Reasons for Decision

Introduction

COURT FILE NO.: CV-25-00739458-00CL & CV-25-00739982-00CL
DATE: 2025-05-21
SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

RE: IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED
AND IN THE MATTER OF RULES 14.05(2) and 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF THE CANNABIST COMPANY HOLDINGS (CANADA) INC. AND 16834434 CANADA INC. AND INVOLVING THE CANNABIST COMPANY HOLDINGS INC, PATRIOT CARE CORP., CURATIVE HEALTH LLC, COLUMBIA CARE DC LLC, MISSION BAY, LLC, CCUT PHARMACY LLC, COLUMBIA CARE PENNSYLVANIA LLC, COLUMBIA CARE INDUSTRIAL HEMP LLC, CURATIVE HEALTH CULTIVATION LLC, COLUMBIA CARE NY LLC, FOCUSED HEALTH LLC, COLUMBIA CARE NEW JERSEY LLC, COLUMBIA CARE WV INDUSTRIAL HEMP LLC, CCPA INDUSTRIAL HEMP LLC, CC OH REALTY LLC, CCF HOLDCO LLC, CC CALIFORNIA LLC, COLUMBIA CARE MD LLC, COLUMBIA CARE DE MANAGEMENT LLC, COLUMBIA CARE DELAWARE, LLC, AND COLUMBIA CARE LLC

THE CANNABIST COMPANY HOLDINGS (CANADA) INC. AND 16834434 CANADA INC. (Applicants)
MURCHINSON LTD. (Applicant)
and
THE CANNABIST COMPANY HOLDINGS INC., THE CANNABIST COMPANY HOLDINGS (CANADA) INC. and 16834434 CANADA INC. (Respondents)

APPLICATION UNDER sections 192 and 241(1) of the Canada Business Corporations Act, RSC 1985, c C-44 and Rule 14.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg 194

BEFORE: Jane Dietrich

COUNSEL:
Lee Nicholson, Eliot Kolers, Philip Yang, Brittney Ketwaroo, for the Applicants
Joseph Groia, David Sischy, Yona Gal, for the Respondent, Murchinson Ltd.
Brendan O’Neill, Brad Wiffen, Peter Kolla, for the Supporting Noteholders

HEARD: May 12, 2025

Introduction

[1] The Applicants, The Cannabist Company Holdings (Canada) Inc. (the “ Company ”) and 16834434 Canada Inc. (“ 168Co ” and together with the Company, the “ Applicants ”) seek a final order approving a plan of arrangement (the “ Arrangement ”) pursuant to s. 192 of the Canada Business Corporations Act RSC 1985 c. C-44, as amended (the “ CBCA ”).

[2] Murchinson Ltd. (“ Murchinson ”) advises Nomis Bay Ltd. and BPY Limited (the “ Bermudan Funds ”) which hold certain of the Senior Notes as outlined below. Murchinson opposes the final order requested by the Applicants.

[3] Murchinson also seeks an order under section 241 of the CBCA (the “ Oppression Application ”) declaring that the Company, the Cannabist Company Holdings (Canada) Inc. and 168Co have acted in a manner that is oppressive, is unfairly prejudicial to and/or unfairly disregards the interests of Murchinson and an order directing a trial to assess damages. The Oppression Application also seeks relief in respect of claims by Murchinson that the Company has breached its contractual obligations to the holders of the 2025 Notes and engaged in civil conspiracy.

[4] Murchinson has also brought a motion seeking to add the Bermudan Funds as applicants in the Oppression Application. That relief is not opposed.

[5] Terms not otherwise defined herein have the meaning provided to them in the factum of the Applicants filed on this motion.

[6] For the reasons set out below the request for a final order under s. 192 of the CBCA is granted and the Oppression Application is dismissed.

Background

Interim Order

[7] On March 28, 2025, I granted an Interim Order with respect to the Arrangement and made a corresponding endorsement (the “ Interim Order Endorsement ”). For ease of reference, certain of the background information set out in the Interim Order Endorsement, is repeated here.

[8] The Interim Order provided that the Senior Noteholders were to vote on the Arrangement as one class. It also provided that the Applicants were to record the vote of the Senior Noteholders separately for each of the 2025 Notes, the 2026 Notes and the 2027 Notes to ensure that Murchinson had the information necessary to make fulsome submissions at this hearing.

The Cannabist Group

[9] The Cannabist Group operates a fully integrated cannabis business - including cultivation, manufacturing, and retail - across 12 states in the United States where medical or adult-use cannabis is legally permitted.

[10] The Company is incorporated pursuant to the CBCA , having its registered office in Toronto, Ontario, Canada. The Company is a direct, wholly-owned subsidiary of The Cannabist Company. The Company is a co-issuer of the Senior Notes.

[11] 168Co is incorporated pursuant to the CBCA , having its registered office in Toronto, Ontario, Canada. 168Co is a direct, wholly owned subsidiary of The Cannabist Company. 168Co does not have any liabilities. 168Co is contemplated to be amalgamated with the Company upon implementation of the Plan.

[12] The Cannabist Company is the parent company of the Company, 168Co and various U.S.-based subsidiaries. The Cannabist Company is incorporated pursuant to the Business Corporations Act (British Columbia). The Cannabist Company is a public company. The CBST Common Shares are listed for trading under the ticker symbols “CBST” on CBOE.

[13] The Cannabist Group’s operations are conducted through 20 U.S. based subsidiaries. These U.S. based subsidiaries own or manage interests in several state-licensed medical and/or adult use marijuana businesses in California, Colorado, Delaware, Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia.

The Cannabist Group Capital Structure

[14] The Cannabist Group’s indebtedness consists primarily of approximately $270 million of Senior Notes issued pursuant to the Existing Indenture. The Senior Notes are summarized in the below table:

Notes

Approximate Amount

Maturity Date

Interest Rate

Security

2025 Notes

$59.5 million

June 29, 2025

6.0%

First lien shared pari passu between all Secured Notes

2026 Notes

$185 million

February 3, 2026

9.5%

First lien shared pari passu between all Secured Notes

2027 Notes

$25.5 million

March 19, 2027

9.0%

First lien shared pari passu between all Secured Notes

[15] Pursuant to the Existing Indenture, all Senior Notes that are outstanding at any time rank pari passu and are equally and rateably secured with all other outstanding Senior Notes, with the same right, lien, and entitlement with respect to all of the same collateral without preference, priority, or distinction between the Senior Notes on account of the date or dates or the actual time or times of the issuance or maturity of the Senior Notes.

[16] Pursuant to the Existing Indenture, the non-payment of principal of one series of Senior Notes (for the 2026 Notes in an amount exceeding $50 million) gives rise to cross-defaults under other series of notes and, subject to certain limited conditions, all Senior Notes may be accelerated. Further, upon an insolvency proceeding, all Senior Notes are accelerated. Any money collected by the Indenture Trustee exercising rights and remedies under the Existing Indenture is paid “rateably and proportionately” between all holders of Senior Notes.

Events Leading to the Arrangement

[17] The market price of the CBST Common Shares decreased by approximately 50%, from $0.21 on November 1, 2024, to $0.10 on November 11, 2024. The Applicants are of the view that this market price drop, corresponded to a decrease experienced by other industry participants as a result of a Florida Ballot Measure failing to pass which would have legalized recreational cannabis use for adults in Florida. The cannabis market sell-off also had a direct negative impact on the Company’s liquidity outlook.

[18] To address the challenging operating environment and its liquidity challenges, the Cannabist Group made several structural changes to their operations with a focus on simplification across its business. Throughout 2024 and continuing in 2025, the Cannabist Group (a) divested and closed underperforming assets; (b) restructured and grew its wholesale business; (c) reduced overall headcount by more than 20%; (d) implemented enhanced purchasing and pricing procedures; and (e) simplified its product selection.

[19] As well, since August 2023, the Cannabist Group has been focused on maintaining the stability of its business operations and proactively exploring strategic options to manage its balance sheet and improve liquidity. As part of these strategic efforts, between August 2023 to mid-2024, the Cannabist Group undertook various transactions, including, among other things: (a) raising $25,000,000 of equity financing; (b) entering into two exchange transactions in respect of the 2025 Notes and senior secured notes due May 2024; (c) raising new money through the 2027 Notes; (d) divesting non-core businesses; and (e) engaging a nationally recognised investment bank in May 2024 to explore a further debt or equity financing to add additional liquidity to the balance sheet.

[20] In June 2024, The Cannabist Company engaged Moelis as financial advisor and the Company’s legal advisor, Stikeman, to explore options to shore up liquidity to make the required interest payment and improve its balance sheet.

[21] Ultimately, after evaluating the options available to the Cannabist Group, the Special Committee and the Board determined that the Eastern Virginia and Arizona Divesture to Verano described in the Hart Affidavit was in the best interests of the Company. The Eastern Virginia and Arizona Divesture allowed the Company to make the interest payment on the 2026 Notes of $8,797,500 due on August 3, 2024, and was expected to assist with the Company’s liquidity throughout 2025. However, the value of the Verano Shares issued as part of the transaction fell significantly following the failure of the Florida Ballot Measure and the transaction failed to serve as a long-term solution to the Company’s liquidity issues.

[22] Following negotiations with certain noteholders comprising the Ad Hoc Group in late 2024 and early 2025, on February 27, 2025, the Company entered into the Support Agreement with the Supporting Noteholders. The Supporting Noteholders now represent approximately 71% of the Senior Notes.

Overview of the Arrangement

[23] The CBCA Restructuring Transaction contemplates a series of steps pursuant to the Arrangement that are designed to lead to the extension of the Senior Notes until December 31, 2028 (subject to extension in certain circumstances).

[24] As an overview, pursuant to the Arrangement, among other things, each holder of 2025 Notes and 2026 Notes will exchange their Senior Notes for (i) new senior notes (the “ New Senior Notes ”) co-issued by the Company and The Cannabist Company with equal principal amount, and (ii) its pro rata amount of 118,209,105 of New CBST Common Shares. As well, each holder of 2027 Notes will elect to exchange their 2027 Notes for either the same consideration as the 2025 Notes and 2026 Notes or new convertible senior notes issued by the Company and The Cannabist Company (the “ New Convertible Notes ”, and together with the New Senior Notes, the “ New Notes ”) for equal principal amount. The New Notes will have improved covenants.

[25] The New CBST Common Shares equal approximately 25% of outstanding shares.

[26] On closing of the CBCA Restructuring Transaction, Early Supporting Noteholders who receive New Senior Notes will also receive their pro-rata share of $1,500,000 in Early Consent Consideration and will be entitled to receive an additional pro-rata amount of $1,500,000 in Additional Early Consent Consideration upon a sale of certain assets or upon maturity.

[27] Existing CBST Shareholders will also be issued the Anti-Dilutive Warrants. The Company will be amalgamated with 168Co.

The Meeting and the Vote

[28] The Meeting was held on April 29, 2025, and conducted in accordance with the requirements of the Interim Order.

[29] Approximately 94% of the outstanding Senior Notes were present in person or represented by proxy at the Meeting.

[30] At the Meeting, overall, 75.43% of the votes cast on the Arrangement Resolution by Senior Noteholders were in favour of the Arrangement Resolution.

[31] When looking at a break down between the Senior Notes: 20.71% of the votes cast on the Arrangement Resolution by 2025 Noteholders were in favour of the Arrangement Resolution; 91.36% of the votes cast on the Arrangement Resolution by 2026 Noteholders were in favour of the Arrangement Resolution; and 75.44% of the votes cast on the Arrangement Resolution by 2027 Noteholders were in favour of the Arrangement Resolution.

[32] One proxy was received after the voting deadline and the scrutineer did not include that vote in the totals noted above. That one vote was against the plan and represented approximately $2.8 million of 2025 Notes (approximately 1% of the total Senior Notes).

Position of Murchinson

[33] At the hearing for the Interim Order, Murchinson relied on an affidavit of Mr. Paul Zogala affirmed March 26, 2025 (the “ First Zogala Affidavit ”) where Mr. Zogala advised that Murchinson (as defined in that affidavit to include the funds managed by Murchinson) held approximately $20 million of the 2025 Notes and $6.25 million of the 2027 Notes. However, on cross-examination, Mr. Zogala clarified that Murchinson is not the legal or beneficial owner of any Senior Notes. Rather the relevant Senior Notes are held by the Bermudan Funds. The Bermuda Funds are not controlled directly or indirectly by Murchinson.

[34] No evidence was provided by the Bermudan Funds or their officers/directors but as noted above, Murchinson now seeks to add the Bermudan Funds as applicants in the Oppression Application. The Applicants do not oppose the addition of the Bermudan Funds as applicants and that relief is granted.

[35] Murchinson takes the position that:

(ii) Murchinson and the other 2025 Noteholders invested in the Company pursuant to the Existing Indenture, which provided contractual guardrails to ensure the 2025 Notes would not be devalued or swallowed up by later debt the Company may assume;

(iii) Murchinson developed a very good relationship with the Company and actively supported the Company’s long-term success;

(iiii) Murchinson had a reasonable expectation that the Company would not disregard Murchinson’s rights and interests as a 2025 noteholder; and

(iiv) An investor referred to as FiSai, put pressure on the Company and barred Murchinson from participating in discussions in a process which led to the Arrangement.

[36] As a result, Murchinson says, the Company breached the Existing Indenture, engaged in a civil conspiracy and acted oppressively to Murchinson and other 2025 Noteholders contrary to their reasonable expectations and proposed the Arrangement is unfair, unreasonable and unbalanced.

Issues

[37] There are two primary issues, with certain sub issues noted below, to be decided today:

(a) Should the Final Order be granted;

(i) Does the Arrangement satisfy the test for final approval under the CBCA ; and

(ii) Are the terms of the proposed Final Order appropriate;

(b) Should the Oppression Application be Granted;

(i) Is Murchison a Proper Complainant;

(ii) Has Murchison established a claim for Oppression;

(iii) Do the terms of Indenture prevent Murchinson or the Bermudan Funds from bringing the Oppression Application;

(iv) Has Murchinson established a claim for breach of contract or civil conspiracy; and

(v) Should damages be referred to a trial of an issue?

Analysis

Issue 1: Should the Final Order be Granted

A. Should the Arrangement be Approved?

[38] In order to grant final approval of the CBCA Arrangement, the Court must be satisfied that: (1) there has been compliance with all statutory and court-mandated requirements; (2) the application has been put forward in good faith; and (3) the Arrangement is fair and reasonable. (See: BCE Inc., Re, 2008 SCC 69 (S.C.C.) [ BCE ] and Concordia International Corp. (Re) 2018 ONSC 4165 [ Concordia ] at para 22.

[39] In 45133541 Canada Inc., Re 2009 QCCS 6440 the Court confirmed at para 61 and 120, that in the context of a debt restructuring, the goal of s. 192 of the CBCA is to “provide a broad procedure aimed at facilitating the restructuring of corporations” and as such the provision ought to be broadly and liberally interpreted: see also BCE at paras. 124-125 and Concordia at para 27.

[40] As well, the Court is to focus on the terms and impact of the arrangement and not the process by which the arrangement was reached: see BCE at para 136 .

Step 1: Has there been Compliance with all Statutory and Court-mandated Requirements?

[41] In order to satisfy part one of the CBCA arrangement final approval test, the Court must be satisfied that: (i) the applicant is a “corporation” under the CBCA; (ii) the proposed transaction is an “arrangement” under s. 192(1) of the CBCA; (iii) the applicant is not insolvent; and (iv) it is not practicable to effect a fundamental change in the nature of an arrangement under any other provision of the CBCA: see para 24 of Concordia .

[42] This portion of the test is not in dispute. The Interim Order Endorsement addresses each of these requirements and finds they are satisfied by the proposed Arrangement. Nothing has been brought to my attention which negatively impacts the analysis contained in the Interim Order Endorsement in this respect.

[43] In addition, the Meeting was held in accordance with the Interim Order and received an affirmative vote from the Senior Noteholders voting at the Meeting.

[44] As well, the Director has also now been provided with notice with respect to the Final Order and the Director has indicated that it does not take a position.

[45] Accordingly, this portion of the test is satisfied.

Step 2: Has the Arrangement been put forward in Good Faith?

[46] An Arrangement is put forward in good faith where it being proposed by the Applicants to further a valid business purpose: see Concordia at para 40 and Xplore Inc. (Re) , 2024 ONSC 4593 [ Xplore ] at para 76 .

[47] In the Interim Order Endorsement, I found that the Arrangement was being put forward to proactively address the pending maturity of the 2025 Notes (and corresponding cross-defaults of the other Senior Notes) and extend the maturity until December 31, 2028. There is no dispute that the Cannabist Group is facing an impending liquidity shortfall that must be addressed. This extension is particularly important given the Applicants’ evidence that there is a liquidity shortfall such that it is not expected the Company could repay the 2025 Notes at their upcoming maturity.

[48] Accordingly, I find that the Arrangement has been put forward for a valid purpose and in good faith.

Step 3: Is the Arrangement Fair and Reasonable?

[49] In assessing the fairness and reasonableness of an arrangement, a Court must be satisfied that (a) the arrangement has a valid business purpose, and (b) the objectives of those whose legal rights are being arranged are being resolved in a fair and balanced way: see BCE , at para. 138 and Xplore at para 33 .

[50] For the reasons set out above, the Arrangement has a valid business purpose.

[51] Section 192 of the CBCA recognizes that major changes may be appropriate, even where they have an adverse impact on the rights of particular individuals or a particular group. An arrangement often involves a compromise on the part of all parties for the greater good and the Court must be careful not to cater to the needs of one particular group but rather to consider the overall fairness of any arrangement as well as the fairness to individual stakeholders: see BCE at para 148 .

[52] “As has frequently been stated, there is no such thing as a perfect arrangement. What is required is a reasonable decision in light of the specific circumstances of each case, not a perfect decision”: see BCE at para 155 . The Court is to refrain from substituting its view as to what the ‘best’ arrangement may be, rather, the Court must scrutinize the proposed arrangement and conduct a careful review of the proposed transactions: see BCE at para 155 .

[53] The level of scrutiny by the Court is related to the degree of necessity of the arrangement. If the arrangement is necessary for the corporation’s continued existence, Courts will be more willing to approve it despite its prejudicial effect on some security holders: see BCE at para 146 and Ayr Wellness Canada Holdings Inc. (Re), (December 22, 2023), Ont SCJ [Commercial List] Court File No. CV-23-00709606-00CL (Endorsement of Justice Kimmel) para. 26 [ Ayr Wellness ].

[54] Here, without the CBCA Restructuring Transaction, the Company will not have the liquidity to repay the 2025 Notes at their maturity in June 2025 to the detriment of the Company and its other stakeholders. Murchison recognizes that the Company needs more runway in the current market environment to maximize value for stakeholders and the fact that the Company cannot currently repay or refinance the 2025 Notes.

[55] Failing to pay the 2025 Notes at their upcoming maturity would result in a cross-default under the other Senior Notes, in which case, all the Senior Notes become due and are paid rateably and proportionately. The consequences flowing from the Company’s default under the Senior Notes in June 2025 would be value destructive to the Company’s business and operations.

[56] If the Arrangement is not completed, the likely outcome is that the Company will need to seek creditor protection under the Companies’ Creditors Arrangement Act (the “ CCAA ”). The Company’s operations are carried out in the United States through its U.S.-based subsidiaries. Given the nature of the Company’s business as a cannabis company, certain uncertainty exists in respect to the Company’s access to federal bankruptcy laws in the U.S. In any event, implementing any restructuring transaction through an insolvency process will also result in higher costs and greater risk for the Company and its business, the elimination of shareholder value that is preserved under the Plan, and risk to creditors that are otherwise unaffected under the CBCA Restructuring Transaction.

[57] Accordingly, given that high level of necessity of the Arrangement to the Company, the degree of scrutiny is lessened.

[58] In BCE , the Supreme Court of Canada articulated various factors that the Court may consider when assessing whether a plan is fair and reasonable, in light of the need to balance the corporation’s ongoing interests with those of its securityholders, including: (a) whether a majority of securityholders voted to approve the arrangement; (b) the proportionality of the compromise between various securityholders and their position before and after the arrangement; (c) the repute of the directors and advisors who endorse the arrangement; (d) whether the plan has been approved by an independent committee; and (e) the presence of a fairness opinion: see BCE at para 149-152 .

[59] In the restructuring context, the fairness, reasonableness, and equitable aspects of a plan must also be assessed in the context of the hierarchy of interests recognized by insolvency legislation and jurisprudence: see Xplore at para 44 and Concordia at para 34.

[60] Here, a majority of the Senior Noteholders voting as one class approved the arrangement. This is just one factor to consider in the fairness assessment. Murchinson argues that if one looking at the 2025 Notes alone, the Arrangement was overwhelmingly voted against. This is an indication that the 2025 Notes are of the view that the Arrangement is not fair and reasonable with respect to those notes.

[61] Murchinson argues that the burden of the compromise falls disproportionately on the 2025 Noteholders with the benefits flowing the other noteholders include FiSai in a preferential manner. Murchinson points to the Early Consent Consideration and the Additional Early Consent Consideration (being a pro-rata share of $3 million payable in certain circumstances) payable to Early Supporting Noteholders.

[62] All Senior Noteholders were provided with an opportunity to participate in both the Early Consent Consideration and the Additional Early Consent Consideration, and it was offered for a valid business purpose – to increase confidence in and facilitate negotiations of the Plan. This Court has approved such early consent consideration for similar reasons in a number of CBCA restructurings: see Sherritt International Corporation and 16743714 Canada Inc., et al. , 2025 ONSC 1409 [ Sherritt 2025 ] at para 53 and 54 .

[63] Murchinson also claims that certain noteholders, including FiSai are provided with additional rights including governance rights, the right to consent to certain asset sales, the right to select a financial advisor and consent over management compensation. The documentation provides that Supporting Noteholders are provided with the right to put forward three potential independent directors of which the Company is to select two. These directors will be two independent directors on a board of seven and are not agents of select noteholders. Similarly, the management incentive program is to be agreed to by the Company and Supporting Noteholders, but subject to approval of the compensation committee and the board following review by third-party compensation consultants. The financial advisor in question is to be retained by the Trustee on behalf of the holders of the New Notes to provide certain reporting and is to be agreed on by the Company and Supporting Noteholders. Finally, with respect to assets sales, different board approval thresholds are provided for previously disclosed/approved sales as opposed to those not previously consented to – ultimately, however, the power to approve is with the new board.

[64] Importantly, all of the rights at issue are available to all Supporting Noteholders. All Senior Noteholders were given the opportunity to become a Supporting Noteholder. 71% of the Senior Noteholders are Supporting Noteholders.

[65] Given the nature of this debt restructuring and the most likely alternative being an insolvency proceeding, the consideration of what the Senior Noteholders would receive in a liquidation is a factor which must be considered. Here, there is no dispute that under the terms of the Existing Indenture in an insolvency proceeding, all Senior Noteholders would be due and payable in full and all Senior Noteholders would share the same collateral rateably and proportionately. Any advantage of an earlier maturity date is illusory in that context.

[66] As such, treating the Senior Noteholders in the same manner under the Arrangement is consistent with the rights of those creditors in an insolvency proceeding.

[67] The one exception to the same treatment is that the 2027 Noteholders may elect for New Convertible Notes. The evidence of the Company is that this conversion option is beneficial for the Company and other Senior Noteholders. Despite Mr. Zogala’s sworn evidence that this convertibility feature preferred the holders of the 2027 Notes, the Bermudan Funds, in their capacity as holders of the 2027 Notes declined to exercise such election. As well, certain 2025 Noteholders, including the Bermudan Funds, were advised that the Company was willing to amend the Arrangement to provide the 2025 Noteholders with the same option, but none of the 2025 Noteholders, including Murchinson, accepted the Company’s offer to do so.

[68] Although extending the maturity dates of all Senior Noteholders to the same date results in a longer extension for the 2025 Notes than the 2026 Notes or the 2027 Notes, it should also be noted that the 2025 Noteholders are receiving improved economic terms on their New Notes while the 2026 Noteholders are not. In this case, the New Senior Notes bear interest at a rate of 9.25%. This rate is 3.25% higher than the current interest rate of 6.0% under the 2025 Notes, but 0.25% lower than the current interest rate of 9.50% under the 2026 Notes.

[69] This Court has also previously approved plans of arrangement under both the CBCA and CCAA that imposed a uniform maturity date on debtholders which voted in the same class, notwithstanding the differences in their stated maturities: see Re Sherritt International Corporation , 2020 ONSC 5822 [ Sherritt 2020 ] and Xplore .

[70] Murchinson also argues that the absence of dissent rights makes the Arrangement unfair. However, as noted in Ayr Wellness at para 33, dissent rights are inconsistent with the purpose of debt restructurings such as the one at issue, dissent rights would defeat the purpose of the Arrangement. Providing Senior Noteholders with a dissent right would undermine the Arrangement’s effectiveness and create liquidity and preference issues.

[71] The record before me is that the Special Committee undertook a thorough review of the business, prospects, and liquidity of the Cannabist Group, and considered potential alternatives that may be available. Following this review process, extensive negotiations with the Ad Hoc Group, and consultation with the Company's financial and legal advisors, the Special Committee determined that the proposed CBCA Restructuring Transaction was in the best interests of the Company and its stakeholders and unanimously recommended that the Senior Noteholders approve the Arrangement.

[72] The Company put forward a fairness opinion from Koger which provided that the proposed Restructuring Transaction was fair from a financial perspective to the Senior Noteholders and CBST Shareholders. The Fairness Opinion also concluded, among other things: (a) no executable transactions were found with better terms as those contained in the proposed CBCA Restructuring Transaction; (b) extending the maturity dates of the Senior Notes is a benefit to all parties in the CBCA Restructuring Transaction as it provides stability for the Company for a longer time period; and (c) the New Notes have improved covenants and security.

[73] Murchinson takes issue with the Fairness Opinion from Koger. In this regard, Murchinson relies on what it refers to as an ‘expert opinion’ from MPA. However, that report was not tendered on its own as a true expert opinion. It was attached to an affidavit of Mr. Zogala as an exhibit and does not comply with the requirements of Rule 53.03(2.1) of the Rules of Civil Procedure – it does not set out (a) the instructions that MPA was provided, (b) the nature of the opinion sought and the issue in the proceeding for which the opinion was sought; or (c) any opinion or range of opinions. MPA also suggests that a different structure should have been negotiated, one that maintains the staggered maturity dates for the various series of Senior Notes. That structure, however, does not appear to be actionable and is not before me for approval. The only actionable structure before me is that contained in the Arrangement.

[74] As noted above, no arrangement is perfect. However, for the reasons outlined above, I am of the view that the Arrangement is fair and reasonable in the specific circumstances of this case.

B. Are the terms of the proposed Final Order appropriate?

[75] The Plan includes a release and discharge of all Released Claims against the Released Parties on the Effective Date (the “ Releases ”). The Released Parties consist of the Company, the Supporting Noteholders, and their respective current and former directors, officers, principals, members, affiliates, limited partners, general partners, managers of accounts or funds, fund advisors, employees, shareholders, financial and other advisors, legal counsel and agents, including the Proxy Information and Exchange Agent and the Indenture Trustee each acting in their capacity as such.

[76] The Released Claims are quite broad and include Claims arising on or prior to the Effective Date in connection with the Notes, the Notes Claims, the Notes Documents, the New CBST Common Shares, the Anti-Dilutive Warrants, the Support Agreement, the Arrangement, the CBCA Proceedings, and any other proceedings commenced with respect to or in connection with the Plan, the CBCA Restructuring Transaction, and any other matter related directly or indirectly to the foregoing. Nothing in the Plan releases or discharges the Released Parties from any liability attributable to gross negligence, fraud, willful misconduct, criminal acts, or any claims wholly unrelated to the CBCA Restructuring Transaction.

[77] In considering approval of third party releases, Courts will consider: (a) whether the parties to be released were necessary and essential to the restructuring of the debtor and have contributed in a tangible and realistic way to the plan; (b) whether the claims to be released were rationally connected to the purpose of the plan and necessary for it; (c) whether the plan could succeed without the releases; (d) whether the release benefitted the debtors as well as the creditors generally; and (e) whether the creditors voting on the plan knew of the nature and effect of the releases: see Concordia at para 39.

[78] Here, the Releases are a central aspect of the Plan and are intended to provide certainty to the Released Parties and a clean slate moving forward. The Released Parties have been actively involved in the development and negotiation of the Arrangement and are making significant concessions and contributions in connection with the CBCA Restructuring Transaction. The Releases were fully disclosed in the court material and in the material provided to Senior Noteholders prior to the Meeting.

[79] Murchinson submits that because each of the Supporting Noteholders are not individually named, the form of Release requested is inappropriate. I do not agree, and the form of release requested is consistent with that approved in other CBCA transactions, including AYR Wellness .

[80] Murchinson’s position as outlined in his correspondence to the Board on May 2, 2025, makes clear that if the Releases are not granted and the Plan is otherwise allowed to proceed that it intends to continue litigation regarding the Plan. In the circumstances such would undermine the approval of the Plan.

[81] In the circumstances the requested Releases are appropriate and are approved.

[82] The Plan and paragraph 10 of the Final Order include a waiver of defaults, which provides, among other things, that all Persons shall be deemed to have waived all defaults, accelerations, third party change of control rights, or non-compliance with any provision in any agreement that relates to the Notes, the Notes Documents, the Plan, the CBCA Restructuring Transaction, the Support Agreement, the transactions contemplated thereby, the CBCA Proceedings and any other proceedings commenced with respect to or in connection with the Plan (the “ Waiver Provision ”).

[83] The purpose of the Waiver Provision is to prevent a collateral attack on the Plan that would undermine the purpose of the Arrangement through the exercise of rights or remedies relating to matters that are comprehensively addressed under the Plan. Courts have exercised their discretion to approve CBCA plans that include waiver provisions: see Concordia at paras 40, 41 and 52 and Xplore at para 70-75 .

[84] In the absence of the waiver, creditors may seek to frustrate the restructuring and attack the arrangement in a different forum. The scope of the Waiver Provision is consistent with similar provisions approved in CBCA cases and its inclusion in the Final Order is appropriate in the circumstances.

[85] Accordingly, subject to the analysis below, I would approve the Arrangement and grant the Final Order.

Issue 2: Should the Oppression Application be Granted

[86] Although approval of an arrangement under s. 192 of the CBCA and the oppression remedy provisions under the CBCA involve an analysis of many of the same considerations, the analysis of each does engage different inquiries and is to be separately considered: see BCE at para 47 .

A. Is Murchinson a proper complainant?

[87] Section 238 of the CBCA defines a “Complainant” for purposes of the oppression remedy as “(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates, … (d) any other person who, in the discretion of a court, is a proper person to make an application under this Part.”

[88] Murchinson is not a holder of any Senior Notes. Rather, the Bermudan Funds, being Nomis Bay Ltd. and BPY Limited, are the holders of the 2025 Notes and 2027 Notes, which Murchinson manages on their behalf. The Bermudan Funds are not directly or indirectly controlled by Murchinson, have separate officers and directors and have proffered no evidence.

[89] The Company takes the position that Murchinson is not a proper Complainant as it does not fall within the definition in (a) set out above. Murchinson relies on Canadian Airlines Corp. (Re) , 2000 ABKB 28185 at paras. 4-8 where a similar claim was made. However, in Canadian Airlines the Court granted standing to a fund manager which did not hold notes beneficially or otherwise as Canadian had not raised the issue on previous occasions, including where consent orders had been made involving the fund manager. Because of the delay and given the fund manager in that case was also supported by 60% of the relevant noteholders in that case, the Court found that the fund manager had standing as a complainant.

[90] Although Murchinson does not fit within the definition of Complainant in sub (a), in the present case, I find that it is appropriate to permit Murchinson to proceed as a Complainant pursuant to sub (d) of the definition. The Bermudan Funds support Murchinson, and the Company has historically dealt with Murchinson on behalf of the Bermudan Funds.

[91] Accordingly, Murchinson is a proper Complainant.

B. Do the terms of the Indenture prevent Murchinson or the Bermudan Funds from bringing the Oppression Application?

[92] The Company argues that the ‘no action’ clause in the Existing Indenture prevents individual noteholders from commencing the Oppression Application. No action clauses are a common feature of indentures and as this Court has previously observed, they may or may not bar oppression claims – it depends upon the wording of the indenture in question see: Catalyst Capital Group Inc. v. Data & Audio-Visual Enterprises Wireless Inc . 2013 ONSC 2170 at para 22 .

[93] Here, s. 9.7 of the Existing Indenture provides that:

Except to enforce payment of the principal of, and premium (if any) or interest on any Note […] no Holder shall have any right to institute any action, suit or proceeding at law or in equity with respect to this Indenture […], unless the Trustee [sic]: (a) the Holder has previously given the Trustee written notice of a continuing Event of Default; (b) the Holder or Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy; […] it being understood and intended that no one or more Holders shall have any right […] to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and rateable benefit of all the Holders. (emphasis added)

[94] Section 9.7 of the Existing Indenture is to be interpreted harmoniously in the context of other provisions of the contract, and in light of the factual matrix as a whole: see Casurina Ltd Partnership v Rio Algom Ltd. , [2002] OJ No 3229 (ONSC) at para 239 ; aff’d at , [2004] OJ No 177 (ONCA) at para. 36 ; leave to appeal to the Supreme Court of Canada dismissed, [2004] SCCA No 105 (SCC).

[95] The “no action” clause as set out in the Existing Indenture is drafted broadly by referencing “any right to institute any action, suit or proceeding at law or in equity with respect to this Indenture”. The language of s. 9.7 of the Existing Indenture is also clear that the intent is to ensure that any Senior Noteholder seeking to commence an action or enforce any right under the Existing Indenture must do so “for the equal and rateable benefit of all the [Senior Noteholders]” (not a series of them).

[96] Murchinson does not dispute that it did not comply with the process set out in s. 9.7 of the Existing Indenture. Rather it submits that the Oppression Remedy is permitted under s. 9.8 of the Existing Indenture because that section confirms that “...a Holder shall have the right to receive payment of principal and interest of any Notes held by the Holder on the applicable Maturity date and institute suit for the enforcement of any such payment.” Murchinson claims that at its core, the Oppression Remedy is a suit for the enforcement of payment permitted under s. 9.8 of the Existing Indenture.

[97] I do not agree. The Oppression Remedy was not commenced as a result of a failure of the Company at maturity to pay the 2025 Notes. Murchinson agrees that the Company’s liquidity position means that the Company requires a restructuring of the Senior Notes. What is complained about is the nature of the restructuring proposed – in that the proposed restructuring imposes a uniform maturity date of December 2028, provides the 2027 Notes with an option to preserve their convertibility feature, and does not respect the 2025 Notes serial voting rights contained in the Existing Indenture or provide the 2025 Notes with dissent rights - it is not an action to enforce payment on maturity.

[98] Rather, I agree with the Company’s submission that s. 9.7 of the Existing Indenture applies with respect to any proceeding at law or in equity with respect to the Existing Indenture (subject to the exception contained in s. 9.8 referred to above). The Oppression Application is on its face “with respect to” the Existing Indenture. The Oppression Application is not for the equal and rateable benefit of all the [Senior Noteholders]. The Oppression Application seeks certain remedies solely for the 2025 Holders which would provide the 2025 Holders with advantages over all Senior Noteholders.

[99] Further, the claims by Murchinson contained in the Oppression Application would amount to an Event of Default under s. 9.1(e) of the Existing Indenture which, under the terms of the Existing Indenture are to be pursued by the Trustee. Murchinson did not argue otherwise.

[100] Accordingly, I find that the Oppression Application is barred by s. 9.7 of the Existing Indenture.

C. Has Murchinson established a Claim for Oppression?

[101] If I am wrong and s. 9.7 of the Existing Indenture does not prevent Murchinson from commencing the Oppression Application, the question then becomes whether Murchinson has established a claim under the Oppression Remedy.

[102] In order to successfully establish a claim of oppression under the CBCA , a claimant must establish that: (a) the evidence supports the reasonable expectation asserted by the claimant; and (b) the conduct complained of amounts to “oppression”, “unfair prejudice”, or “unfair disregard” within the meaning of section 241(2) of the CBCA: see BCE at para 56 and 68 .

[103] The concept of reasonable expectations is objective and contextual—the actual expectation of a stakeholder is not conclusive. The question is whether the claimant’s expectation is reasonable having regard to the facts of the specific case, the relationships at issue, and the entire context, including the fact that there may be conflicting claims and expectations: see BCE at para 62 . As directors owe their duty to the corporation, not to stakeholders, the reasonable expectation of stakeholders is simply that the directors act in the best interests of the corporation: see BCE at para 66 .

[104] As the oppression remedy is a fact-specific enquiry Courts are to consider a number of factors, including (a) general commercial practice; (b) the nature of the corporation; (c) the relationship between the parties; (d) past practice; (e) steps the claimant could have taken to protect itself; (f) representations and agreements; and (g) the fair resolution of conflicting interests between corporate stakeholders: see BCE at 59 and 71-72.

[105] Murchinson claims that the Company has acted oppressively by, among other things, negotiating, without adequate consultation with Murchinson, and pursuing the proposed Arrangement, which disproportionately and negatively impacts Murchinson and the other 2025 Notes in the Arrangement by expressly excluding Murchinson’s (and those 2025 noteholders’) involvement and by denying Murchinson and the other noteholders their serial voting rights established under the Existing Indenture.

[106] In other words, Murchinson claims it had a reasonable expectation that (i) it would be consulted throughout the negotiations; and (ii) that the contractual provisions of the Existing Indenture – including specifically the voting rights thereunder – would be respected by the Company.

Consultation

[107] Murchinson claims that it reasonably expected that the Company would provide it with full and proper disclosure and allow Murchinson to participate in negotiations for the proposed Arrangement in the same manner as other noteholders.

[108] That expectation is not unreasonable, however, whether that expectation was disregarded in a manner that amounts to “oppression”, “unfair prejudice”, or “unfair disregard” must be considered in light of the nature of The Cannabist Company as a public company and the facts of the case.

[109] The Company began engaging with certain noteholders as early as October of 2024, while only providing ordinary course updates to Murchinson. However, the Company’s evidence is that only after the November events relating to the Florida Ballot Measure, which the Company described as a ‘seminal market event’, did negotiations reflect the revised liquidity outlook of the Company.

[110] The Company made an offer to Murchinson that it join the Ad Hoc Group in December 2024, provided Murchinson execute a confidentiality agreement, but Murchinson chose not to. Murchinson takes issue with the offer at this time, submitting that if it had been made aware that a restructuring was imminent Murchinson may have in fact executed the confidentiality agreement. However, given the public company issues at stake, it was Murchinson’s choice at that point in time not to enter into a confidentiality agreement so as not to be restricted from trading in the Company’s securities.

[111] Once Murchinson did execute a confidentiality agreement on January 27, 2025, it participated as part of the Ad Hoc Group but ultimately decided not to support the CBCA Restructuring Transaction. Murchinson claims that the main terms of the restructuring had been agreed to and it was too late by the time they made party to certain of the negotiations. However, the evidence is that negotiations were ongoing with the Supporting Noteholders up until signing on or about February 27, 2025, approximately 20 proposals were exchanged, and various other alternatives were considered in parallel.

[112] After learning of Murchinson’s opposition, the Company’s financial advisor, Moelis, contacted Murchinson to understand its potential issues and invited Murchinson to submit any alternative transaction for consideration. The evidence is that the Company did consider the proposals put forward by Murchinson, however, it was the Company’s view that the Murchinson’s proposals were not actionable and preferred the 2025 Noteholders' interest to those of the Company and its broader stakeholder group.

[113] Accordingly, I am not persuaded that the Company’s conduct amounts to “oppression”, “unfair prejudice”, or “unfair disregard” of Murchinson’s reasonable expectation regarding consultation.

Voting Rights

[114] With respect to serial voting rights, Articles 11 and 14 of the Existing Indenture, required the Company to call a special meeting of each series of effected Senior Noteholders to vote to approve any changes to the maturity date. Murchinson therefore submits that it was entitled to expect that the Company would comply with this explicit requirement when proposing the Arrangement. This would mean that each series of Notes would have had to vote independently on the Arrangement and each Senior Noteholder in each series effected would need to vote affirmatively (i.e. 100% acceptance).

[115] Murchinson says that the 2025 Noteholders did what the Supreme Court of Canada in BCE cautioned them to do and negotiated ‘guardrails’ to protect their interest. Accordingly, Murchinson takes the position that those guardrails must be respected.

[116] What Murchinson fails to recognize is that in BCE , the Supreme Court of Canada was addressing whether or not a stakeholder was provided a vote on an arrangement. In BCE , as the relevant bondholders had not negotiated protections for increased debt levels or change of control provisions in their indenture, the Supreme Court of Canada found that they could not have a reasonable expectation with respect to those matters and were not provided a vote in the arrangement at issue as it did not affect their legal rights. That is not the present case – here the holders of the 2025 Notes were provided a vote.

[117] Essentially, Murchinson’s claim amounts to an assertion that Murchinson reasonably expected that the Company would not avail itself of the benefits of the arrangement provisions of the CBCA . As outlined below, the arrangement provisions of the CBCA only come into play when it is not practicable to effect a fundamental change in the nature of an arrangement in another manner under the CBCA. In many cases, an arrangement under s. 192 of the CBCA is sought because the terms of the applicable indentures contain provisions requiring voting thresholds or other matters which make compliance with those provisions impractical: see Xplore at para 24 (c) and RGL Reservoir Management Inc. (Re) , 2017 ONSC 7302 at para 38 . It cannot be a reasonable expectation for a Complainant that a corporation waive the ability to purse an arrangement under s. 192 of the CBCA, because it would not be in the best interest of a corporation for the directors to do so.

[118] There is no evidence on the record before me to support a finding that it was a reasonable expectation of Murchinson or the Bermudan Funds in these circumstances that the Company had somehow waived its right to apply to the court under s. 192 of the CBCA . Rather, Murchinson acknowledges that a restructuring is needed and has proposed its own term sheet for such. Although Murchinson has not confirmed how its own proposal could possibly be implemented, it appears that an arrangement under s. 192 of the CBCA may also be required if that proposal was sought to be implemented.

[119] In the context of a liquidity wall, it must be the reasonable expectation of a stakeholder in a corporation that the directors of the corporation will consider all available options, including the arrangement provisions under s. 192 of the CBCA and move forward in a way that the directors believe is in the best interest of the corporation (which may not be in the best interest of any one particular stakeholder group). Here, the Company came to the realization that a restructuring of the Senior Notes was required, it ran a process, it engaged with Senior Noteholders, considered the various options before it and chose to proceed with the Arrangement.

[120] The use of the arrangement provisions when compliance with terms of an indenture are not practicable is consistent with general commercial practice, the nature of the corporation and past practice in other proceedings under s. 192 of the CBCA . Accordingly, I am not persuaded that Murchinson’s expectation that the strict terms of the Existing Indenture, including as to serial voting rights is reasonable given the circumstances facing the Company, including the impending liquidity wall.

D. Has Murchinson established a claim for breach of contract or civil conspiracy?

[121] As described above, the Arrangement does not comply with the terms of Existing Indenture. The Company has not and will not obtain the consent of each affected holder of the 2025 Notes. However, this does not mean that the Company cannot move forward with the Arrangement.

[122] As referenced above, often arrangements are implemented under s. 192 of the CBCA because the terms of an indenture cannot be complied with. To ensure there is not a collateral attack on an arrangement, as referenced above, Courts have granted Waiver Provisions with respect to contractual defaults created by the Arrangement itself.

[123] Murchinson also alleges that the Company has engaged in civil conspiracy with certain of the Supporting Noteholders, including FiSai. Civil conspiracy is made out by four elements: (a) two or more defendants make an agreement to injure the plaintiff; (b) the defendants (i) use some means (lawful or unlawful) for the predominant purpose of injuring the plaintiff or (ii) use unlawful means with knowledge their acts were aimed at the plaintiff and knowing or constructively knowing that their acts would result in injury to the plaintiff; (c) the defendants act in furtherance of their agreement to injure; and (d) the plaintiff suffers damages as a result of the defendants’ conduct: see Lilleyman v Bumblebee Foods LLC , 2023 ONSC 4408 at para. 95 .

[124] In oral submissions, Murchinson agreed that if I approved the Arrangement under s. 192 of the CBCA and found that it was not oppressive, then the ‘unlawful means’ required to support a finding of civil conspiracy would not be met. Accordingly, given my findings above, I am not persuaded that a claim for civil conspiracy has been established.

E. Should Murchinson’s Claim for Damages be referred to a Trial of an Issue?

[125] Given my findings above, Murchinson’s motion that its damages be deferred to a trial of an issue is dismissed.

Disposition

[126] For the reasons set out above, the Applicants request for a final order under s. 192 of the CBCA is granted. Counsel is requested to email the Commercial List Office a draft of the final order for my review and signature.

[127] As well, Murchinson’s Oppression Application is dismissed.

[128] By agreement of the parties, Murchinson is to pay costs to the Applicants in the amount of $175,000 including HST.

J. Dietrich, J.

Date: May 21, 2025