Liquor Stores N A : Annual Information Form 2016

For the Year Ended December 31, 2016

1. DEFINED TERMS 2

2. CURRENCY 2

3. FORWARD LOOKING STATEMENTS 2

4. EFFECTIVE DATE OF INFORMATION 3

5. CORPORATE PROFILE 3

6. DESCRIPTION OF OUR BUSINESS 5

7. THE ALCOHOLIC BEVERAGE MARKET 7

8. BUSINESS STRENGTHS 7

9. COMPANY STRATEGY 9

10. DEVELOPMENT OF OUR BUSINESS 30

11. RISK FACTORS 31

12. DIVIDENDS AND DIVIDEND POLICY 42

13. DESCRIPTION OF CAPITAL STRUCTURE 43

14. MARKET FOR SECURITIES 48

15. DIRECTORS AND EXECUTIVE OFFICERS OF LIQUOR STORES 50

16. CONFLICTS OF INTEREST 57

17. INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS 57

18. PROMOTERS 57

19. LEGAL PROCEEDINGS AND REGULATORY ACTIONS 57

20. TRANSFER AGENT AND REGISTRAR 58

21. MATERIAL CONTRACTS 58

22. INTERESTS OF EXPERTS 58

23. AUDIT COMMITTEE 58

24. ADDITIONAL INFORMATION 61

SCHEDULE "A"‐ GLOSSARY OF TERMS..............................................................................................................................................A‐1

SCHEDULE "B" ‐ AUDIT COMMITTEE CHARTER ..........................................................................................................................B‐1

1. Defined Terms

   Please refer to the "Glossary of Terms" in Schedule "A" for a list of defined terms used in this Annual Information Form.

2. Currency

   All dollar amounts in this Annual Information Form are in Canadian dollars unless otherwise stated. On March 29, 2017, the Bank of Canada closing rate for one United States dollar was $1.333 Canadian dollars.

3. Forward Looking Statements

   This Annual Information Form contains forward‐looking statements or information (collectively "forward‐ looking statements") within the meaning of the "safe harbour" provisions of applicable securities legislation. All statements and information other than statements of historical fact contained in this Annual Information Form are forward‐looking statements. In particular, this Annual Information Form contains forward‐looking statements regarding, without limitation, the financial position, cash dividends, business strategy and plans, proposed acquisitions, government regulation and laws and objectives of or involving Liquor Stores N.A. Ltd. (the "Corporation", "Company" or "Liquor Stores"). Prospective investors can identify many of these statements by looking for words such as "believes", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words and the negative thereof.

   Forward‐looking statements reflect the Corporation's current plans, intentions, and expectations, which are based on Management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Corporation's plans, intentions, and expectations are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. There is no assurance that the plans, intentions, or expectations upon which these forward‐looking statements are based will occur. Forward‐looking statements are subject to risks, uncertainties and assumptions, including, but not limited to, those discussed elsewhere in this Annual Information Form. Although Management believes that the expectations represented in such forward looking statements are reasonable there can be no assurance that such expectations will prove to be correct and such forward‐looking statements included in this Annual Information Form should not be unduly relied upon.

   Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward‐looking statements contained herein include, but are not limited to: risks relating to government regulation and changes thereto (whether by court decisions, citizen referenda, or otherwise); competition; the state of the economy including general economic conditions in Canada (including Alberta) and the U.S.; the unpredictability and volatility of Liquor Stores' Common Share price; restrictions on potential growth; restrictions on the potential growth of Liquor Stores as a consequence of the payment of cash dividends by Liquor Stores representing a substantial amount of its operating cash flow; availability of sufficient financial resources to fund the Corporation's capital expenditures; changes in commodity tax rates and government mark‐ups or other taxes that impact the price of alcoholic beverages; risks relating to future acquisitions and development of new stores; the ability of management to execute the Corporation's business and strategic plans; Liquor Stores' ability to locate and secure acceptable store sites and to adapt to changing market conditions; poor weather conditions; dependence on key personnel; labour costs, shortages and labour relations including Liquor Stores' ability to hire and retain staff at current wage levels and the risk of possible future unionization; supply interruption or delays; dependence on suppliers; reliance on information and control systems; income tax changes; leverage and restrictive covenants in agreements relating to current and future indebtedness of Liquor Stores; credit risks arising from operations; dilution and future sales of Liquor Stores' Common Shares; and the potential lack of an active trading market for Liquor Stores' Common Shares and the Convertible Debentures. These factors should not be construed as exhaustive. The information contained in this Annual Information Form, including the information set forth under "Risk Factors", and as disclosed in other filings made by the Corporation with Canadian securities regulatory authorities and available

   on SEDAR at www.sedar.com, identifies additional factors that could affect the operating results and performance of Liquor Stores.

   The forward‐looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward‐looking statements included in this Annual Information Form are made as of the date of this Annual Information Form and Liquor Stores assumes no obligation to update or revise them to reflect new events or circumstances except as expressly required by applicable securities law.

4. Effective Date of Information

   Except where otherwise indicated, the information in this Annual Information Form is presented as at the end of Liquor Stores' most recently completed financial year, being December 31, 2016.

5. Corporate Profile

Liquor Stores N.A. Ltd. is a corporation incorporated under the CBCA and commenced operations as such on December 31, 2010. We are the successor to Liquor Stores Income Fund. Our head office is located at Suite 101, 17220 Stony Plain Road Edmonton, Alberta, T5S 1K6, and our registered office is located at Suite 2500, 10303 Jasper Avenue, Edmonton, Alberta T5J 3N6. Our Common Shares, the 2012 Debentures and the 2016 Debentures trade on the TSX under the trading symbols "LIQ", "LIQ.DB.A" and "LIQ.DB.B", respectively.

The following chart illustrates on a simplified basis the structure of Liquor Stores and its material Subsidiaries, including the jurisdiction of incorporation/registration of the corporations and partnerships, as at the date hereof.