided in operating activities was $3,480 for the quarter ended April 30, 2023 (2022: cash used $3,820). The increase in operating cash inflows is primarily driven by the increase in revenue due to the Company’s Retail Segment’s shift in the retail pricing strategy and launch of our discount club model. Additionally, the increase in revenue was due to the acquisitions of Jimmy’s and the building of 10 new stores.

Cash used in investing activities was $2,524 (2022: cash used $4,516) due to the acquisition of Jimmy’s and as a result of new store openings. Cash used in financing activities was $3,553 (2022: cash provided $9,321). On Nov 1, 2022 principal payment has been extended after negotiations have been completed. As of the data of this MD&A, the company is working with the "investor" to amend the loan agreement. This is important because in theory Cash Flow should have been down by approximately $450 if the payment would have been made.

Liquidity

On August 15, 2022, the Company entered into the connectFirst Credit Facility with the first tranche, $12,100, available in a single advance, and the second tranche, $6,900, available in multiple draws subject to certain pre-disbursement conditions. The demand loan bears interest at connectFirst’s prime lending rate plus 2.50% per annum and matures on September 7, 2027.

The second tranche is repayable on demand, but until demand is made the connectFirst Credit Facility is repaid in monthly blended payments of principal and interest of $147. Blended payments may be adjusted from time to time, if necessary, on the basis of connectFirst’s prime lending rate, the principal outstanding and amortization period remaining. On October 25, 2022, the Company received the inflow of funds for the second tranche.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Financial Instruments

The Company’s activities expose it to a variety of financial risks. The Company is exposed to credit, liquidity, interest and market risk due to holding certain financial instruments. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.

Risk management is carried out by senior Management in conjunction with the Board.

Fair value

The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities

Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The Company assessed that the fair values of cash and cash equivalents, accounts receivable, loans receivable, accounts payable and accrued liabilities, and other current liabilities approximate their carrying amounts largely due to the short-term nature of these instruments.

The following methods and assumptions were used to estimate the fair value:

Marketable securities are determined based on level 1 inputs, as the prices for the marketable securities are quoted in public exchanges.

Long-term fixed-rate notes receivables and loans payable are initially recorded at fair value and are evaluated by the Company based on level 2 inputs such as discounted future interest and principal payments using current market interest rates of instruments using similar terms. These instruments are subsequently measured through amortized cost, with accretion and interest income recognized through the statement of loss and comprehensive loss.

Derivative Warrant liabilities are designated as FVTPL and are measured using level 2 inputs. The fair value of the derivative Warrant liabilities is measured each reporting period with changes in the fair value recognized in the consolidated statement of loss and comprehensive loss. Assumptions used to calculate the fair value include stock price, volatility, and risk-free interest rate.

Derivative liabilities associated with the put options included in the acquisitions of Nuleaf Naturals, FABCBD and Blessed CBD have been recorded at fair value based on level 3 inputs. The value of the put is calculated using discounted cash flows. The valuation model considers the present value of the future obligation using a multiple of forecasted trailing twelve-month EBITDA for both Nuleaf Naturals and FABCBD and forecasted twelve-month revenue for Blessed CBD, and a risk-adjusted discount rate for all the put obligations. Significant unobservable inputs include expected cash flows and the risk adjusted interest rate. The estimated fair value would increase (decrease) if the expected cash flows were higher (lower) or the risk adjusted interest rate were lower (higher). On September 20, 2022, the Company received a notice to exercise put option related to FABCBD.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

The contingent consideration related to the Smoke Cartel business combination is designated as FVTPL and is measured using level 3 inputs. The fair value of the contingent consideration is measured at each reporting period. The fair value calculation requires inputs such as the forecasted future cash flows of Smoke Cartel. During the fourth quarter of 2021, the Company finalized the revenue targets related to the contingent consideration and measured the fair value based on the finalized revenue targets, recognizing the change in fair value through the statement of loss and comprehensive loss. During the year 2022, the Company settled the contingent consideration obligation by issuing 500,000 shares valued at $940.

The convertible debentures are evaluated by the Company based on level 2 inputs such as the effective interest rate and the market rates of comparable securities. The convertible debentures are initially measured at amortized cost and at each reporting period accretion incurred in the period is recorded to transaction costs on the consolidated statement of loss and comprehensive loss.

The Halo Kushbar convertible promissory note receivable is a non-derivative financial asset with fixed or determinable payments that are not quoted in an active market and is recorded at fair value based on level 2 inputs. The fair value of these assets were estimated on discounted future interest and principal payments using current market interest rates of instruments using similar terms. The promissory note failed the SPPI test due to the conversion feature of the note, therefore this note will be subsequently recognized at fair value through profit or loss on the consolidated statement of loss and comprehensive loss. On July 15, 2022, the Company took control of the shares of Halo Kushbar, which owns three operating cannabis retail stores in Alberta. The consideration received was a settlement of this convertible promissory note which was revalued to a principal amount of $810 and $216 was recorded as a loss on revaluation.


As at	April 30, 2023	October 31, 2022
	$	$
FABCBD Put Option derivative liability ⁽ⁱ⁾	695	763
Blessed Put Option derivative liability ⁽ⁱⁱ⁾	2,072	2,899
NuLeaf Put Option derivative liability ⁽ⁱⁱⁱ⁾	1,021	2,674
Total	3,788	6,336

(i)

On May 10, 2021, the Company acquired 80% of the outstanding shares of FABCBD. The acquisition agreement also included a call and put option that could result in the Company acquiring the remaining 20% of common shares of FABCBD not acquired upon initial acquisition. The initial obligation under the put option was valued at $3,722. For the three and six months ended April 30, 2023, the Company recognized $123 and $69 (2022: $269 and $494 gain) as a gain on revaluation of derivative liability in the statement of net loss and comprehensive loss, with a closing balance of $695 (2022: $763). On September 20, 2022, the Company received a notice to exercise the put option related to FABCBD, by April 30, 2023, the Company was yet to finalize the settlement, however by May 24, 2023, the Company finalized and issued shares for the put option.

(ii)

On October 19, 2021, the Company acquired 80% of the outstanding shares of Blessed CBD. The acquisition agreement also included a call and put option that could result in the Company acquiring the remaining 20% of common shares of Blessed CBD not acquired upon initial acquisition. The initial obligation under the put option was valued at $4,323. For the three and six months ended April 30, 2023, the Company recognized $487 and $828 (2022: $180 and $72 gain) as a gain on revaluation of derivative liability in the statement of net loss and comprehensive loss, with a closing balance of $2,072 (2022: $2,899).

(iii)

On November 29, 2021, the Company acquired 80% of the outstanding shares of NuLeaf. The acquisition agreement also included a call and put option that could result in the Company acquiring the remaining 20% of common shares of NuLeaf not acquired upon initial acquisition. The initial obligation under the put option was valued at $8,326. For the three and six months ended April 30, 2023, the Company recognized $678 and $1,652 (2022: $233 and $307 loss) as a gain on revaluation of derivative liability in the statement of net loss and comprehensive loss, with a closing balance of $1,021 (2022: $2,674). On May 29, 2023, the Company received a notice to exercise the put option related to NuLeaf, as at period end, April 30, 2023, the Company is in the process of finalizing the settlement of the put option.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Credit risk

Credit risk arises when a party to a financial instrument will cause a financial loss for the counter party by failing to fulfill its obligation. Financial instruments that subject the Company to credit risk consist primarily of cash, accounts receivable, marketable securities and loans receivable. The credit risk relating to cash, cash equivalents and restricted marketable securities balances is limited because the counterparties are large commercial banks. The amounts reported for accounts receivable in the statement of consolidated financial position is net of expected credit loss and the net carrying value represents the Company’s maximum exposure to credit risk. Accounts receivable credit exposure is minimized by entering into transactions with creditworthy counterparties and monitoring the age and balances outstanding on an ongoing basis. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk. The following table sets forth details of the aging profile of accounts receivable and the allowance for expected credit loss:


As at	April 30, 2023	October 31, 2022
	$	$
Current (for less than 30 days)	6,832	5,435
31 – 60 days	219	420
61 – 90 days	1,246	568
Greater than 90 days	2,268	2,148
Less allowance	(1,155)	(655)
	9,410	7,916

For the quarter ended April 30, 2023, $120 in trade receivables were written off against the loss allowance due to bad debts (April 2022: $0). Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The remaining accounts receivable are evaluated by the Company based on parameters such as interest rates, specific country risk factors, and individual creditworthiness of the customer. Based on this evaluation, allowances are considered for the estimated losses of these receivables.

The Company performs a regular assessment of collectability of accounts receivables. In determining the expected credit loss amount, the Company considers the customer’s financial position, payment history and economic conditions. For the quarter ended April 30, 2023, Management reviewed the estimates and have not created any additional loss allowances on trade receivable.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company generally relies on funds generated from operations, equity, and debt financing to provide sufficient liquidity to meet budgeted operating requirements and to supply capital to expand its operations.

Historically the Company has been able to sustain their operations and meet liabilities as they come due through cash generated by operating results as well as equity financing where applicable. While no certainty can be obtained around future results, the Company anticipates that cash flows from operations, working capital and other sources of financing will be sufficient to meet its debt repayments and other obligations as they come due.

Maturities of the Company’s financial liabilities are as follows:


	Contractual cash flows	Less than one year	1-3 years	3-5 years	Greater than 5 years
	$	$	$	$	$
October 31, 2022
Accounts payable and accrued liabilities	26,887	26,887	-	-	-
Notes payable	12,257	-	-	12,257	-
Interest bearing loans and borrowings	16,393	16,393	-	-	-
Derivative liability	6,336	6,336	-	-	-
Convertible debentures	7,466	2,696	4,770	-	-
Undiscounted lease obligations	37,116	9,683	12,604	7,437	7,392
Total	106,455	61,995	17,374	19,694	7,392
April 30, 2023
Accounts payable and accrued liabilities	21,933	21,933	-	-	-
Notes payable	12,473	-	-	12,473	-
Interest bearing loans and borrowings	17,659	17,659	-	-	-
Derivative liability	3,788	3,788	-	-	-
Convertible debentures	8,331	6,349	1,982	-	-
Undiscounted lease obligations	33,826	4,696	13,246	7,835	8,049
Total	98,010	54,425	15,228	20,308	8,049

Notes:

• Interest bearing loans and borrowings: On August 15, 2022, the Company entered into a $19,000 demand term loan with Connect First credit union (the "Credit Facility") with Tranche 1 ‐ $12,100 available in a single advance, and Tranche 2 ‐ $6,900 available in multiple draws subject to pre‐disbursement conditions set. The demand loan bears interest at the Credit Union’s prime lending rate plus 2.50% per annum and is set to mature on September 5, 2027. Although the maturity is in 2027, this liability has to be classified as a “Short Term” since the credit facility is repayable on demand.

• Convertible debentures, the principal payments regarding the Convertible debentures are shown as currently agreed to. However, the Company is in active discussions to amend the terms of the debenture which is expected to result in a longer period between principal payments.

• The Company also has access to raise additional cash through the ATM program.

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in the market interest rate related primarily to the Company’s current credit facility with variable interest rates.

As at April 30, 2023, approximately 58% of the Company’s borrowings are at a fixed rate of interest (2022: 84%). Assuming all other variables remain constant, a fluctuation of +/- 1.0 percent in the interest rate would impact the interest payment by approximately +/- $76.

Foreign currency risk

Foreign currency risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company maintains cash balances and enters into transactions denominated in foreign currencies, which exposes the Company to fluctuating balances and cash flows due to variations in foreign exchange rates.

The Canadian dollar equivalent carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities as at April 30, 2023 were as follows:


(Canadian dollar equivalent amounts of GBP, EUR and USD balances)	April 30, 2023	April 30, 2023	April 30, 2023	April 30, 2023	October 31,
	(GBP)	(EUR)	(USD)	Total	2022
	$	$	$	$	$
Cash	825	866	2,784	4,475	4,391
Accounts receivable	197	504	898	1,599	1,754
Accounts payable and accrued liabilities	(70)	(1,999)	(5,209)	(7,278)	(11,542)
Net monetary assets	952	(629)	(1,527)	(1,204)	(5,397)

Assuming all other variables remain constant, a fluctuation of +/- 5.0 percent in the exchange rate between USD and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $45 (October 31, 2022 - $34). Maintaining constant variables, a fluctuation of +/- 5.0 percent in the exchange rate between the EUR and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $21 (October 31, 2022 - $38), and a fluctuation of +/- 5.0 percent in the exchange rate between GBP and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $35 (October 31, 2022 - $42). To date, the Company has not entered into financial derivative contracts to manage exposure to fluctuations in foreign exchange rates.

Disclosure Controls and Procedures and Internal Controls Over Financial Reporting

The Chief Executive Officer and Chief Financial Officer of the Company have designed or caused to be designed under their supervision, disclosure controls and procedures which provide reasonable assurance that material information regarding the Company is accumulated and communicated to Management, including its Chief Executive Officer and Chief Financial Officer, in a timely manner. Under the supervision and with the participation of Management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Canada by NI 52-109 and in the United States by the rules adopted by the SEC). In addition, the Chief Executive Officer and Chief Financial Officer of the Company are

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

responsible for designing internal controls over financial reporting or causing them to be designed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were ineffective due to the material weakness identified in our internal control over financial reporting, as further described below.

In accordance with the provisions under NI 52-109, and consistent with SEC-related guidance, the Company has limited the scope of the evaluation to exclude controls, policies and procedures over entities acquired by the Company not more than 365 days before the end of financial period. Bud Heaven, Halo Kushbar, Ontario Lottery Winner, Kensington, and Choom acquisitions during the quarter ended April 30, 2023, on a combined basis represented approximately 21% of the Company’s total assets and 8% of the Company’s total revenues as of and for the quarter ended April 30, 2023.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2023, based on the criteria set forth in Internal Control – Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, Management has concluded that our internal control over financial reporting was not effective as of April 30, 2023, due to material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following internal control deficiencies that constitute material weaknesses in the Company’s ICFR as of April 30, 2023.

The Company experienced significant and rapid growth during the fiscal quarter ended April 30, 2023, and the fiscal year October 31, 2022 because of our Business plan and business combinations. The Company did not effectively design, implement, and operate effective process-level control activities related to various processes or engage an adequate number of accounting personnel with the appropriate technical training in, and experience with IFRS to allow for a detailed review of significant and non-routine accounting transactions that would identify errors in a timely manner, including business combinations, impairment testing and financing arrangements.

In addition, as previously disclosed in our management’s discussion and analysis, the internal control over the accounting for income taxes, including the income tax provision, deferred tax assets and liabilities and related disclosures were not effective for the year ended October 31, 2022 and for the quarter ended April 30, 2023. The Company identified a material weakness in the accounting for income taxes, including the income tax provision, deferred tax liabilities and related disclosures. Specifically, the Company did not design effective internal controls over income taxes which resulted in adjustments to the income tax provision and deferred tax assets and liabilities in the Financial Statements. These deficiencies were due to insufficient knowledge and technical expertise in the income tax function to review with a level of precision that would have identified a material misstatement in the income tax provision, including the allocation of tax between the calculation of deferred tax assets and liabilities and related disclosures. Management believes that the complexity introduced to the Financial Statements because of the acquisitions of the U.S. and U.K. subsidiaries were a contributing factor to the identified deficiencies.

In response to the identification, the Company has taken action to remediate the material weakness. Progress to date includes engagement of a third-party experienced tax accounting resource with the skills, training, and knowledge to assist in the review of more technical a tax matters and to assist in preparing the income tax provision, deferred tax liabilities and related disclosures for each period. Management has made progress in accordance with the remediation plan and the goal is to fully remediate this material

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

weakness in fiscal year 2023. However, the material weakness will not be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Outlook

High Tide is the market leader in Canadian bricks-and-mortar cannabis retail, with 153 locations operating across the country and a loyalty base exceeding 1,040,000 Cabana Club members. Having generated rising positive EBITDA for 13 straight quarters and with national market share outside Quebec approaching 10%, the Company is now working towards its goal of generating positive free cash flow by the end of calendar 2023. The Company expects this to be achieved by increasing same-store sales, continued incremental upward momentum in gross margins in its Canadian bricks-and-mortar business, and strong cost controls. The Company plans to roll out more white-label SKUs of its Cabana Cannabis Co. brand through the course of the year, which should be additive to gross margins. We are pleased with the initial uptake of Cabana ELITE, our premium paid membership offering, with over 13,500 customers having signed up to date. We expect this number to climb steadily in the coming quarters, which should add a recurring high-margin revenue line and further enhance customer loyalty.

High Tide’s commitment to operational excellence, including its real estate strategy and its differentiated discount club model, has made it a clear standout in the industry, which has unfortunately seen firms of all sizes struggle. The Company expects that this shakeout will likely continue over the coming 12 months as we pass the pivotal five-year anniversary of cannabis legalization, and many expiring leases are not renewed. The Company currently plans to open more stores in the second half of calendar 2023 than in the first half of the year. However, considering the macro environment, this growth will still be relatively muted compared to its historical pace. Regarding potential future M&A, there is currently a heightened level of opportunities coming to market. While we continue to feel that our share price does not currently reflect the Company’s true value, we continue to evaluate every opportunity. That said, we plan to be very selective, as we believe we are very well positioned to engage only on opportunities which are truly the most strategic, attractive and accretive and thus create lasting, meaningful value for shareholders.

Cautionary Note Regarding Forward-Looking Information

Certain statements contained in this MD&A, and in the documents incorporated by reference in this MD&A, constitute "forward-looking information" and “forward-looking statements within the meaning of Applicable Securities Legislation. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. The forward-looking statements herein include, but are not limited to, statements regarding:

●

the Business objectives and milestones and the anticipated timing of, and costs in connection with, the execution or achievement of such objectives and milestones (including, without limitation proposed acquisitions);

●

the Company’s future growth prospects and intentions to pursue one or more viable Business opportunities;

●

the development of the Business and future activities following the date of this MD&A;

●

expectations relating to market size and anticipated growth in the jurisdictions within which the Company may from time to time operate or contemplate future operations;

●

expectations with respect to economic, Business, regulatory and/or competitive factors related to the Company or the cannabis industry generally;

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

●

the Company’s ability to generate consistent free cash flow from operations and from financing activities, including by amending its loan agreement, on the timelines disclosed herein;

●

the Company continuing to increase its revenue;

●

the Company continuing to integrate and expand its CBD brands;

●

Cabana Club and Cabana ELITE loyalty programs membership continuing to increase;

●

the Company hitting its forecasted revenue and sales projections; and

●

the Company launching additional Cabana Cannabis Co. and NuLeaf Naturals branded SKUs on the timelines outlined herein.

Readers are cautioned that the foregoing is not exhaustive. The forward-looking statements contained in this MD&A and the documents incorporated by reference herein are expressly qualified by this cautionary statement. The forward-looking statements contained in this document speak only as of that date of this document and the Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to Applicable Securities Laws.

These forward-looking statements speak only as of the date of this MD&A or as of the date specified in the documents incorporated by reference into this MD&A. The actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this MD&A: counterparty credit risk; access to capital; limitations on insurance; changes in environmental or legislation applicable to our operations, and our ability to comply with current and future environmental and other laws; changes in income tax laws or changes in tax laws and incentive programs relating to the cannabis industry; and the other factors discussed under “Financial Instruments” and “Risk Assessment” in this MD&A.

Additional risk factors that can cause results to differ materially from those expressed in forward-looking statements in this MD&A are discussed in greater detail in the “Non-Exhaustive List of Risk Factors” section in Schedule A to our current annual information form, and elsewhere in this MD&A, as such factors may be further updated from time to time in our periodic filings, available at www.sedar.com and www.sec.gov, which risk factors are incorporated herein by reference.

Cautionary Note Regarding FOFI

This MD&A, and documents incorporated by reference herein, may contain FOFI within the meaning of Applicable Securities Laws and analogous U.S. securities Laws, about prospective results of operations, financial position or cash flows, based on assumptions about future economic conditions and courses of action, which FOFI is not presented in the format of a historical balance sheet, income statement or cash flow statement. The FOFI has been prepared by Management to provide an outlook of the Company’s activities and results and has been prepared based on a number of assumptions including the assumptions discussed under the heading “Cautionary Note Regarding Forward-Looking Information” and assumptions with respect to the costs and expenditures to be incurred by the Company, capital expenditures and operating costs, taxation rates for the Company and general and administrative expenses. Management does not have, or may not have had at the relevant date, firm commitments for all of the costs, expenditures, prices or other financial assumptions which may have been used to prepare the FOFI or assurance that such operating results will be achieved and, accordingly, the complete financial effects of all of those costs, expenditures, prices and operating results are not, or may not have been at the relevant date of the FOFI, objectively determinable.

Importantly, the FOFI contained in this MD&A, and in documents incorporated by reference herein are, or may be, based upon certain additional assumptions that Management believes to be reasonable based on the information currently available to Management, including, but not limited to, assumptions about: (i) the future pricing for the Company’s products, (ii) the future market demand and trends within the jurisdictions in which the Company may from time to time conduct the Business, (iii) the Company’s ongoing inventory levels, and operating cost estimates, and (iv) the Company’s net proceeds from the ATM Program and connectFirst Credit

High Tide Inc.

Management’s Discussion and Analysis

For the Quarter ended April 30, 2023 and 2022

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Facility. The FOFI or financial outlook contained in MD&A, and in documents incorporated by reference herein do not purport to present the Company’s financial condition in accordance with IFRS as issued by the International Accounting Standards Board, and there can be no assurance that the assumptions made in preparing the FOFI will prove accurate. The actual results of operations of the Company and the resulting financial results will likely vary from the amounts set forth in the analysis presented in any such document, and such variation may be material (including due to the occurrence of unforeseen events occurring subsequent to the preparation of the FOFI). The Company and Management believe that the FOFI has been prepared on a reasonable basis, reflecting Management’s best estimates and judgments as at the applicable date. However, because this information is highly subjective and subject to numerous risks including the risks discussed under the heading “Risk Assessment”, FOFI or financial outlook within this MD&A, and in documents incorporated by reference herein, should not be relied on as necessarily indicative of future results.

Readers are cautioned not to place undue reliance on the FOFI, or financial outlook contained in this MD&A, and in documents incorporated by reference herein. Except as required by Applicable Securities Laws, the Company does not intend, and does not assume any obligation, to update such FOFI.

Accounting Policies and Critical Accounting Estimates

The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements and have been applied consistently by the Company and its subsidiaries.

The significant accounting policies applied in the preparation of the unaudited condensed interim consolidated financial statements for the three months ended January 31, 2023, and 2022 are consistent with those applied and disclosed in Note 3 and 4 of the Company’s Consolidated Financial Statements for the years ended October 31, 2022 and 2021.

New and amended standards and interpretations

Classification of Liabilities as Current or Non-current - Amendments to IAS 1

In January 2020 and October 2022, the Board issued amendments to IAS 1 Presentation of Financial Statements to specify the requirements for classifying liabilities as current or non-current, effective for periods beginning on or after January 1, 2024. The amendments clarify:

• What is meant by a right to defer settlement;

• That a right to defer must exist at the end of the reporting period;

• That classification is unaffected by the likelihood that an entity will exercise its deferral right; and

• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification.

The Board decided that if an entity’s right to defer settlement of a liability is subject to the entity complying with the required covenants at a date subsequent to the reporting period (“future covenants”), the entity has a right to defer settlement of the liability even if it does not comply with those covenants at the end of the reporting period.

The amendments also clarify that the requirement for the right to exist at the end of the reporting period applies regardless of whether the lender tests for compliance at that date or at a later date.

Non-IFRS Financial Measures

Throughout this MD&A, references are made to non-IFRS financial measures, including operating expenses, EBITDA and Adjusted EBITDA, and free cash flow. These measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-IFRS measures provide investors with a supplemental measure of the Company’s operating performance and therefore highlight trends in Company’s core Business that may not otherwise be apparent when relying solely on IFRS measures. Management uses non-IFRS measures in measuring the financial performance of the Company.