Mr. Kyle Kazan reports

GLASS HOUSE BRANDS ANNOUNCES THE CLOSING OF $4.7 MILLION SERIES C PREFERRED STOCK OFFERING

Glass House Brands Inc. has closed a non-brokered private placement of Series C preferred stock (face value of $1,000 per share) of GH Group Inc., a subsidiary of the company. The financing raised $4.7-million of new capital on top of the approximately $26.5-million of incremental capital raised from the company's Series B preferred stock offering that closed on Dec. 6, 2022.

Kyle Kazan, co-founder, chairman and chief executive officer of Glass House, stated: "We are very pleased with the strong investor interest in our recent preferred equity offerings, which enabled us to raise nearly $5-million more than we initially expected. Our Series B preferred stock offering closed in early December and was fully subscribed at $50-million, bringing in approximately $26.5-million of new capital. The $4.7-million of additional capital raised through our Series C preferred stock offering was driven by the excess demand we received during the Series B offering, and the terms of the two issuances are nearly identical, except that the Series C preferred stock is designated as junior in preference to the Series B stock. The additional capital from the Series C preferred stock offering further strengthens our balance sheet, and we remain committed to our target of achieving free-cash-flow-positive operations by the third quarter of 2023, excluding potential expansion capex [capital expenditure] related to cannabis cultivation capacity at the SoCal farm."

Holders of the Series C preferred stock will be entitled to an annual dividend at a rate of 20 per cent for the first two years after the date of initial issuance of Series C preferred stock, 22.5 per cent for the third year and, thereafter, 25 per cent until the 54-month anniversary of the initial issuance. The dividend will accrue and be paid quarterly, with an annual amount equal to 10 per cent of the initial investment being payable in cash and the balance of the dividend being paid in kind, accumulating and compounding on a quarterly basis until paid; provided that if the Series C preferred stock remains outstanding after the 54-month anniversary of the initial issuance, the annual dividend shall thereafter be payable solely in cash at a rate of 20 per cent.

The issuance of each share of Series C preferred stock with a face value of $1,000 per share was accompanied by the delivery of 200 warrants of the company. Each warrant entitles the holder to purchase one new equity share in the capital of the company until Aug. 31, 2027, at a price of $5 per warrant share subject to customary anti-dilution adjustments. The company has the option to accelerate the expiration of any unexercised warrants if the underlying equity shares of the company trade at a price of at least $12 per share, subject to customary anti-dilution provisions.

The warrants, the warrant shares issuable upon exercise of the warrants and any equity shares of the company into which the warrant shares may be exercised in accordance with their terms are subject to a four-month statutory hold period from the date of issuance of the warrants under applicable Canadian securities laws.

As part of the offering, the company's general counsel has subscribed for 100 Series C preferred shares and will receive 20,000 warrants therewith. The subscription by the company's general counsel is considered to be a related party transaction for purposes of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. The company did not announce the transaction more than 21 days before the expected closing date of the offering as the details of the offering and the participation therein by related parties were not settled until shortly prior to the closing of the offering, and the company wished to close the offering on an expedited basis for sound business reasons. The company is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The company is exempt from the formal valuation requirement in Section 5.4 of MI 61-101 and the minority shareholder approval requirement in Section 5.6 of MI 61-101 in reliance on Section 5.5(a) and Section 5.7(1)(a), respectively, of MI 61-101, as the fair market value of the transaction, insofar as it involves related parties, is not more than the 25 per cent of the company's market capitalization.

The intended use of net proceeds from the offering of approximately $4.7-million is for working capital and general corporate purposes. Prior to closing of the offering, the company had approximately $116-million outstanding in senior secured debt, unsecured convertible debt and preferred equity. As of this final closing of the offering, this amount is expected to increase to approximately $121-million.

All dollar amounts in this news release refer to U.S. dollars.

About Glass House Brands Inc.

Glass House is one of the fastest-growing, vertically integrated cannabis companies in the United States, with a dedicated focus on the California market and building leading, lasting brands to serve consumers across all segments. From its greenhouse cultivation operations to its manufacturing practices, from brand building to retailing, the company's efforts are rooted in the respect for people, the environment and the community that co-founders Kyle D. Kazan, chairman and chief executive officer, and Graham Farrar, president, instilled at the outset. Through its portfolio of brands, which includes Glass House Farms, Plus Products, Allswell, Forbidden Flowers and Mama Sue Wellness, Glass House is committed to realizing its vision of excellence: outstanding cannabis products, produced sustainably, for the benefit of all.

We seek Safe Harbor.