Ms. Margaret Brodie reports

RUBICON ORGANICS REPORTS 2023 FINANCIAL RESULTS

Rubicon Organics Inc. has released its financial results for the year ended Dec. 31, 2023.

"Two thousand twenty-three served as a cornerstone year for Rubicon. We've solidified our presence with established brands fuelled by our renowned reputation for quality flower, now expanding into diverse product formats exemplified by our success of launching edibles under 1964 Supply Co. and Wildflower. Looking forward to 2024, we're thrilled to unveil several exciting initiatives, including the highly anticipated launch of full-spectrum-extract resin vapes under 1964 Supply Co., which I view as our next significant growth opportunity," said Margaret Brodie, chief executive officer.

Janis Risbin, chief financial officer, said: "I am pleased to announce that Rubicon has attained its seventh consecutive quarter of positive adjusted [earnings before interest, taxes, depreciation and amortization] and sixth consecutive quarter of positive operating cash flow. Despite the challenges faced in the latter half of 2023 due to competitive pricing pressures in the Canadian cannabis sector and broader negative macroeconomic factors affecting Canadian consumers, we are optimistic about the prospects in 2024. With Rubicon's prominent position as a leading force in the premium cannabis market, I am enthusiastic about the opportunities that lie ahead."

2023 highlights

For the 12 months ended Dec. 31, 2023:

• Net revenue of $40.1-million (13-per-cent increase from 2022);
• Gross profit before fair value adjustments of $14.1-million (15-per-cent increase from 2022);
• Achieved adjusted EBITDA profitability of $4.4-million with fourth quarter 2023 marking the seventh consecutive quarter of adjusted EBITDA profitability;
• Growth in cash balance by $1.5-million from Dec. 31, 2022, from $8.3-million to $9.8-million while reducing accounts payable and accrued liabilities by $1-million;
• Achieved $5.0-million operating cash flow, Q4 2023 marking the sixth consecutive quarter of operating cash flow positive;
• Simply Bare Organic and 1964 Supply Co. identified as two of top-three brands recommended by Canadian budtenders;
• 1964 Supply Co. voted No. 1 brand sampled at Kind Summer Fair;
• Rubicon won cannabis company of the year and people's choice for best weed awards;
• 2.1-per-cent national market share of flower and prerolls;
• 6.9-per-cent national market share of premium flower and prerolls;
• 21.8-per-cent national market share of topical products;
• 15.2-per-cent national market share of premium concentrates;
• 4.3-per-cent national market share of premium edibles following initial launch of 1964 Supply Co. edibles in second quarter 2023 and Wildflower launch in fourth quarter 2023.

2023 and subsequent sales and operational highlights:

• Rubicon has established high-quality partnerships for contract grow and co-manufacturing to complement its own premium production and to satisfy the increasing demand for its brands.
• The company launched its first entry into the edibles category through a co-manufacturing relationship with 1964 Supply Co. live rosin edibles in Ontario, British Columbia and Alberta. These edibles were the first single-strain live rosin edibles in Canada, and are vegan and gluten-free. Following up on the success of the initial two flavour launch in the second quarter, 1964 Supply Co. has since rolled out five additional flavours.
• Wildflower launched its first edibles in October, 2023. These edible products consist of four flavours, and contain the minor cannabinoids cannabinol, cannabigerol and cannabidiol, as well as full-spectrum tetrahydrocannabinol live rosin, and are vegan and gluten-free.
• Simply Bare Organic launched infused prerolls under the Simply Bare Organic brand, including the Layer J in B.C. and Ontario in October, 2023. It contains two layers, one with flower and hash of one cultivar and the other with flower and hash rosin of another cultivar. The two cultivars are B.C. organic Cleopatra and B.C. organic White Rainbow.
• Simply Bare Organic launched a new two-gram hash, New School Hash, available in B.C., Ontario, Alberta and Quebec.
• With the continuing growth of the infused preroll category, 1964 Supply Co. launched the one-by-one-gram Comatose rosin roll that features a mix of flavourful Comatose flower and potent Comatose hash rosin. Comatose was the 1964 Supply Co. hero strain and was voted indica of the year by Kind Magazine in December, 2022.
• In September, 2023, the company's brand 1964 Supply Co. launched an infused preroll, the super lemon haze heavy hitter rosin roll, which is a one-by-one gram infused prerolls featuring super lemon haze flower and potent super lemon haze hash rosin.
• Wildflower is leveraging its leading market share by launching new products to address consumer needs in the wellness space. The new products launched consist of Wildflower extra strength relief stick and Wildflower 1:1 cannabidiol to tetrahydrocannabinol relief stick.
• Brightfield released its own survey of Canadian budtenders, and in those results, Simply Bare Organic and 1964 Supply Co. were identified as two of the top-three most recommended brands by Canadian budtenders.
• 1964 Supply Co. was voted as the No. 1 brand sampled at the Kind Summer Fair by budtenders. Of the budtenders surveyed, 96 per cent are more likely to recommend a brand they sampled at the Kind Summer Fair.
• The company added five new independent directors to its board of directors following its annual general meeting.
• The company appointed Margaret Brodie as permanent chief executive officer and Janis Risbin as chief financial officer.

2024 outlook

Brand and product development

Its strategy is founded on a strong premium branded portfolio, highly regarded by both budtenders and consumers alike. Guided by consumer research, it continually innovates its products to anticipate market trends. Its commitment to quality and excellence is evident throughout all areas of its business, seeking to deliver products and services that consistently meet the highest-quality standards.

Launch into vape category

Rubicon is launching into the vape category with its 1964 Supply Co. brand. The introduction of vapes strategically aligns with its market expansion strategy and offers substantial growth prospects. The vape market has demonstrated robust growth over recent years, and trends in Canada and the United States demonstrate indicating the vape category's increasing prominence, rivalling or surpassing traditional flower products.

Its launch into the vape category takes advantage of additional biomass available from its contract grow strategy launched in 2023 of its own genetics grown outside of the Delta facility. It has listed its leading Comatose and Blue Dream full-spectrum-extract resin vapes in Ontario, and the product is expected to be first available in May seeking to launch in other provinces soon after. In line with its approach to the live rosin edibles it launched under the brand in 2023, it is focused on delivering products that maintain a competitive edge through superior quality and right price to value ratio leveraging its established and reputable brands. It is confident that by capitalizing on this opportunity, over time, it can achieve comparable financial success with its vape offerings as it has with its flower business.

Wildflower's leadership in cannabis wellness

Wildflower's prominence in the cannabis wellness sector is characterized by its notable dominance in topical products, and the company has recently expanded the brand to other categories, including edibles and capsules, designed to address specific wellness needs such as sleep, pain relief and anxiety reduction. While it expects more competition to enter the topical and wellness category, it is expanding the brand into other categories and anticipates steady growth and momentum behind the daily wellness consumer.

Launch of new genetics

Rubicon plans to continue to launch new and novel genetics into its Simply Bare Organic and 1964 Supply Co. to continue leadership in the premium cannabis market. Planned launches in 2024 include B.C. organic Zookies, B.C. organic Power Mintz and B.C. organic Fruit Loopz under the Simply Bare Organic brand, and Blue Dream under the 1964 Supply Co. brand.

Growth from solid business fundamentals

Consistent quality and systematic delivery to its customers, including the provincial distributors and retailers, and consumers to meet their needs are imperative to be successful in the Canadian cannabis industry. In 2024, it is investing in an enterprise resource planning system, which is necessary for its business to deliver more growth in future and allow less reliance on key people within its internal systems. Predominantly in the first half of 2024, it will incur additional costs associated with this project, and while a resource intensive process, this ERP implementation readies its business for growth in future.

Financial

It believes that its commitment to cannabis quality, strategic brand positioning, diverse product portfolio and committed team will position it as one of the premier cannabis companies in Canada. It anticipates year-over-year growth in net revenue, supported by modest increases in its cost base, excluding the impact of the ERP implementation occurring mostly in the first half, thereby enhancing its operating leverage. While it expects growth in 2024, it also anticipates that much of the growth will come from its branded products that are produced using external capacity and thereby deliver lower gross margin than its current mix. Furthermore, it expects continued fierce competition in the distressed Canadian cannabis industry with price compression across all categories. Notwithstanding these pressures, it expects to deliver continued operating positive cash flow in the year ahead and plans to refinance its debt to a longer-term mortgage facility midway through the year.

Fourth quarter 2023 financial and market share highlights

For the three months ended Dec. 31, 2023:

• Net revenue of $10.0-million (9.1-per-cent decrease from Q4 2022);
• Gross profit before fair value adjustments of $3.2-million (29-per-cent decrease from Q4 2022);
• Achieved seventh consecutive quarter of adjusted EBITDA profitability with $1.3-million;
• Achieved sixth consecutive quarter of operating cash flow positive of $1.1-million;
• 2.1-per-cent national market share of flower and prerolls;
• 6.7-per-cent national market share of premium flower and prerolls;
• 26.9-per-cent national market share of topical products;
• 14.0-per-cent national market share of premium edibles;
• 11.0-per-cent national market share of premium concentrates.

Conference call

The company will be hosting a conference call to discuss Q4 2023 results on Thursday, March 28, 2024. Conference call details are as follows.

Time:  7 a.m. PT/10 a.m. ET

Conference ID:  60125

Local dial-in:  1-289-514-5100

Toll-free North America:  1-800-717-1738

A webcast will be available.

About Rubicon Organics Inc.

Rubicon is the global brand leader in premium organic cannabis products. The company is vertically integrated through its wholly owned subsidiary Rubicon Holdings Corp., a licensed producer. Rubicon is focused on achieving industry-leading profitability through its premium cannabis flower, product innovation and brand portfolio management, including three flagship brands: its superpremium brand Simply Bare Organic, its premium brand 1964 Supply Co. and its cannabis wellness brand Wildflower in addition to the company's mainstream brand Homestead Cannabis Supply.

The company ensures the quality of its supply chain by cultivating, processing, branding and selling organic certified, sustainably produced, superpremium cannabis products from its state-of-the-art glass-roofed facility located in Delta, B.C., Canada.

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