Mr. Josh Rosen reports

GOODNESS GROWTH HOLDINGS ANNOUNCES SECOND QUARTER 2023 RESULTS

Goodness Growth Holdings Inc. has released its financial results for its second quarter ended June 30, 2023. Key financial results are presented herein, in summary form, with supporting commentary and discussion from management of certain key operating metrics which the company uses to judge its performance. All currency figures referenced herein are denominated in United States dollars.

Management commentary

Josh Rosen, interim chief executive officer, commented: "We continued to make progress executing our balance sheet and operational improvement plan during the second quarter, with continued revenue growth in our core markets, particularly Minnesota and Maryland, and improvements in key performance indicators. With respect to our focus and derisking our balance sheet, we completed the divestiture of our former New Mexico operations for an immaterial consideration during the second quarter, and are working on definitive documents after executing an LOI [letter of intent] for the divestiture of our New York operations. When coupled with our recent announcement related to supporting two additional retail locations in Maryland, we believe we are on the cusp of meaningfully improved cash flow performance. We are optimistic that we'll be able to share additional details regarding the divestiture process for our New York assets during the third quarter and look forward to sharing more visibility into our future profitability expectations once this process is complete."

Amber Shimpa, president and chief executive officer of Vireo Health of Minnesota, commented: "We have been pleased with the initial performance of our two Green Goods stores in Maryland following the commencement of adult-use sales on July 1. We're also excited about our ability to improve our penetration in Maryland with the recent execution of consulting, licensing and wholesale agreements with two additional retail stores during the third quarter. In Minnesota, we remain focused on driving better product at better prices for Minnesota patients, and have been particularly pleased with the support we've received from our partnership with Grown Rogue in achieving these important goals. Summer months in Minnesota are our most challenging of the year given the temperatures and humidity in our greenhouse environment, but we have been encouraged by improved production as compared to the prior year, despite these seasonal headwinds."

Other events

On April 28, 2023, the company closed on a $2-million (U.S.) tranche of a new convertible debt facility, which enables the company to access up to $10-million (U.S.) in aggregate principal of convertible notes. Through today, the company has drawn $5-million on this facility. The convertible loan has a term of three years and an annual interest rate of 12 per cent, including 6 per cent cash and 6 per cent paid-in-kind. The initial tranche's principal amount of convertible notes outstanding, plus all paid-in-kind interest and all other accrued but unpaid interest thereunder, is convertible into subordinate voting shares of the company at the option of the holders, at any time by written notice to the company, at a conversion price equal to 14.5 U.S. cents. In connection with this financing, the company issued 6.25 million warrants to purchase subordinate voting shares of the company to the lenders. The warrants have a term of five years with a strike price of 14.5 U.S. cents.

On May 25, 2023, the company entered into a strategic agreement with Grown Rogue International Inc., whereby Grown Rogue will support Goodness Growth in the optimization of its cannabis flower products, with a particular focus on improving the quality and yield of top-grade A cannabis flower in Maryland and Minnesota. As part of this strategic agreement, the company is obligated to issue 10 million warrants to purchase subordinate voting shares of Goodness Growth to Grown Rogue, with a strike price equal to a 25-per-cent premium to the 10-day volume-weighted average price (VWAP) of Goodness Growth's subordinate voting shares prior to the effective date of the agreement. Grown Rogue is also obligated to issue 8.5 million warrants to purchase subordinate voting shares of Grown Rogue to Goodness Growth, with a strike price equal to a 25-per-cent premium to the 10-day VWAP of Grown Rogue's subordinate voting shares prior to the effective date of the agreement. The warrants exchanged in the agreement will be issued with five-year terms to exercise.

On June 23, 2023, the company divested all the assets and liabilities of Red Barn Growers Inc., a New Mexico non-profit organization effectively controlled by the company's subsidiary company, Vireo Health of New Mexico LLC, to 37 Management Group Inc., a New Mexico corporation.

On Aug. 2, 2023, the company announced that its executive chairman, Dr. Kyle Kingsley, voluntarily converted all of his 65,411 super voting shares and, in connection therewith, the company issued to Dr. Kingsley 6,541,100 subordinate voting shares of Goodness Growth's capital stock. Dr. Kingsley originally acquired the supervoting shares in connection with the business combination of the company completed on March 18, 2019. The voluntary conversion eliminated the company's previous class of supervoting shares and was related to a recent financing undertaken by the company.

On Aug. 14, 2023, the company announced that it has entered into consulting, licensing and wholesale agreements with two additional dispensaries in Maryland that are owned and controlled by HA-MD LLC, and currently operate under the Ethos brand name. The agreements will result in the two Ethos dispensaries in Hampden and Rockville being, upon regulatory approval, rebranded to Green Goods and include an option to acquire the two dispensaries if and when allowed by applicable law and regulations.

Balance sheet and liquidity

As of June 30, 2023, total current assets were $126.4-million, including cash on hand of $11.3-million. Total current liabilities were $157-million.

As of June 30, 2023, including the yet-to-be exchanged warrants in relation with the company's agreement with Grown Rogue, and subordinate voting shares the company has agreed to issue to lenders in connection with the fifth amendment to the company's credit facility, the company had a total of 143,126,330 equity shares issued and outstanding on an as-converted basis, 223,608,947 shares outstanding on an as-converted, fully diluted basis, and 151,350,670 fully diluted shares outstanding on the treasury-method basis.

Conference call and webcast information

Goodness Growth management will host a conference call with research analysts today, Aug. 14, 2023, at 5 p.m. ET (4 p.m. CT), to discuss its financial results for its second quarter ended June 30, 2023. Interested parties may attend the conference call by dialling 1-888-414-4585 (toll-free) (U.S. and Canada) or 1-646-960-0331 (toll) (international) and referencing conference ID No. 8663261.

A live audio webcast of this event will also be available in the events and presentations section of the company's investor relations website.

About Goodness Growth Holdings Inc.

Goodness Growth Holdings is a cannabis company whose mission is to provide safe access, quality products and value to its customers while supporting its local communities through active participation and restorative justice programs. The company is evolving with the industry and is in the midst of a transformation to being significantly more customer-centric across its operations, which include cultivation, manufacturing, wholesale and retail business lines. Today, the company is licensed to grow, process, and/or distribute cannabis in four markets and operates 14 dispensaries in three states.

We seek Safe Harbor.