Mr. Dennis Curran reports

ACREAGE REPORTS THIRD QUARTER 2023 FINANCIAL RESULTS

Acreage Holdings Inc. has released its financial results for the third quarter ended Sept. 30, 2023. Dollar amounts are in U.S. dollars unless otherwise stated.

Third quarter 2023 financial highlights:

• Consolidated revenue of $56.5-million, a decrease of 2.8 per cent compared with the quarter ended June 30, 2023;
• Gross margin was 38 per cent; excluding the impact of non-cash inventory adjustments, gross margin for Q3 2023 was 41 per cent;
• Net loss for Q3 2023 was $7.9-million;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $6.6-million, and adjusted EBITDA as a percentage of consolidated revenue was 12 per cent.

Third quarter and recent operational highlights:

• Recorded a 27-per-cent increase in Connecticut sales for the nine months ended Sept. 30, 2023, compared with the nine months ended Sept. 30, 2022, with The Botanist Danbury achieving the highest individual store growth with a 64-per-cent increase year over year;
• Achieved strong results in New Jersey, including the highest statewide year-over-year sales growth with an increase of 34 per cent for year-to-date 2023 compared with YTD 2022; further, New Jersey wholesale revenue reached $1-million for the month of August, 2023;
• Commenced construction on a new dispensary in Vernon, Conn., which will be the company's third hybrid location in the state; The Botanist Vernon is anticipated to open in April, 2024;
• Continued progression and nearing completion of the company's large-scale infrastructure project at the Egg Harbor township facility in New Jersey; the new upgrades will support premium biomass production to facilitate the expansion of Acreage's brand and product portfolio in the state;
• Grew in-house product retail sales in Illinois to 31 per cent as of Q3 2023 as compared with 13 per cent as Q3 2022;
• Established Superflux as the No. 1 extracts brand in Massachusetts for September, 2023, per BDSA enhanced data;
• Expanded Superflux and The Botanist brand market share in Massachusetts by 3 per cent and 4 per cent, respectively.

Product innovation and recent launches:

• Debuted craft cannabis brand Superflux in New Jersey after the quarter, with the initial launch of four limited-edition, small-batch flower strains: cherry lemon gusher, chocolate cherry OG, red carpet runtz and silly rabbit; with the addition of New Jersey, Superflux is available across four states, including Ohio, Illinois and Massachusetts;
• Broadened product offerings in New York with the Nycanna launch of new form factors, including The Botanist infused prerolls;
• Launched The Botanist infused prerolls in Illinois with four new product SKUs with an average tetrahydrocannabinol content of 40 per cent;
• Introduced The Botanist fall seasonal edibles with apple cider gummies and caramel apple fruit chews in Ohio and Illinois, and expanded The Botanist distillate vape offering in Ohio;
• Diversified the Superflux flower offering in Massachusetts with the introduction of grapple pie (THC 31.5 per cent) and Kazuma (THC 28 per cent), with additional strains to follow, including La Pop Rockz in December, 2023;
• Featured winner of the High Times Cannabis Cup Illinois: people's choice edition 2023, with Superflux live resin strawberry bubbles budder and Superflux strawberry bubbles live resin vape cart placing second in the solvent concentrates and vape pens and carts categories, respectively.

Management commentary

"I'm proud of the progress the team made in Q3, building a company focused on strong brands and implementing a cost structure that will allow for future growth," said Dennis Curran, chief executive officer of Acreage. "In particular, New Jersey and Connecticut remain strong areas of performance for our business, once again delivering record results and robust year-over-year growth. To continue this momentum, we have been aggressively driving our strategy of broadening distribution of our most popular, top-selling offerings, having recently launched craft cannabis brand Superflux in New Jersey, which has already had a positive impression on consumers in its first two weeks of sales. In Connecticut, The Botanist Danbury hit an important milestone, having achieved a notable 64-per-cent increase in sales year over year, the highest for a single store across our entire, nationwide dispensary network. Fostering our position as a leading operator in these states has been incredibly rewarding and has primed our business to further execute in newer, developing markets."

Mr. Curran added: "The playbook we have created from our experiences launching adult-use sales in Connecticut and New Jersey will benefit us greatly as our other core markets begin to adopt adult-use regulations. With the adult-use market finally beginning to open in New York and the recent vote for adult-use legalization in Ohio, we are readying our operations for increased output and innovation to continue differentiating our offering in anticipation of the long-term growth potential these markets offer. As we prepare for these expected developments, we have maintained disciplined cost controls and continue to realize cost savings across our operations to expand our gross margin and maintain our near two-year record of positive adjusted EBITDA."

About Acreage Holdings Inc.

Acreage is a multistate operator of cannabis cultivation and retailing facilities in the United States, including the company's national retail store brand, The Botanist. With its principal address in New York, Acreage has a wide range of national and regionally available cannabis products that include the award-winning brands The Botanist and Superflux, the Prime medical brand in Pennsylvania, and others. Since its founding in 2011, Acreage has focused on building and scaling operations to create a seamless, consumer-focused, branded experience.

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