Canopy Growth's eligible employees participate in a share-based compensation plan as noted below.

On September 21, 2020, the Company’s shareholders approved amendments to the Company’s Amended and Restated Omnibus Incentive Plan (as amended and restated, the “Omnibus Plan”) pursuant to which the Company can issue share-based long-term incentives. The Omnibus Plan approved by the shareholders extended the maximum term of each Option (as defined below) to be granted by the Company to ten years from the date of grant rather than six years from the date of grant. On May 27, 2021, the Board of Directors of the Company (the "Board") approved certain amendments to the Omnibus Plan in order to reduce the maximum number of shares available for issuance under the Omnibus Plan from 15% of the issued and outstanding shares to 10% of the issued and outstanding shares from time to time less the number of shares issuable pursuant to other security-based compensation arrangements of the Company. All directors, officers, employees and independent contractors of the Company are eligible to receive awards of common share purchase options (“Options”), restricted share units (“RSUs”), performance share units (“PSUs”), deferred share units, stock appreciation rights, performance awards, or other shares-based awards (collectively, the “Awards”) under the Omnibus Plan.

The maximum number of common shares reserved for Awards is 48,026,088 at September 30, 2022. As of September 30, 2022, the only Awards issued have been Options, RSUs and PSUs under the Omnibus Plan.

The Omnibus Plan is administered by the Corporate Governance, Compensation and Nominating Committee of the Board (the “CGC&N Committee”) which establishes exercise prices, at not less than the market price at the date of grant, and expiry dates. Awards under the Omnibus Plan generally vest in increments with 1/3 vesting on each of the first, second and third anniversaries from the date of grant, with expiry dates set at ten years from issuance, subject to the discretion of the CGC&N Committee pursuant to the Omnibus Plan to provide for an alternative expiry date or vesting period in an award agreement for the grant of Awards, subject to limits contained in the Omnibus Plan.

Under the Company’s Employee Share Purchase Plan (the “Purchase Plan”) the aggregate number of common shares that may be issued is 600,000, and the maximum number of common shares which may be issued in any one fiscal year shall not exceed 300,000. For the three and six months ended September 30, 2022, 237,802 common shares were issued under the Purchase Plan (three and six months ended September 30, 2021 – 61,103).

The following is a summary of the changes in the Options outstanding during the six months ended September 30, 2022:


	Options issued			Weighted average exercise price
Balance outstanding at March 31, 2022		16,782,962		$	33.89
Options granted		3,353,180			4.75
Options exercised		(76,929	)		3.41
Options forfeited		(3,682,742	)		32.74
Balance outstanding at September 30, 2022		16,376,471		$	28.33

The following is a summary of the Options outstanding as at September 30, 2022:


	Options Outstanding				Options Exercisable
			Weighted Average				Weighted Average
			Remaining				Remaining
	Outstanding at		Contractual Life		Exercisable at		Contractual Life
Range of Exercise Prices	September 30, 2022		(years)		September 30, 2022		(years)
$0.06 - $24.62		5,870,999		4.87		1,020,481		1.91
$24.63 - $33.53		3,499,768		2.80		2,094,903		2.37
$33.54 - $36.80		2,363,464		1.66		2,363,464		1.66
$36.81 - $42.84		2,002,420		2.42		1,919,628		2.17
$42.85 - $67.64		2,639,820		2.34		2,639,820		2.34
		16,376,471		3.26		10,038,296		2.11

At September 30, 2022, the weighted average exercise price of Options outstanding and Options exercisable was $28.33 and $38.46, respectively (March 31, 2022 – $33.89 and $38.33, respectively).

The Company recorded $3,008 and $3,385 in share-based compensation expense related to Options and Purchase Plan shares issued to employees and contractors for the three and six months ended September 30, 2022, respectively (three and six months ended September 30, 2021 – $10,298 and $18,342, respectively). The share-based compensation expense for the six months ended September 30, 2022 includes an amount related to 1,173,866 Options being provided in exchange for services which are subject to performance conditions (for the six months ended September 30, 2021 – 1,559,413).

During the three months ended June 30, 2021, the Company issued replacement options to employees in relation to the acquisition of Supreme Cannabis and recorded share-based compensation expense of $823.

The Company uses the Black-Scholes option pricing model to establish the fair value of Options granted during the three months ended September 30, 2022 and 2021, on their measurement date by applying the following assumptions:


	September 30,	September 30,
	2022	2021
Risk-free interest rate	2.94%	-
Expected life of options (years)	3 - 5	-
Expected volatility	77%	-
Expected forfeiture rate	20%	-
Expected dividend yield	nil	-
Black-Scholes value of each option	$2.17	-

Volatility was estimated by using the historical volatility of the Company. The expected life in years represents the period of time that Options granted are expected to be outstanding. The risk-free rate was based on zero coupon Canada government bonds with a remaining term equal to the expected life of the Options.

During the six months ended September 30, 2022, 76,929 Options were exercised ranging in price from $0.06 to $8.18 for gross proceeds of $271 (for the six months ended September 30, 2021 – 332,105 Options were exercised ranging in price from $0.06 to $36.34 for gross proceeds of $4,886).

For the three and six months ended September 30, 2022, the Company recorded $6,565 and $11,453, respectively, in share-based compensation expense related to RSUs and PSUs (for the three and six months ended September 30, 2021 – $3,690 and $5,985, respectively).

The following is a summary of the changes in the Company’s RSUs and PSUs during the six months ended September 30, 2022:


	Number of RSUs and PSUs
Balance outstanding at March 31, 2022		3,477,292
RSUs and PSUs granted		3,043,050
RSUs and PSUs released		(292,596	)
RSUs and PSUs cancelled and forfeited		(1,153,768	)
Balance outstanding at September 30, 2022		5,073,978

During the three and six months ended September 30, 2022, the Company recorded $nil in share-based compensation expense related to acquisition milestones (for the three and six months ended September 30, 2021 – $1,706 and $3,405, respectively).

During the three and six months ended September 30, 2022, no common shares were released on completion of acquisition milestones (during the three and six months ended September 30, 2021 – 59,258 and 9,948,059, respectively). At September 30, 2022, there were up to 361,985 common shares to be issued on the completion of acquisition and asset purchase milestones. In certain cases, the number of common shares to be issued is based on the volume weighted average share price at the time the milestones are met. The number of common shares has been estimated assuming the milestones were met at September 30, 2022.

On October 1, 2019, the Company purchased 72% of the outstanding shares of BioSteel Sports Nutrition Inc. (“BioSteel”). BioSteel has a stock option plan under which non-transferable options to purchase common shares of BioSteel may be granted to directors, officers, employees, or independent contractors of the BioSteel. As at September 30, 2022, BioSteel had 1,657,682 (March 31, 2022 – 1,565,300) options outstanding which vest in equal tranches over a 5-year period. In determining the amount of share-based compensation related to these options, BioSteel used the Black-Scholes option pricing model to establish the fair value of options on their measurement date. The Company recorded $285 and $459 of share-based compensation expense related to the

BioSteel options during the three and six months ended September 30, 2022, respectively, with a corresponding increase in noncontrolling interest (three and six months ended September 30, 2021 – $259 and $524, respectively).