DERIVATIVE LIABILITY

12 Months Ended

Jan. 31, 2021

17. DERIVATIVE LIABILITY

The following reflects the continuity of derivative liability:

Balance, January 31, 2019	$	23,097
On acquisition February 4, 2019		3,748,377
On acquisition May 24, 2019		4,707,370
Fair value adjustment on derivative liabilities		(4,779,692	)
Balance, January 31, 2020		3,699,152
Fair value adjustment on derivative liabilities		5,731,839
Balance, January 31, 2021	$	9,430,991

Upon the February 4, 2019 acquisition of Phantom Farms the vendors can earn up to 4,500,000 'earn out' shares over a period of seven years. The conditions are based on the Company's common shares exceeding certain share prices during the period. The liability is derived using a Monte Carlo simulation.

Upon the May 24, 2019 acquisition of Swell Companies the vendors can earn up to 6,000,000 'earn out' shares over a period of seven years. The conditions are based on C21 common shares exceeding certain share prices during the period. The liability is derived using a Monte Carlo simulation.

Inputs into the calculation of fair value adjustment are as follows:

	January 31,	January 31,	May 24,	February 4,
	2021	2020	2019	2019
Discount rate	0.30%	1.36%	2.50%	2.19%
Expected life in years	5.34	6.14	7.00	7.00
Expected stock volatility	80%	100%	100%	100%
Expected volatility of foreign exchange	5.29%	5.29%	5.29%	5.84%