Mr. Charles Bachtell reports

CRESCO LABS REPORTS SECOND QUARTER 2023 RESULTS

Cresco Labs Inc. has released its financial and operating results for the second quarter ended June 30, 2023. All financial information presented in this release is reported in accordance with U.S. generally accepted accounting principles and in U.S. dollars, unless otherwise indicated, and is available on the company's investor website.

Second quarter 2023 financial highlights:

• Second quarter revenue of $198-million, up 2 per cent sequentially, driven by retail growth of 4 per cent and flat wholesale revenue;
• Gross profit of $87-million, 44 per cent of revenue;
• Adjusted gross profit of $93-million and adjusted gross margin of 47 per cent, up 100 basis points (bps) from the first quarter;
• Adjusted selling, general and administrative reduction of $7-million sequentially;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $40-million, up 38 per cent sequentially as margin improved 540 bps to 20 per cent;
• Generated positive operating cash flow of $18-million, inclusive of $14-million of one-time cash charges related to facility closures, severance payments, and merger and acquisition-related fees;
• Second quarter net loss of $43-million, which includes $22-million of impairment charges.

Operating highlights:

• Retained the No. 1 share position in Illinois, Pennsylvania and Massachusetts;
• Maintained the industry's No. 1 bestselling portfolio of branded flower and branded concentrates, No. 3 portfolio of branded vapes, and No. 4 portfolio of branded edibles;
• Branded equivalized unit volume of 18 million, up 19 per cent year-over-year;
• Retail transactions of 1.3 million, an 11-per-cent increase year-over-year;
• Opened five total Sunnyside stores in Florida and Pennsylvania, bringing the nationwide store count to 68 as of June 30, 2023.

Management commentary

"Our year-of-the-core commitment to rationalizing and optimizing our core markets, core stores, core brands and core products is reflected in our Q2 results with growth in our top line, gross margin, adjusted EBITDA and operating cash flow. With our focus on driving scale and efficiencies across the entire organization, we've been accomplishing more with less -- leading to a 38-per-cent sequential improvement in adjusted EBITDA. We maintained our industry leadership with the No. 1 portfolio of both branded flower and branded concentrates, No. 3 portfolio of branded vapes, and No. 4 portfolio of branded edibles. We're pleased to see improved profitability and cash flow in our core markets, which positions us well for the capital-efficient growth and expansion opportunities that lie ahead. Our results are just starting to reflect the decisions we made earlier this year to support our year-of-the-core priorities, with much more to come," said Charles Bachtell, chief executive officer of Cresco Labs.

Balance sheet, liquidity and other financial information:

• As of June 30, 2023, current assets were $265-million, including cash, cash equivalents and restricted cash of $75-million. The company had senior secured term loan debt, net of discount and issuance costs, of $384-million.
• Total shares on a fully converted basis were 470,308,738 as of June 30, 2023.

Capital markets and M&A activity:

• On July 30, 2023, Cresco Labs and Columbia Care mutually agreed to terminate the definitive agreement dated March 23, 2022. Concurrently, the definitive agreement dated Nov. 4, 2022, to divest certain assets to an entity owned and controlled by Sean "Diddy" Combs also has been terminated.
• The company intends to file a short form base shelf prospectus replacing the former prospectus that recently expired. The company has no plans to raise funds under the prospectus in the near term. The prospectus will be filed with the securities commissions or similar authorities in Canada, subsequent to the filing of the company's quarterly earnings, in reliance on the well-known seasoned issuer exemption. Additionally, a corresponding shelf registration statement on Form F-10 will be filed with the United States Securities and Exchange Commission.

Conference call and webcast

The company will host a conference call and webcast to discuss its financial results on Wednesday, Aug. 16, 2023, at 8:30 a.m. Eastern Time (7:30 a.m. Central Time). The conference call may be accessed via webcast or by dialling 1-833-470-1428 (United States toll-free), 1-404-975-4839 (U.S. local) or 1-929-526-1599 (other), providing access code 979042. Archived access to the webcast will be available for one year on Cresco Labs' investor website.

About Cresco Labs Inc.

Cresco Labs' mission is to normalize and professionalize the cannabis industry through a consumer packaged good approach to building national brands and a customer-focused retail experience, while acting as a steward for the industry on legislative and regulatory-focused initiatives. As a leader in cultivation, production and branded product distribution, the company is leveraging its scale and agility to grow its portfolio of brands that include Cresco, High Supply, FloraCal Farms, Good News, Wonder Wellness Co., Mindy's and Remedi, on a national level. The company also operates highly productive dispensaries nationally under the Sunnyside brand that focus on building patient and consumer trust and delivering continuing education and convenience in a wonderfully traditional retail experience. Through year-round policy, community outreach and SEED (social equity and educational development) initiative efforts, Cresco Labs embraces the responsibility to support communities through authentic engagement, economic opportunity, investment, work force development and legislative initiatives designed to create the most responsible, respectable and robust cannabis industry possible.

We seek Safe Harbor.