Common shares to be repurchased for cancellation under share repurchase credit feature (in shares)



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| PART II | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | Table of Contents |

Fair value methodologyThe following methods and assumptions are used to estimate the fair value for each class of our financial instruments:  
Foreign currency and commodity derivative contractsThe fair value is estimated using market-based inputs, obtained from independent pricing services, entered into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves, and currency volatilities, as applicable (Level 2 fair value measurement).  
Interest rate swap, swap lock, and treasury lock contractsThe fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement).  
Canopy investmentEquity securities, Warrants – The November 2018 Canopy Warrants consist of three tranches of warrants, including 88.5 million Tranche A Warrants expiring November 1, 2023, which are currently exercisable, 38.4 million Tranche B Warrants expiring November 1, 2026, and 12.8 million Tranche C Warrants expiring November 1, 2026. The inputs used to estimate the fair value of the November 2018 Canopy Warrants are as follows (1) (2):

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|  | February 28, 2022 |  | February 28, 2021 |
|  | Tranche A Warrants (3) |  | Tranche B Warrants (4) |  | Tranche A Warrants (3) |  | Tranche B Warrants (4) |
| Exercise price (5) | C$ | 50.40  |  |  | C$ | 76.68  |  |  | C$ | 50.40  |  |  | C$ | 76.68  |  |
| Valuation date stock price (6) | C$ | 9.04  |  |  | C$ | 9.04  |  |  | C$ | 41.90  |  |  | C$ | 41.90  |  |
| Remaining contractual term (7) | 1.7 years |  | 4.7 years |  | 2.7 years |  | 5.7 years |
| Expected volatility (8) | 75.0  | % |  | 75.0  | % |  | 70.0  | % |  | 70.0  | % |
| Risk-free interest rate (9) | 1.4  | % |  | 1.7  | % |  | 0.5  | % |  | 1.1  | % |
| Expected dividend yield (10) | 0.0  | % |  | 0.0  | % |  | 0.0  | % |  | 0.0  | % |

(1)The exercise price for the Tranche C Warrants is based on the VWAP Exercise Price. The Tranche C Warrants are not included in the table as there is no fair value assigned.(2)In connection with the Acreage Transaction, we obtained other rights which include a share repurchase credit. If Canopy has not purchased the lesser of 27,378,866 Canopy common shares, or C$1,583.0 million worth of Canopy common shares for cancellation between April 18, 2019, and two-years after the full exercise of the Tranche A Warrants, we will be credited an amount that will reduce the aggregate exercise price otherwise payable upon each exercise of the Tranche B Warrants and Tranche C Warrants. The credit will be an amount equal to the difference between C$1,583.0 million and the actual price paid by Canopy in purchasing its common shares for cancellation. The likelihood of receiving the share repurchase credit if we were to fully exercise the Tranche A Warrants is remote, therefore, no fair value has been assigned.(3)The fair value is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement).(4)The fair value is estimated using Monte Carlo simulations (Level 2 fair value measurement).(5)Based on the exercise price from the applicable underlying agreements.(6)Based on the closing market price for Canopy common stock on the TSX as of the applicable date.(7)Based on the expiration date of the warrants.(8)Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels.(9)Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expiration date of the applicable warrants.(10)Based on historical dividend levels.

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| Constellation Brands, Inc. FY 2022 Form 10-K | #WORTHREACHINGFOR    I    82 |


