Page 1 of 6 20 July 2021 Special Situations Andrew Semple , CFA | 416.687.6656 | asemple@echelonpartners.com Event : High Tide, Inc. (“ High Tide ” or “ the Company ”) announced a definitive agreement to acquire DS Distribution (“DankStop” , private ) , a US e - commerce retailer of consumption accessory pro ducts. This acquisition will bolster High Tide’s exiting e - commerce accessory business, where pro forma annualized US revenues would be ~$55M (prev. ~$50M) following the DankStop acquisition . High Tide will pay US$3.85M in stock as consideration. The acqui sition is expected to be immediately accretive. DankStop generated TTM revenues of US$3M as of April 30 and produced low double - digit EBITDA margins. We believe there are clear revenue growth and cross - selling opportunities upon closing the transaction, wh ich is expected in the coming weeks. We note High Tide also announced this morning that it closed the previously announced acquisition of Daily High Club for US$10M, adding a subscription box offering to its existing US accessory operations. High Tide now own s 3 of the 5 of the most popular pure - play online cannabis accessory retailers, giving it a strong lea dership position in the accessory e - commerce marketplace. See our Daily High Club note here We reiterate our Speculative Buy rating and our price target of $ 20 .00/shr based on a DCF valuation of $ 1 9 5 8 /shr ▪ Overview of Key Transaction Terms – High Tide agreed to acquire all of DankStop for US$3.85M payable in shares, priced at the 10 - day VWAP as of closing the transaction. DankStop is expected to have US$100K cash on hand upon closing the transaction, and non - cash working capital of US$220K. The transaction is expected to close in the coming weeks according to the Company. We believe this acquisitio n represents a net valuation multiple of 1.25x DankStop’s TTM revenue as of April 30 (net of cash acquired), and a trailing EBITDA multiple in the mid - to - high single - digit range. ▪ DankStop Complements High Tide’s Existing E - Commerce Business, Revenue Syner gy Opportunities – We see plenty of opportunities to drive revenue synergies upon closing the acquisition. DankStop has already garnered a strong online following, recording 2.5M site visits in 2020, 200K email subscribers, and 335K Instagram followers. High Tide will have opportunities to increase commercialization of these potential customer s, including higher conversion rates , more frequ ent purchases, and introducing this large network to High Tide’s other e - commerce platforms (Grasscity, Smoke Cartel, Daily High Club, and FABCBD) High Tide is also likely to enhance vertical integration across its channels , selling more of its own branded products on the DankStop e - commerc e store to capture additional margin We believe these synergies will accelerate growth for DankStop and improve profitability. We view this acquisition to be on strategy for High Tide, and believe it retains a deep pipeline of US e - commerce acquisition op portunities to capitalize on in the coming months. ▪ High Tide Closes Daily High Club Acquisition – Please see our Daily High Club note for full details. Daily High Club offers a rapidly growing subscript ion box model, which charges members a monthly fee to receive a box of cannabis accessories on a monthly basis. The subscription model creates a sticky customer base, generating recurring and predictable revenues. In addition to its subscription box model, Daily High Club also acts as a regular High Tide, Inc. Continues US E - Commerce Roll - up Strategy with DankStop Acquisition, Immediately Accretive and Able to Accelerate Growth HITI - TSXV: $ 7.88 Speculative Buy $20.00 Target Projected Return: 154 % Valuation: DCF, 11 % Discount Rate, 1 7 5 x exit multiple on FCF High Tide, Inc. CAD Unless Noted Market Cap. (PD, $M) Net Debt (PD, $M) Capitalized Leases ($M) Potential Proceeds from Dilutive Securities ($M) Enterprise Value ($M) Basic Shares O/S (M) Partially Diluted Shares (M) Avg. Daily Volume (M) 52 Week High (C$) 52 Week Low (C$) Financial Metrics 31-Oct Revenue ($M) Adj. Gross Margin (%) Adj. EBITDA ($M) Valuation Data EV/Sales Current Target EV/EBITDA Current Target Quarterly Data Revenue ($M) Adj. Gross Margin (%) Adj. EBITDA ($M) Company Description 61.5 50.6 0.5 16.95 2.10 484.6 (3.2) 460.0 28.6 50.0 8.2 22.7 53.8 16.1x 7.2x 4.3x 5.5x 2.5x 1.5x 20.2x 8.5x Q321E Q421E Source: Company Filings (historical financials), Echelon Capital Markets (estimates), FactSet (share pricing) 4.6 4.7 5.3 7.7 High Tide is a Canadian retailer, distributor, and e-commerce provider of legal adult-use cannabis products and related accessories. The Company's retail segment operates licensed cannabis stores in Canada, as well as e-commerce smoking accessory platforms. High Tide’s wholesale operations oversee the design, manufacture, and distribution of smoking accessory products. nmf 39% 37% 36% 36% 38.3 40.9 47.8 59.3 nmf 59.1x 24.9x Q121A Q221E 37% 37% 36% F2020A F2021E F2022E 83.3 186.3 314.5 0.0 1.0 2.0 3.0 4.0 5.0 6.0 $0.00 $5.00 $10.00 $15.00 $20.00 Volume (M) Price (C$) Page 2 of 6 High Tide, Inc. (HITI - TSXV ) | 20 July 2021 Andrew Semple , CFA | 416.687.6656 | asemple@echelonpartners.com e - commerce retailer of cannabis accessories. Daily High Club has 15,000 active subscribers and has sold over 1M cannabis accessories to date. The transaction is an excellent fit for High Tide, as Daily High Club pro vides the Company with a new offering (subscription boxes), is complementary to existing US e - commerce operations, and offers clear revenue synergy opportunities. ▪ Changes to Estimates , Adding DankStop to Financial Forecasts – We are including DankStop into our financial estimates, with closing of the transaction expected shortly in the coming weeks. We model first contribution in FQ421 results for the quarter ended October 31, 2021. We raised our 2022 sales and EBITDA estimates for the acquisition. We expe ct strong organic growth over time driven by the aforementioned revenue synergy opportunities as well as organic growth, and believe our initial estimates for the DankStop acquisition are conservative. Exhibit 1 – Financial Forecasts Source: FactSet, Echelon Capital Markets ▪ Valuation Remains Attractive with > 150 % Upside Expected in the Next 12 Months – High Tide trades at an attractive valuation of 8 5 x EV/2022E EBITDA based on our estimate compared to the cannabis retailer average multiple of 11 5 x 2022E EBITDA, and ~14. 5 x 2021E multiple for comparable retailers from other industries. We continue to see upside to High Tide’s valuation upon future M&A a nnouncements , which should prove to be a tailwind to financial forecasts and valuation multiples. In $M F2020A FQ121A FQ221A FQ321E FQ421E F2021E F2022E Revenue $83.3 $38.3 $40.9 $47.8 $59.3 $186.3 $314.5 Adj. Gross Margin 37.0% 38.5% 36.7% 36.2% 35.7% 36.6% 36.1% Adj. EBITDA $8.2 $4.6 $4.7 $5.3 $7.7 $22.7 $53.8 Revenue $83.3 $38.3 $40.9 $47.8 $58.5 $185.5 $309.5 Adj. Gross Margin 37.0% 38.5% 36.7% 36.2% 35.6% 36.6% 35.9% Adj. EBITDA $8.2 $4.6 $4.7 $5.3 $7.6 $22.6 $52.4 Revenue $83.3 $36.3 $40.9 $51.5 $56.4 $187.3 $294.1 Adj. Gross Margin 36.0% 38.6% 33.8% 36.0% 30.0% 34.2% 35.4% Adj. EBITDA $8.6 $4.6 $4.3 $6.6 $7.7 $23.2 $56.0 New Estimates Former Estimates Consensus Page 3 of 6 High Tide, Inc. (HITI - TSXV ) | 20 July 2021 Andrew Semple , CFA | 416.687.6656 | asemple@echelonpartners.com Source : Company Filings, Company Documents, FactSet, Statistics Canada, Arcview Market Research, Echelon Capital Markets High Tide, Inc. (HITI-TSXV, $7.88) - Data Sheet Speculative Buy | PT: $20.00 Company Description Consensus 3 Mths Ago Current Return Rating: NA Buy Target: NA $17.50 122% Median: $18.75 $17.50 122% High: $21.00 $20.00 154% Low: $16.50 $15.00 90% Consensus Distribution Sector Outperform/Buy 2 Sector Perform/Hold 0 Sector Underperform/Sell 0 # Est 2 Key Financial Metrics Key Statistics Value Financial Summary F2019A F2020A FQ121A FQ221A FQ321E FQ421E F2021E F2022E 52-Week High $16.95 115% Consolidated, $M (CAD unless noted) 52-Week Low $2.10 (73%) Revenue 31.3 83.3 38.3 40.9 47.8 59.3 186.3 314.5 Avg Vol (3-Mo, M) 0.5 Growth y/y 258% 166% 179% 99% 98% 119% 124% 69% Partially Diluted Shares Outstanding (M) 61 Cons. 31.3 83.3 36.3 40.9 47.7 57.2 184.3 292.3 Market Cap (PD, $M) 485 Net Debt (PD, Incl. Leases, $M) -3 Gross Margin 36% 37% 39% 37% 36% 36% 37% 36% Enterprise Value (PD, Incl. leases, $M) 460 Cons. 36% 36% 41% 37% 35% 34% 36% 36% FYE Oct 31 Adj. EBITDA (15.9) 8.2 4.6 4.7 5.3 7.7 22.7 53.8 Growth y/y nmf nmf nmf 166% 55% 112% 178% 137% Valuation Multiples Current At Target Margin (51%) 10% 12% 12% 11% 13% 12% 17% F2019 14.7x 42.9x Cons. (15.9) 8.6 4.6 4.7 5.1 6.8 21.3 49.7 F2020 5.5x 16.1x F2021 2.5x 7.2x Net Income (26.3) (6.4) (16.8) (12.3) (1.2) 2.0 (28.3) 22.5 F2022 1.5x 4.3x Diluted EPS ($1.99) ($0.42) ($0.62) ($0.30) ($0.02) $0.03 ($0.67) $0.37 F2019 nmf nmf Adj. Diluted EPS ($1.68) ($0.47) ($0.20) ($0.18) $0.00 $0.03 ($0.26) $0.37 F2020 56.2x 164.0x Growth y/y (Adj EPS) nmf nmf nmf nmf nmf nmf nmf nmf F2021 20.2x 59.1x Cons. ($1.95) ($0.45) ($0.30) ($0.02) $0.00 $0.03 ($0.26) $0.35 F2022 8.5x 24.9x F2019 nmf nmf Net Debt (Incl. leases) 26.0 45.9 75.4 28.6 27.5 28.5 28.5 6.8 F2020 nmf nmf Operating Cash Flow ($M) ex. NWC (14.7) 8.0 4.9 4.1 3.9 7.1 19.9 46.7 F2021 nmf nmf CAPEX ($M) (incl. Acquisitions) (16.9) (5.0) 8.5 (9.0) (21.5) (2.9) (24.9) (11.5) F2022 21.6x 57.8x Unlevered FCF (ex. rent) (29.8) 8.2 11.3 (12.0) (18.6) 1.1 (18.2) 33.6 Unlevered FCF (incl. rent) (29.8) 5.0 10.2 (13.3) (20.2) (0.6) (23.8) 23.5 Discount Rate Unlevered FCF (ex. rent) Yield to EV (6%) 2% 10% (10%) (16%) 1% (4%) 7% Valuation Sensitivity 9.0% 11.0% 13.0% 13.5x $16.90 $15.58 $14.38 Other Metrics F2019A F2020A FQ121A FQ221A FQ321E FQ421E F2021E F2022E 15.5x $19.07 $17.58 $16.23 17.5x $21.24 $19.58 $18.07 Adj. Return on Assets (ROA) (54%) (10%) (13%) (15%) 0% 3% (5%) 9% 19.5x $23.42 $21.58 $19.92 Adj. Return on Invested Capital (ROIC) (56%) 3% (1%) (3%) 1% 3% 1% 25% 21.5x $25.59 $23.58 $21.77 Adj. Return on Equity (ROE) (231%) (70%) (44%) (29%) 1% 6% (8%) 14% EV/Sales EV/EBITDA P/E Exit FCF Multiple High Tide is a Canadian retailer, distributor, and e- commerce provider of legal adult-use cannabis products and related accessories. The Company's retail segment operates licensed cannabis stores in Canada, as well as e- commerce smoking accessory platforms. High Tide’s wholesale operations oversee the design, manufacture, and distribution of smoking accessory products. Total Addressable Market Opportunity Store Photos 0.0 1.0 2.0 3.0 4.0 5.0 6.0 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Volume (M) Price (C$) Page 4 of 6 High Tide, Inc . ( HITI - TSXV ) | 20 July 2021 Andrew Semple , CFA | 416.687.6656 | asemple@echelonpartners.com Important Information and Legal Disclaimers Echelon Wealth Partners Inc. is a member of IIROC and CIPF. 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This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Copyr ight: This report may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whats oever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of Echelon Wealth Partners. ANALYST CERTIFICATION Company: High Tide, Inc. | TSXV : HITI I, Andrew Semple , hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or vi ews in this report. IMPORTANT DISCLOSURES Is this an issuer related or industry related publication? Issuer Does the Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer? If Yes: 1) Is it a long or short position? No Position ; and, 2) What type of security is it? None. No The name of any partner, director, officer, employee or agent of the Dealer Member who is an officer, director or employee of the issuer, or who serves in any adv isory capacity to the issuer. No Does Echelon Wealth Partners Inc. or the Analyst have any actual material conflicts of interest with the issuer? No Does Echelon Wealth Partners Inc. and/or one or more entities affiliated with Echelon Wealth Partners Inc. beneficially own c ommon shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer? No During the last 12 months, has Echelon Wealth Partners Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public offering, or private placement of securities of this issuer? Yes During the last 12 months, has Echelon Wealth Partners Inc. received compensation for having provided investment banking or r elated services to thi s Issuer? Yes Has the Analyst had an onsite visit with the Issuer within the last 12 months? ( December 14 , 2020: T oured Toronto retail store) Yes Has the Analyst or any Partner, Director or Officer been compensated for travel expenses incurred as a result of an onsite vi sit with the Issuer within the last 12 months? No Has the Analyst received any compensation from the subject company in the past 12 months? No Is Echelon Wealth Partners Inc. a market maker in the issuer’s securities at the date of this report? No Page 5 of 6 High Tide, Inc . ( HITI - TSXV ) | 20 July 2021 Andrew Semple , CFA | 416.687.6656 | asemple@echelonpartners.com RATING DEFINITIONS Buy The security represents attractive relative value and is expected to appreciate significantly from the current price over the next 12 month time horizon. Speculative Buy The security is considered a BUY but in the analyst’s opinion possesses certain opera tional and/or financial risks that are higher than average. Hold The security represents fair value and no material appreciation is expected over the next 12 - 18 month time horizon. Sell The security represents poor value and is expected to depreciate over the next 12 month time horizon. Under Review While not a rating, this designates the existing rating and/or forecasts are subject to specific review usually due to a material event or share price move. Tender Echelon Wealth Partners recommends that investors tender to an existing public offer for the securities in the absence of a superior competing offer. Dropped Coverage Applies to former coverage names where a current analyst has dropped coverage. Echelon Wealth Partners will provide notice t o investors whenever coverage of an issuer is dropped. RATINGS DISTRIBUTION Recommendation Hierarchy Buy Speculative Buy Hold Sell Under Review Restricted Tender Number of recommendations 2 6 3 4 1 0 50 1 0 % of Total (excluding Restricted) 2 3 % 3 1 % 1 % 0 % 4 5 % Number of investment banking relationships 1 5 2 6 0 0 1 4 1 0 % of Total (excluding Restricted) 2 7 % 4 7 % 0 % 0% 2 5 % PRICE CHART, RATING & PRICE TARGET HISTORY Note: Price t argets and share price data prior to May 13, 2021 have been adjusted to reflect a 1 - for - 15 share consolidation. Date Target Rating 24 Aug 2020 $7.50 Speculative Buy 13 Sep 2020 RESTRICTED 28 Oct 2020 $7.50 Speculative Buy 19 Nov 2020 $9.00 Speculative Buy 1 Feb 2021 RESTRICTED 23 Feb 2021 $13.50 Speculative Buy 1 Apr 2021 $16.50 Speculative Buy 3 May 2021 $18.00 Speculative Buy 18 May 2021 RESTRICTED 26 May 2021 $20.00 Speculative Buy Coverage Initiated: Jul 29, 2020 Data sourced from: FactSet $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 Jul 20 Sep 20 Nov 20 Jan 21 Mar 21 May 21 Jul 21 High Tide, Inc. (HITI - CAN) Price Price Target Revisions Page 6 of 6 High Tide, Inc . ( HITI - TSXV ) | 20 July 2021 Andrew Semple , CFA | 416.687.6656 | asemple@echelonpartners.com Toronto Wealth Management 1 Adelaide St East, Suite 2000 Toronto, ON M5C 2V9 416 - 572 - 5523 Toronto Capital Markets 1 Adelaide St East, Suite 2100 Toronto, Ontario M5C 2V9 416 - 572 - 5523 Montreal Wealth Management and Capital Markets 1000 De La Gauchetière St W., Suite 1130 Montréal, QC H3B 4W5 514 - 396 - 0333 Calgary Wealth Management 525 8 th Ave SW, Suite 400 Calgary, AB T2P 1G1 403 - 218 - 3144 Calgary Wealth Management 123 9A St NE Calgary, AB T2E 9C5 1 - 866 - 880 - 0818 Oakville Wealth Management 1275 North Service Road, Suite 612 Oakville, ON L6M 3G4 289 - 348 - 5936 Edmonton Wealth Management 8603 104 St NW Edmonton, AB T6E 4G6 1 - 800 - 231 - 5087 London Wealth Management 235 North Centre Rd, Suite 302 London, ON N5X 4E7 519 - 858 - 2112 Ottawa Wealth Management 360 Albert St, Suite 800 Ottawa, ON K1R 7X7 613 - 907 - 0700 Vancouver Wealth Management and Capital Markets 1055 Dunsmuir St, Suite 3424, P.O. 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