Fire & Flower : Q4 2021 MD&A

Fire & Flower Holdings Corp.

Management Discussion and Analysis

For the Fiscal Year ended January 29, 2022

Dated April 26, 2022

INTRODUCTION

The following management's discussion and analysis ("MD&A") of financial condition and results of operations of Fire & Flower Holdings Corp. and its wholly-owned subsidiaries ("Fire & Flower" or "FFHC" or the "Company")

constitutes management's review of the factors that affected the Company's financial and operating performance for the quarter and fiscal year ended January 29, 2022 ("Q4 2021" and "FY 2021", respectively).

The information in this MD&A is current as of April 26, 2022 and should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended January 29, 2022 (the "Financial Statements"). The Financial Statements referenced above have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") and interpretations of the IFRS Interpretations Committee for all periods presented.

The Financial Statements and this MD&A have been reviewed by the

Company's Audit Committee and approved by the Company's board of directors (the "Board of Directors") as of April 26, 2022.

Unless otherwise indicated, all financial information in this MD&A is reported in Canadian dollars. All references to the Company contained herein include references to its subsidiaries, as applicable, in the context. The Financial Statements and the Company's most recent annual information form ("2021 AIF") are filed onwww.sedar.com. Additional information about the Company can also be found onwww.sedar.com.

ACCOUNTING PERIODS

The fiscal year of the Company consists of a fifty-two or fifty-three week period ending on the Saturday closest to January 31, which is January 29, 2022 ("FY 2021") and January 30, 2021 ("FY 2020"), for the current and prior year period presented in this MD&A, respectively.

Each quarterly interim period for the current and prior fiscal year consists of thirteen weeks.

NON-IFRS FINANCIAL MEASURES

Throughout this MD&A, references are made to non-IFRS financial measures, including same store sales and Adjusted EBITDA. 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.

FORWARD LOOKING STATEMENTS

Certain statements contained in this MD&A, and the documents incorporated by reference in this MD&A, may constitute forward-looking statements.

These statements relate to future events or the Company's future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "propose", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

These forward-looking statements include, among other things, statements relating to:

• • the performance of the Company's business and operations;

• • the expected timing and cost of the Company's business objectives and milestones;

• • the intention to grow the business, operations and potential activities of the Company;

• • the expected timing and completion of certain filings, acquisitions and other transactions;

• • the competitive conditions of the cannabis industry;

• • the intended expansion of the Company's operations, its costs and receipt of all requisite regulatory approvals to complete such expansion and increase sale capacity;

• • the applicable laws, regulations and any amendments thereof;

• • the competitive and business strategies of the Company;

• • the grant, timing and impact of any licence or supplemental licence to conduct activities or any amendments thereof;

• • the intention of the Company to complete any offering of securities;

• • the intention of the Company to make certain elections;

• • the impact of the novel strain of the coronavirus ("COVID-19") on the business and operations of the Company.

Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company's financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. Such assumptions include, but are not limited to, assumptions regarding: (a) the demand for the

Company's products and services and fluctuations in future revenues; (b)

sufficiency of current working capital to support future operating and working capital requirements; (c) equity and debt markets continuing to provide access to capital on acceptable terms; (d) policies of enforcement of applicable laws; (e) the expected actions of third parties; (f) the Company's future growth prospects and business opportunities; (g) the expected growth in the amount of cannabis sold by the Company and the expected size of and pricing of products in the recreational cannabis market; (h) expectations with respect to the renewal and/or extension of the Company's licences and permits; (i) capital cost of the Company's expected expansion; (j) the competitive conditions of the cannabis industry; (k) the applicable laws, regulations and any amendments thereof; (l) the grant and impact of any licence or supplemental licence to conduct activities with cannabis or any amendments thereof; (m) the Company's ability to comply with applicable governmental regulations and standards; (n) the Company's success in implementing its strategies and achieving its business objectives; (o) the number of stores to be operated by the Company; and (p) general business and economic trends and conditions, including negative impacts from the continued spread of COVID-19 on the global economy or on the Company's business, financial position or results of operations.

The Company believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by investors as actual results may vary. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of various risk factors.

The forward-looking statements contained herein and in other reports filed by the Company and made by the Company's directors, officers and other persons authorized to speak on the Company's behalf are expressly qualified in their entirety by these cautionary statements.

COMPANY OVERVIEW AND STRATEGY

Overview of the Company

The Company's principal business is the operation of a fully integrated cannabis consumer technology platform, supported by a fulfillment network of over 100 retail stores and rapid delivery to cannabis consumers. The Company is focused on delivering a seamless customer experience, from online customer acquisition and discovery through to purchase and fulfillment. The Company's fully-integrated platform allows it to own the customer relationship from customer acquisition and discovery through customer acquisition channels, such as PotGuide.com and Wikileaf.com, through to a personalized online or in-store shopping experience through our proprietary Fire & Flower™, Friendly Stranger™, Happy Dayz™, and Hotbox™ retail banners, powered by our technology development subsidiary, Hifyre Inc. ("Hifyre") and our proprietary Spark Perks™ loyalty program, and culminating in best-in-class rapid delivery to our customers' doors through our delivery subsidiary, Pineapple Express Delivery Inc. ("Pineapple Express Delivery").

The Company's common shares (the "Common Shares") trade on the Toronto Stock Exchange (the "TSX") under the ticker symbol "FAF".

On August 7, 2019, 2707031 Ontario Inc., an indirect wholly-owned subsidiary of Alimentation Couche-Tard Inc. (collectively, "ACT"),

made a strategic investment in the Company (the "Strategic Investment") and received convertible debentures (the "ACT Debentures") and warrants (the "ACT Warrants"). Pursuant to the terms of the Strategic Investment, ACT acquired the right, but not the obligation, to acquire that number of Common Shares that may result in ACT holding 50.1% of the issued and outstanding Common Shares, on a fully-diluted basis, if the principal amount of ACT Debentures, ACT Warrants and Top-up Rights (as defined in the Amended and Restated Investor Rights Agreement dated September 16, 2020 between the Company and 2707031 Ontario Inc. (the "IRA")) are converted and exercised, respectively, in full. As of the date of this MD&A, ACT held 20.8% of the issued and outstanding Common Shares.

The Company's material wholly-owned subsidiaries are Fire & Flower Inc. ("FFI"), Hifyre, Hifyre US, Inc., PGED Corp., Pineapple Express Delivery, 10926671 Canada Ltd. (operating as Open Fields Distribution), 11180703 Canada Ltd. (operating as Hi-Line Ventures),

13318184 Canada Inc. and Friendly Stranger Holdings Corp. ("Friendly Stranger" or "FSHC").

The Company's head office, registered office and records office is located at 130 King Street West, Suite 2500, Toronto, Ontario, M5X 1C8.

Description of the Business

The Company's mission is to "Deliver Cannabis to the World" through a fully-integrated cannabis consumer technology platform enabled by advanced technology and data analytics to focus on consumer needs and transform the way consumers learn about and purchase cannabis. Through Hifyre's online cannabis platforms, along with the Company's retail brands and partner branded online dispensaries, the Company drives cannabis consumers into its data-driven retail network, powered by the proprietary Hifyre™ Digital Retail and Analytics Platform and the cross-platform Spark Perks™ customer loyalty program, to deliver a highly personalized consumer shopping experience. Fulfilment is carried out through the Company's Fire & Flower™, Friendly Stranger™, Happy Dayz™, and Hotbox™ retail networks, Pineapple Express Delivery rapid delivery platform and its wholesale distribution and fulfilment capabilities (operating as

"Open Fields Distribution"). The Company's complete platform and asset-light retail strategy provides a significant competitive advantage, additional revenue opportunities, as well as a growth platform to enter international markets in a flexible and compliant manner.

Retail

The retail sale of adult-use cannabis is only permitted by approved store operators at licensed premises in accordance with applicable federal, provincial and municipal laws. As of the date of this MD&A, the Company, through its wholly-owned subsidiaries FFI and Friendly Stranger, owns and operates one hundred (100) licensed cannabis retail stores and one (1) accessory store, and has also licensed the Fire & Flower™ brand to Fire & Flower US Holdings Inc., which is currently operating one (1) Fire & Flower™ branded cannabis retail store in the United States as described under "Description of Business - Hifyre™ Digital Retail and Analytics Platform". In addition to service as traditional brick-and-mortar retail shops, the Company's network of retail stores also serve as distribution nodes and last-mile fulfilment outposts for delivery direct to consumers.

The Company's retail experience model is designed to be continuously optimized through insights garnered from the Hifyre™ Digital

Platform to provide a highly personalized shopping experience to both long-time cannabis users who may be transitioning from the unregulated market as well as customers who are new to consuming cannabis. In addition, the Hifyre™ IQ data and Analytics Platform is one of the leading products that provide market industry data to the cannabis industry across North America.

The Company's purchase of cannabis product inventory is determined by the applicable provincial regime and optimized through automated tolls included in the Hifyre™ Digital Platform. All cannabis products are purchased either directly or indirectly from Licensed Producers in accordance with the Cannabis Act and the applicable provincial regime. In the provinces of Alberta, British Columbia, Ontario, Manitoba and the Yukon Territory, all purchases of cannabis products are made through a provincial wholesaler (that acquires its cannabis products from Licensed Producers). In the province of Saskatchewan, no such intermediary exists, and the Company engages directly with Licensed Producers. Pricing for cannabis products purchased by the Company for sale in its cannabis retail stores in Alberta, Manitoba, Ontario, British Columbia and the Yukon Territory is set by the provincial/territory regulator.

During the fiscal year ended January 30, 2021, the Company acquired all of the shares of Friendly Stranger, which holds the Retail Operator Licence ("ROL") and Retail Store Authorizations ("RSA") (as such terms are defined in the Cannabis Licence Act (Ontario)) to operate cannabis retail stores in Ontario under the Friendly Stranger™, Happy Dayz™ and Hotbox™ brands. The Company has transitioned operational procedures and technology systems onto FFI's best practices including the Hifyre™ Digital Platform.

The following table sets out the Company's current retail operations, including acquisitions, across Canada as at the date of this MD&A:

As of the date of this MD&A: Province/ Territory	Stores Operated (2, 3)
Alberta	39
Saskatchewan	15
Manitoba	5
Yukon Territory	1
Ontario	39(1)
British Columbia	2
Total	101

(1) Reflects 38 licensed cannabis retail stores and 1 accessories only store in Ontario that are in operation as at the date of this MD&A and is exclusive of sites that are in the process of being licensed and sites under construction.

(2) The number of stores operating during the COVID-19 pandemic may vary as the Company continues to respond to the applicable legal requirements and guidelines from public health officials.

(3) All operated stores as of the date of this MD&A are owned by the Company.

The Company has licensed the Fire & Flower™ brand to Fire & Flower US Holdings Inc., which is currently operating one branded store licensed under California state laws as described under "Description of Business - Hifyre™ Digital Platform".

During the fiscal year ended January 29, 2022, the Company opened twenty-eight (28) additional locations and completed the acquisition of one (1) store located in Orangeville, Ontario and one (1) store in Sarnia, Ontario as described in more detail under "Acquisitions - Assets of Sarnia and Orangeville, Ontario locations". During the quarter ended January 29, 2022, the Company opened eight (8) additional locations. The Company anticipates being able to grow both organically as well as through acquisition in the future. Subsequent to the end of the fiscal year ended January 29, 2022, the Company opened two (2) additional locations, but closed four (4) of its existing cannabis retail stores and two (2) accessories only locations.

On October 5, 2021, the Company announced that it had advanced its strategic initiative with ACT, the parent company of Circle K stores, to open new Fire & Flower™ cannabis retail stores adjacent to existing Circle K stores located in new markets across Canada (the "Co-Location Program"). Initially launched as a pilot project in July 2020, the expected expansion of the Co-Location Program will now see co-located retail stores open in the provinces of Alberta, Saskatchewan and Manitoba. The co-located stores will be operated by ACT pursuant to certain master franchise agreements whereby ACT has the right to develop and operate cannabis retail outlets utilizing the Company's cannabis brand trademarks, intellectual property, operating plans and system of design.

During fiscal year ended January 29, 2022, COVID-19 resulted in governments reinstating stricter emergency measures to combat the spread of the virus. These measures include the implementation of travel bans, self-imposed quarantine periods, social distancing, proof of vaccination or negative test mandates and temporary closures of non-essential businesses. The impact of COVID-19 on the Company's operations and the measures taken to address the associated challenges are described under "Q4 2021 and Recent Highlights - COVID-19".

During the prior fiscal year, the Company focused its expansion through a combination of acquisition of various cannabis retail stores, including the acquisition of Friendly Stranger described above and organic growth through the construction of new retail locations. The operation of such acquired stores has been assumed by FFI or Friendly Stranger, as applicable, via legal entity consolidation.

Wholesale Distribution

The Company, through Open Fields Distribution ("Open Fields"), also operates a cannabis wholesale business in Saskatchewan under a cannabis wholesale permit issued by the Saskatchewan Liquor and Gaming Authority ("SLGA"). Open Fields purchases cannabis products directly from Licensed Producers that are authorized to sell into Saskatchewan and distributes such products to the Company's licensed corporate-owned and branded retail stores as well as third-party independent licensed retailers in Saskatchewan. Open Fields also purchases cannabis accessories and related ancillary products from Canadian-based and global suppliers and distributes them to FFI's retail stores and third-party independent retailers in Canada. Sales to third-party retailers provides the Company with additional revenue and margin opportunities that includes fulfilment of e-commerce sales across Canada of cannabis accessories and related ancillary products. Pricing for cannabis products purchased by Open Fields for re-sale through the Company's retail stores and independent retailers in Saskatchewan is determined through negotiation with provincially authorized Licensed Producers. Pricing for cannabis accessories and ancillary products purchased by Open Fields for re-sale through the Company's retail stores and independent retailers is determined through negotiation with manufacturers, distributors and other wholesalers.

Hifyre™ Digital Platform

Hifyre™ has developed and deployed a proprietary, omni-channel, data-driven system to drive the Company's advanced retail operations and provide insight into consumer behaviours. The fully-integrated Hifyre™ Digital Platform allows the Company to own the customer relationship from digital customer acquisition through to a personalized online or in-store purchase experience and, ultimately, rapid delivery to the customer's door. The Hifyre™ Digital Platform allows customers to discover and interact with cannabis brands independent of a brick-and-mortar store, but still provides them the unparalleled convenience of rapid delivery from a robust and well-organized physical fulfilment network.

The first generation of the platform was successfully launched for legalization on October 17, 2018, and Hifyre™ continues to execute development activities on the platform and acquire complimentary technology that can be integrated into the existing Hifyre technology stack. By capturing user behaviour data and applying predictive analytics, Hifyre™ is able to facilitate the retail business' delivery of a highly personalized customer experience. This both allows the Company to connect customers with products that match their buying habits and interests, and helps the Company efficiently manage its inventory and product assortment to offer products its customers enjoy most.

The Company expects the Hifyre™ Digital Platform to provide it with a significant competitive advantage at retail, create opportunities for additional high-margin revenue streams and a platform for growth into international markets. Hifyre™ also licenses certain of the data analytics components of the Hifyre™ Digital Platform to allow its customers to better understand consumer preferences, behaviour and market dynamics. The Hifyre™ Digital Platform includes the industry-leading data platform and high-margin subscription revenue stream, Hifyre™ IQ, which is subscribed to by a significant number of Canadian licensed producers, equity research analysts and a variety of customers in business, finance, banking and consulting. Hifyre™ has also launched a digital advertising offering, Hifyre™ Reach, which uses the Company's advanced consumer segmentation engine to deliver targeted advertising services, compliant with the highly regulated cannabis marketing restrictions.

In September of 2019, Hifyre™ launched the proprietary Spark Perks™ loyalty program across the Fire & Flower retail network, providing member benefits such as Spark Fastlane™ 'click-and-collect' checkout, home delivery, exclusive deals and access to member-only events. The Spark Perks™ program collects data on consumer purchase behaviours to help the Company better understand the preferences of their customers and provide a personalized customer experience to members.

In January of 2020, Hifyre™ entered into a Strategic License Agreement with COVA Software Solutions ("Cova") which allows Cova to provide the Hifyre™ Digital Platform to its customers including the Spark Perks™ program and the Spark Fastlane™ 'click-and-collect' service and enhances the depth of Hifyre's cannabis retail sales dataset.