Mr. Sam Gibbons reports

GOODNESS GROWTH HOLDINGS ANNOUNCES THIRD QUARTER 2023 RESULTS

Goodness Growth Holdings Inc. today released its financial results for its third quarter ended Sept. 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 U.S. dollars.

• Q3 revenue of $24.7-million increased 44.0 per cent YoY (year over year) and 28.2 per cent sequentially excluding discontinued operations;
• Stronger revenue growth and margins largely driven by adult-use activation in Maryland;
• Record operating income reflects Maryland's performance and early returns on the company's strategic plan, despite continued headwinds in New York;
• New York divestiture process taking longer than anticipated.

Management commentary

Interim chief executive officer Josh Rosen commented: "The strength of our third quarter results reflects a combination of benefits from our recent operational improvement initiatives and regulatory catalysts in Maryland following the launch of adult use sales in July. We are very proud of our team, who have adapted quickly to our decentralized approach to operations. These efforts and the substantial regulatory catalyst in Maryland enabled us to produce positive cash flow from operations in the quarter. Derisking our balance sheet remains a critical focus, and while we have not yet executed definitive documents related to our divestiture process in New York, we expect to do so before the end of this year and look forward to sharing more visibility into our future profitability expectations once that process is complete."

Amber Shimpa, president and chief executive officer of Vireo Health of Minnesota, commented: "Our operational key performance indicators continued to improve during the quarter despite the seasonal challenges we experience in our greenhouse environment in Minnesota. We are encouraged by the strength of our performance in the Maryland market following the implementation of adult use. Based on early indications, we believe we are outpacing the overall market growth in Maryland, which is an internal goal and standard by which we measure our performance. In Minnesota, we remain focused on driving better value and quality of products for patients as we move out of what is seasonally a very challenging climate for our flower production."

Other events

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.

On Oct. 5, 2023, the company announced that it completed previously disclosed warrant issuances with Grown Rogue International Inc. Goodness Growth issued 10 million warrants to purchase subordinate voting shares of Goodness Growth to Grown Rogue, with a strike price equal to 31.7 Canadian cents (23.3 cents), which represented a 25.0-per-cent premium to the 10-day volume weighted average price (VWAP) of Goodness Growth's subordinate voting shares on the trading day immediately prior to the effective date of the agreement. Similarly, Grown Rogue issued 8.5 million warrants to purchase shares of Grown Rogue to Goodness Growth, with a strike price equal to 22.5 Canadian cents (16.6 cents), which represented a 25.0-per-cent premium to the 10-day VWAP of Grown Rogue's subordinate voting shares on the trading day immediately prior to the effective date of the agreement. The warrants exchanged in the agreement were issued with five-year terms to exercise.

On Oct. 30, 2023, the company announced that it executed a fifth amendment to its lease with its landlord on its cannabis cultivation and manufacturing facilities located in Johnstown, N.Y. The company and its landlord agreed to increase the tenant improvement allowance on the lease by an additional $14.0-million, with the increase in funds to be utilized to support the completion of the construction of the company's indoor expansion project which was announced in September, 2021. The parties also agreed to a monthly base rental increase of $210,000 beginning November, 2023. Goodness Growth management stated that the amendment is intended to support the company's continuing divestment process in the State of New York.

Balance sheet and liquidity

As of Sept. 30, 2023, total current assets were $135.1-million, including cash on hand of $13.3-million. Total current liabilities were $165.4-million.

As of Sept. 30, 2023, including the required issuance of warrants to Grown Rogue International Inc., the company had a total of 143,126,330 equity shares issued and outstanding on an as-converted basis, 236,986,611 shares outstanding on an as-converted, fully diluted basis and 153,573,359 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, Nov. 14, 2023, at 5 p.m. ET (4 p.m. CT) to discuss its financial results for its third quarter ended Sept. 30, 2023. Interested parties may attend the conference call by dialling 1-888-414-4585 (toll-free) (United States and Canada) or 1-646-960-0331 (toll) (international) and referencing conference ID 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.

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