CERTAIN U.S. FEDERAL
INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax
consequences to a U.S. Holder (as defined below) arising from (1)
the acquisition, ownership, conversion, and disposition of an
Aphria Note acquired in this offering, (2) the ownership and
disposition of shares of Tilray Common Stock acquired upon a
conversion of such an Aphria Note, the SW Shares, the Additional
Shares and the Warrant Shares (collectively referred to herein as
This summary is for general information purposes only and does not
purport to be a complete analysis of all potential U.S. federal
income tax consequences that may apply to a U.S. Holder as a result
of the acquisition, ownership, conversion, and disposition of
Aphria Notes or common shares. This summary only applies to
U.S. Holders that acquired Aphria Notes and any common shares
as “capital assets” within the meaning of Section 1221 of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”) (generally,
property held for investment). In addition, this summary does not
take into account the individual facts and circumstances of any
particular U.S. Holder that may affect the U.S. federal income tax
consequences of the acquisition, ownership, and disposition of
Aphria Notes or common shares. Accordingly, this summary is not
intended to be, and should not be construed as, legal or U.S.
federal income tax advice with respect to any U.S. Holder. Each
U.S. Holder is urged to consult its own tax advisor regarding the
U.S. federal, state and local, and foreign tax consequences of the
acquisition, ownership, and disposition of Aphria Notes or common
Scope of this Summary
This summary is based on the Code, Treasury Regulations (whether
final, temporary, or proposed), published rulings of the Internal
Revenue Service (the “IRS”), published administrative positions of
the IRS, the Convention Between Canada and the United States of
America with Respect to Taxes on Income and on Capital, signed
September 26, 1980, as amended (the “Canada-U.S. Tax Convention”),
and U.S. court decisions that are applicable and, in each
case, as in effect, as of the date of this offering memorandum. Any
of the authorities on which this summary is based could be changed
in a material and adverse manner at any time, and any such change
could be applied on a retroactive basis. We have not requested, and
will not request, a ruling or other guidance from the IRS with
respect to any of the U.S. federal income tax consequences
described below, and as a result there can be no assurance that the
IRS will not disagree with or challenge any of the conclusions
described herein. This summary does not discuss the potential
effects, whether adverse or beneficial, of any proposed legislation
that, if enacted, could be applied on a retroactive basis.
For purposes of this summary, a “U.S. Holder” is a beneficial owner
of Aphria Notes and/or common shares that is (a) an individual who
is a citizen or resident of the United States as determined for
U.S. federal income tax purposes, (b) a corporation, or any other
entity classified as a corporation for U.S. federal income tax
purposes, that is created or organized in or under the laws of the
United States, any state in the United States, or the District of
Columbia, (c) an estate if the income of such estate is subject to
U.S. federal income tax regardless of its source, or (d) a trust if
(i) such trust has validly elected to be treated as a U.S.
person for U.S. federal income tax purposes or (ii) a U.S.
court is able to exercise primary supervision over the
administration of such trust and one or more U.S. persons have the
authority to control all substantial decisions of such trust.
Also, for purposes of this summary, a “Non-U.S. Holder” is any
beneficial owner of Aphria Notes or common shares, as the case may
be, who is neither a U.S. Holder nor an entity classified as a
partnership for U.S. federal income tax purposes.
If an entity that is classified as a partnership for U.S. federal
income tax purposes holds Aphria Notes or common shares, the U.S.
federal income tax consequences to such partnership and the
partners of such partnership generally will depend on the
activities of the partnership and the status of such partners.
Partners of entities that are classified as partnerships for U.S.
federal income tax purposes are urged to consult their own tax
advisors regarding the U.S. federal income tax consequences of the
acquisition, ownership, conversion and disposition of Aphria Notes
and/or common shares.
This summary does not address the tax treatment of U.S. Holders
that are subject to special provisions under the Code, including:
(a) U.S. Holders that are tax-exempt organizations, qualified
retirement plans, individual retirement accounts, or other
tax-deferred accounts; (b) U.S. Holders that are financial
institutions, insurance companies, real estate investment trusts,
or regulated investment companies; (c) U.S. Holders that are
dealers insecurities or currencies or U.S. Holders that are traders
in securities that elect to apply a mark-to-market accounting
method; (d) U.S. Holders that have a “functional currency” other
than the U.S. dollar;