Document

This management discussion and analysis (“MD&A”) of the financial condition and results of operations of Cresco Labs Inc. (the “Company,” “Cresco Labs,” “we,” or “our”) is dated August 6, 2026 and has been prepared for the three and six months ended June 30, 2026 and 2025. It is supplemental to, and should be read in conjunction with, the Company’s audited Consolidated Financial Statements and accompanying notes as of and for the years ended December 31, 2025 and 2024, which were previously filed on SEDAR+ and EDGAR, and the Company's unaudited condensed interim consolidated financial statements and accompanying notes as of and for the three and six months ended June 30, 2026 and 2025. The Company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Financial information presented in this MD&A is presented in United States (“U.S.”) dollars (“USD” or “$”) unless otherwise indicated.

The Company has provided certain supplemental non-GAAP financial measures in this MD&A. Where the Company has provided such non-GAAP financial measures, we have also provided a reconciliation to the most comparable GAAP financial measure. Please see the information under the heading “Non-GAAP Financial Measures” for additional information on the Company’s use of non-GAAP financial measures.

This MD&A contains certain “forward-looking statements” and certain “forward-looking information” as defined under applicable U.S. securities laws and Canadian securities laws. Please refer to the discussion of forward-looking statements and information set out under the heading “Cautionary Statement Regarding Forward-Looking Information,” located at the beginning of the Company’s Annual Information Form for the year ended December 31, 2025, filed on SEDAR+ and EDGAR. As a result of many factors, the Company’s actual results may differ materially from those anticipated in these forward-looking statements and information. Please refer to the discussion of risks and uncertainties set out under the heading “Risk Factors,” located within the Company’s Annual Information Form for the year ended December 31, 2025, filed on SEDAR+ and EDGAR.

Cresco Labs primarily engages in the cultivation of medical-grade cannabis, the production of cannabis-derived medical-grade products, and their distribution to consumers in legalized cannabis markets in the United States, whether for medical or adult-use. The Company strives to provide consumers with high-quality and consistent cannabis-based products, focusing on regulatory adherence while developing condition-specific cannabis strains and non-invasive delivery methods. These non-invasive delivery methods, which are alternatives to smoke inhalation, aim to deliver controlled-dosage medicinal cannabis relief to qualified patients and consumers in legalized cannabis markets in the United States.

As of August 6, 2026, the Company operates a total of eighty-nine (89) open dispensaries, which includes fifteen (15) retail partner locations where we provide operational support to our licensed retail partners, and thirteen (13) cultivation and production facilities across eight (8) states, where cannabis use, medical or both medical and adult-use, has been approved by state and local regulatory bodies. Of the states in which we operate Illinois, Massachusetts, Michigan, New York, and Ohio have adult-use cannabis programs.

The Company operates its dispensaries under the brand, Sunnyside*®1. Our Sunnyside* dispensaries are home for a judgement-free cannabis shopping experience, where all are welcome to explore, discover, and purchase a wide array of high-quality products. The Company’s portfolio of owned cannabis consumer-packaged goods includes Cresco®1, High Supply®2, Mindy’sTM, Good News®2, RemediTM, Wonder Wellness Co.®2, and FloraCal® Farms2. The Company distributes and markets these products both to third-party licensed retail cannabis stores across the U.S. and to the Company’s owned retail stores.

1The Sunnyside*® (inclusive of the stand-alone asterisk mark) and Cresco® brands maintain federal trademark registrations for websites pertaining to medical cannabis and cannabis educational services, as well as multiple state trademark registrations.

2The High Supply®, Good News®, Wonder Wellness Co.®, and FloraCal® Farms brands maintain federal trademark registrations for apparel and multiple state trademark registrations.

The Company operates its business through its directly and indirectly owned subsidiaries that hold licenses and have entered into managed service agreements in the states in which they operate. For additional information on wholly-owned or effectively controlled subsidiaries and affiliates of Cresco Labs, refer to Note 2 “Summary of Significant Accounting Policies” under the heading “Basis of Consolidation” of the Company’s Unaudited Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2026 and 2025.

In accordance with the Canadian Securities Administrators Staff Notice 51-352 – Issuers with U.S. Marijuana-Related Activities (“Staff Notice 51-352”), information regarding the current U.S. federal regulatory environment is disclosed in the Company’s 2025 Annual MD&A filed on SEDAR+ and EDGAR under the heading “Federal Regulatory Environment,” which section is incorporated by reference herein. The Company will evaluate, monitor and reassess the disclosures contained herein, and incorporated by reference herein, and any related risks, on an ongoing basis and the same will be supplemented, amended, and communicated to investors in public filings, including in the event of government policy changes or the introduction of new or amended guidance, laws, or regulations regarding marijuana regulation.

In accordance with Staff Notice 51-352, information regarding the states that the Company operates in, their legal frameworks and how it affects the Company's business, is disclosed in the Company’s 2025 Annual MD&A filed on SEDAR+ and EDGAR under the heading, “The States in Which We Operate, Their Legal Framework and How It Affects Our Business,” which section is incorporated by reference herein.

For more information about risks related to the U.S. marijuana operations, refer to the discussion of risks and uncertainties set out under the heading “Risk Factors,” located within the Company’s Annual Information Form for the year ended December 31, 2025, filed on SEDAR+ and EDGAR. Additional information relating to the Company, including the Company’s Annual Information Form for the year ended December 31, 2025, is available on SEDAR+ at www.sedarplus.ca.

On April 23, 2026, the Justice Department and the Drug Enforcement Administration announced the issuance of an order immediately placing both Food and Drug Administration-approved products containing marijuana and marijuana products regulated by a state medical marijuana license in Schedule III of the Controlled Substances Act, as well as the initiation of an expedited administrative hearing process to consider the broader rescheduling of marijuana from Schedule I to Schedule III. The administrative hearing process commenced on June 29, 2026 and concluded on July 15, 2026. The broader rescheduling proposal remains subject to the ongoing administrative rulemaking process, and the timing and outcome remain uncertain.

On March 9, 2026, a VIE of the Company entered into multiple agreements to acquire four (4) dispensaries. Total consideration is an estimated $14.7 million, subject to certain closing adjustments. Subsequently, on June 8, 2026, a VIE of the Company entered into multiple agreements that went into effect to operate one (1) additional adult-use dispensary for total consideration of an estimated $2.9 million, subject to certain closing adjustments.

During the first quarter of 2026, the Company entered into a purchase agreement, pending approval, which resulted in the acquisition of nine (9) dispensaries, for the purpose of expanding the Company’s national presence. On April 12, 2026, the Company entered into an management service agreement covering operation of these dispensaries and resulting in consolidation. Total consideration is an estimated $47.8 million, subject to certain closing adjustments.

For the three months ended June 30, 2026 and 2025, approximately 69.9% and 67.1%, respectively, of our revenue was derived from Company-owned retail dispensary locations. Retail revenue includes medical and adult-use cannabis sales. Revenue from the wholesale of cannabis products represents the remaining 30.1% and 32.9%, respectively, for the same periods. Sales discounts were approximately 31.8% and 30.0% of gross revenue for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, approximately 68.9% and 67.2%, respectively, of our revenue was derived from Company-owned retail dispensary locations. Revenue from the wholesale of cannabis products represents the remaining 31.1% and 32.8%, respectively, for the same periods. Sales discounts were approximately 31.2% and 29.4% of gross revenue for the six months ended June 30, 2026 and 2025, respectively.

•Other operating expenses: Include all costs associated with the facility itself, including insurance, community benefit fees, professional services related to licenses and compliance, uniforms, employee training programs, tracking and inventory management systems, product testing, business development, information technology, license renewal fees, and certain excise taxes.

In addition to market fluctuations, cannabis costs are affected by various state regulations that limit the sourcing and procurement of cannabis products. The changes in regulatory environments may create fluctuations in gross profit over comparative periods. Additionally, gross profit may include the cost of inventory required to be marked to fair value as part of purchase accounting in a business combination.

SG&A consist of employee salary and benefit costs, depreciation and amortization, professional and legal fees, finance costs, advertising and marketing, office and retail operation costs, share-based compensation, certain excise taxes, technology, insurance, security, travel and entertainment, and rent expense. SG&A is a component of Total operating expenses as discussed in the “Selected Financial Information” section below.


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2026		2025		2026		2025

Salaries and benefits	$	35,504	$	30,805	$	67,290	$	67,183
Occupancy and facility expenses	7,228		7,173		13,559		13,904
Depreciation and amortization	6,958		4,420		11,876		9,576
Professional and legal fees	8,096		3,439		13,659		7,931

Selling and marketing expense	4,204		3,534		6,557		5,135
Office and general expense	2,485		2,210		5,289		5,162

Share-based compensation	3,403		2,032		8,263		4,107







Other expense	5,708		4,237		11,368		9,894
Total SG&A	$	73,586	$	57,850	$	137,861	$	122,892

Other expense, net consists mainly of recurring gains (losses) on investments, foreign currency, loss on provision for loan receivables, gain (loss) on disposition of assets, changes in fair value of deferred and contingent consideration, as well as ad hoc expenses, such as gain (loss) on lease termination, and loss on debt extinguishment. These gains (losses) do not generally correlate to revenue. Other expense, net is added to Interest expense, net, to sum to Total other expense, net discussed in the “Selected Financial Information” section below.


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2026		2025		2026		2025


Loss on disposal of assets	(1,929)		(636)		$	(1,932)	$	(805)

Gain (loss) on foreign currency	216		(612)		417		(642)
Loss on provision - loan receivable	(79)		(76)		(421)		(115)


Changes in fair value of deferred and contingent considerations	(1,050)		460		(709)		490
Gain on asset acquisition	94		—		228		—
Other income, net	896		488		1,524		1,043
Other expense, net	$	(1,852)	$	(376)	$	(893)	$	(29)


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2026		2025		2026		2025

Interest expense – notes and loans payable	$	(11,340)	$	(9,070)	$	(22,539)	$	(19,934)
Interest expense – financing activities	(2,742)		(2,825)		(5,507)		(5,669)
Accretion of debt discount and amortization of deferred financing fees	(698)		(1,259)		(1,333)		(2,470)
Interest expense – leases	(672)		(739)		(1,356)		(1,484)

Interest income	407		873		814		1,686
Other interest expense	(60)		(2)		(111)		(5)
Interest expense, net	$	(15,105)	$	(13,022)	$	(30,032)	$	(27,876)

The Company is classified for U.S. federal income tax purposes as a U.S. corporation under Section 7874 of the Internal Revenue Code (“IRC”). The Company is subject to income taxes in the jurisdictions in which it operates and, consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events. As the Company operates in the cannabis industry, the Company is subject to the limits of IRC Section 280E for U.S. federal income tax purposes as well as state income tax purposes. Under IRC Section 280E, the Company is only allowed to deduct expenses directly related to the COGS for operations relating to adult-use cannabis. Effective April 22, 2026, SG&A and COGS expenses are deductible for operations relating to medical cannabis. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E.

However, beginning in 2024, the Company began taking an uncertain tax position on its tax returns (beginning with 2023 originally filed tax returns) that its operations are not subject to IRC Section 280E and therefore intends to deduct such expenses with a related uncertain tax liability offsetting such deductions. The Company continues to take this position for the full year 2026 for both state licensed medical and adult use cannabis. Additionally, certain states including Arizona, California, Illinois, Massachusetts, Michigan, Pennsylvania, and New York do not conform to IRC Section 280E and, accordingly, the Company generally deducts all operating expenses on its income tax returns in these states.

The April 2026 federal rescheduling order has a material effect on our future results of operations, cash flows, and liquidity, particularly because it eliminates the application of IRC Section 280E to our state-licensed medical cannabis operations effective April 22, 2026. Such impact depends on, among other things, the scope of our qualifying medical cannabis activities, our ability to substantiate deductions attributable to those activities, future Treasury, Internal Revenue Service, Department of Justice, Drug Enforcement Administration (“DEA”), and state regulatory guidance, and the outcome of pending DEA proceedings regarding broader rescheduling for adult use cannabis. The Company has adjusted its income tax provision during the quarter ended June 30, 2026 to reflect an effective date of April 22, 2026 for state-licensed medical cannabis no longer being subject to IRC Section 280E. We continue to wait for guidance on whether the change to medical cannabis will be applied retroactively and for the results of the rescheduling hearings for adult use cannabis. As more guidance becomes available , we will continue to evaluate whether to file amended returns and whether changes to our systems, controls, and cost allocation methodologies are required. At this time, we cannot be certain of the amount of tax benefit that will be realized, that the order will improve our access to capital or banking services, or that additional federal regulatory changes will occur.

The Company reports results of operations of its affiliates from the date that control commences, either through the purchase of the business, through a management agreement, or through other arrangements that grant such control. The following selected financial information includes only the results of operations after the Company established control of its affiliates. Accordingly, the information included below may not be representative of the results of operations if such affiliates had included their results of operations for the entire reporting period. For discussion of


($ in thousands)	2026				2025								2024
	Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3
Revenues, net	$	173,341	$	151,325	$	161,553	$	164,913	$	163,624	$	165,757	$	175,909	$	179,783
Income (loss) from operations	13,361		11,173		(75,545)		17,828		16,141		13,589		19,406		26,343
Net income (loss) attributable to Cresco Labs Inc.	16,796		(13,072)		(87,588)		(17,054)		(16,334)		(14,432)		(4,372)		(10,541)
Basic EPS	$	0.05	$	(0.04)	$	(0.25)	$	(0.05)	$	(0.05)	$	(0.04)	$	(0.01)	$	(0.03)
Diluted EPS	$	0.04	$	(0.04)	$	(0.25)	$	(0.05)	$	(0.05)	$	(0.04)	$	(0.01)	$	(0.03)


	Three Months Ended June 30,
($ in thousands)	2026		2025		$ Change		% Change
Revenues, net	$	173,341	$	163,624	$	9,717	5.9	%
Cost of goods sold	86,394		80,368		6,026		7.5	%
Gross profit	86,947		83,256		3,691		4.4	%
Selling, general, and administrative	73,586		57,850		15,736		27.2	%
Impairment loss	—		9,265		(9,265)		(100.0)	%
Total operating expenses	73,586		67,115		6,471		9.6	%
Total other expense, net	(16,957)		(13,398)		(3,559)		26.6	%
Income tax benefit (expense)	18,966		(16,636)		35,602		(214.0)	%
Net income (loss)1	$	15,370	$	(13,893)	$	29,263	(210.6)	%

Revenue for the three months ended June 30, 2026, increased $9.7 million, or 5.9%, compared to the three months ended June 30, 2025. The increase in revenue was primarily driven by dispensary acquisitions in Pennsylvania, retail growth in Ohio due to legalizing adult-use of cannabis, and wholesale growth in Massachusetts and Ohio. The increase was partially offset by reduced operations in California compared to the prior year period as well as price compression and increased competition in Illinois.

Gross profit increased by $3.7 million, or 4.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase in gross profit was primarily driven by increased sales in Pennsylvania, Ohio, and Massachusetts. As a percentage of revenue, gross profit was 50.2% and 50.9% for the three months ended June 30, 2026 and June 30, 2025, respectively. The slight decrease in gross profit as a percentage of revenue was driven by compressed margins from higher margin states.

Total operating expenses for the three months ended June 30, 2026, increased $6.5 million, or 9.6%, compared to the three months ended June 30, 2025. The increase was primarily attributable to an increase in salaries and benefits expense and professional and legal fees. The increase was partially offset by $9.3 million of impairment charges recognized during the three months ended June 30, 2025, with no impairment charges were recognized for the three months ended June 30, 2026.

Total other expense, net for the three months ended June 30, 2026, increased $3.6 million, or 26.6%, compared to the three months ended June 30, 2025. The increase was primarily attributable to increased interest expense on notes and loans payable, most notably interest on the Senior Secured Term Loan, as well as unfavorable changes in fair value of deferred and contingent considerations compared to the prior year period.


	Six Months Ended June 30,
($ in thousands)	2026		2025		$ Change		% Change
Revenues, net	$	324,666	$	329,381	$	(4,715)	(1.4)	%
Cost of goods sold	162,270		167,494		(5,224)		(3.1)	%
Gross profit	162,396		161,887		509		0.3	%
Selling, general, and administrative	137,861		122,892		14,969		12.2	%
Impairment loss	—		9,265		(9,265)		(100.0)	%
Total operating expenses	137,861		132,157		5,704		4.3	%
Total other expense, net	(30,925)		(27,905)		(3,020)		10.8	%
Income tax benefit (expense)	4,746		(30,952)		35,698		(115.3)	%
Net loss1	$	(1,644)	$	(29,127)	$	27,483	(94.4)	%

1Net loss includes amounts attributable to non-controlling interests.

Revenue for the six months ended June 30, 2026, decreased $4.7 million, or 1.4%, compared to the six months ended June 30, 2025. The decrease in revenue was primarily driven by increased competition, price compression, and price discounting in the Illinois, Florida, and Pennsylvania markets; disruption in the Michigan market following the introduction of an excise tax; and reduced operations in California compared to the prior year period. The decrease was partially offset by retail growth in Pennsylvania due to dispensary acquisitions, growth in Ohio due to legalizing adult-use of cannabis, as well as wholesale growth in Massachusetts.

Gross profit increased by $0.5 million, or 0.3%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase in gross profit was primarily driven by increased sales in Ohio offset by lower sales in Illinois. As a percentage of revenue, gross profit was 50.0% and 49.1% for the six months ended June 30, 2026 and June 30, 2025, respectively. The increase in gross profit as a percentage of revenue was driven by increased sales from higher margin states.

Total operating expenses for the six months ended June 30, 2026, increased $5.7 million, or 4.3%, compared to the six months ended June 30, 2025. The increase was primarily attributable to an increase in professional and legal fees and share-based compensation. The increase was partially offset by $9.3 million of impairment charges recognized for the six months ended June 30, 2025, with no impairment charges recognized during the six months ended June 30, 2026.

Total other expense, net for the six months ended June 30, 2026, increased $3.0 million, or 10.8%, compared to the six months ended June 30, 2025. The increase was primarily attributable to increased interest expense on notes and loans payable, most notably interest on the Senior Secured Term Loan, as well as unfavorable changes in fair value of deferred and contingent considerations compared to the prior year period.

Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and Adjusted EBITDA (defined below) are non-GAAP financial measures and do not have standardized definitions under GAAP and may not be comparable to similar measures presented by other issuers. The Company has provided the non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. These supplemental non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspectives and insights when analyzing the core operating performance of the business. This provides useful information for investors, allowing them to gain a clearer understanding of the Company’s operating performance and make more informed investment decisions. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to and should only be considered in conjunction with, the GAAP financial measures presented herein. Accordingly, the Company has included below reconciliations of the supplemental non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.


	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)	2026		2025		$ Change		% Change2		2026		2025		$ Change		% Change2
Net income (loss)1	$	15,370	$	(13,893)	$	29,263	(210.6)	%	$	(1,644)	$	(29,127)	$	27,483	(94.4)	%
Depreciation and amortization	12,656		12,190		466		3.8	%	24,872		25,096		(224)		(0.9)	%
Interest expense, net	15,105		13,022		2,083		16.0	%	30,032		27,876		2,156		7.7	%
Income tax (benefit) expense	(18,966)		16,636		(35,602)		(214.0)	%	(4,746)		30,952		(35,698)		(115.3)	%
EBITDA (non-GAAP)	$	24,165	$	27,955	$	(3,790)	(13.6)	%	$	48,514	$	54,797	$	(6,283)	(11.5)	%
Other expense, net	1,852		376		1,476		392.6	%	893		29		864		nm
Fair value mark-up for acquired inventory	1,312		—		1,312		100.0	%	1,905		—		1,905		100.0	%
Adjustments for acquisition and other non-core costs	8,437		734		7,703		nm		12,099		7,749		4,350		56.1	%
Impairment loss	—		9,265		(9,265)		(100.0)	%	—		9,265		(9,265)		(100.0)	%
Share-based compensation	3,773		2,546		1,227		48.2	%	9,028		5,269		3,759		71.3	%
Adjusted EBITDA (non-GAAP)	$	39,539	$	40,876	$	(1,337)	(3.3)	%	$	72,439	$	77,109	$	(4,670)	(6.1)	%

Adjusted EBITDA, a non-GAAP financial measure, is defined as EBITDA, excluding Other expense, net; adjustments for acquisition and other non-core costs; and share-based compensation. Non-core costs include non-operating costs, such as costs related to acquisitions and restructuring, unique legal expenses, and other expenses that are mostly one-time in nature. Adjusted EBITDA was $39.5 million for the three months ended June 30, 2026, compared to $40.9 million for the three months ended June 30, 2025. The decrease in adjusted EBITDA of $1.3 million is primarily due an increase in salaries and benefits expense driven by higher payroll costs as a result of an increased headcount related to dispensary acquisitions. Adjusted EBITDA was $72.4 million for the six months ended June 30, 2026, compared to $77.1 million for the six months ended June 30, 2025. The decrease in adjusted EBITDA of $4.7 million is primarily driven by an increase in operating expenses such as professional and legal fees and selling and marketing expenses.

The Company is generally able to access private and/or public financing through, but not limited to, institutional lenders, such as the agreement for the Senior Secured Term Loan of $325.0 million, which closed on August 13, 2025, that bears an interest rate of 12.5% and matures on August 13, 2030. This refinancing, along with existing cash on hand, was used to repay the Company’s prior facility of $360.0 million, reducing total debt. Additionally, on June 5, 2026, the Company closed on the Revolving Credit Facility of $50.0 million, which matures on August 13, 2030 and bears a 7.99% interest rate. JDRC Ellenville, LLC (“Ellenville”), an indirect subsidiary of the Company, entered into a $25.3 million loan on September 26, 2023, and amended on October 3, 2025, secured by real estate and improvements thereto. In addition, the Company has received and has access to private loans through individual investors and private and public equity raises. As of June 30, 2026, the Company was in compliance with all covenants.

The Company expects cash on hand and cash flows from operations, along with the private and/or public financing options discussed above, will be adequate to meet capital requirements and operational needs for the next twelve months. We cannot guarantee this will be the case, or that our assumptions regarding revenues and expenses underlying this belief will be accurate. If, in the future, we require more liquidity than contemplated, we may need to raise additional funds through debt and/or equity offerings. Adequate funds may not be available when needed or may not be available on terms favorable to us. If additional funds are raised by issuing equity securities, dilution to existing shareholders may result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also require us to fund additional interest expense.

Net cash provided by operating activities was $9.8 million for the six months ended June 30, 2026, a decrease of $29.5 million compared to $39.3 million of net cash provided by operating activities during the six months ended June 30, 2025. The $29.5 million decrease was primarily attributable to an increase in accounts payable and accrued liabilities payments due to the Senior Secured Term Loan refinancing, and a net benefit from improved collections of accounts receivables in the prior year period.


($ in thousands)	< 1 Year		1 to 3 Years		3 to 5 Years		> 5 Years		Total

Deferred and contingent consideration, short-term	$	41,429	$	—	$	—	$	—	$	41,429
Operating leases liabilities	22,242		63,128		61,630		111,261		258,261
Finance lease liabilities	2,696		10,371		8,244		9,979		31,290
Deferred and contingent consideration, long-term	—		19,421		—		—		19,421
Short-term borrowings and Long-term notes and loans payable	22,202		118,094		416,314		80,566		637,176
Tax receivable agreement liability	5,513		11,273		12,019		42,826		71,631
Other long-term liabilities	—		1,000		—		—		1,000
Total obligations as of June 30, 2026	$	94,082	$	223,287	$	498,207	$	244,632	$	1,060,208

Credit risk is the risk of a potential loss to the Company if a customer or a third-party to a financial instrument fails to meet its contractual obligations. The maximum credit exposure as of June 30, 2026 and December 31, 2025 is the carrying amount of cash, accounts receivable, and loans receivable. The Company does not have significant credit risk with respect to its growth in its key retail markets, as payment is typically due upon transferring the goods to the customer at our dispensaries, which currently accept only cash and debit cards. Additionally, the Company does not have significant credit risk with respect to its loan counterparties as the interest rate on the Senior Secured Term Loan is not variable and therefore, is not materially impacted by interest rate increases enacted by the Federal Reserve. The interest rate on our Mortgage Loans is based on the FHLB Five Year Classic Regular Advance Rates which matures every five (5) years and does not pose a significant credit risk. Although all deposited cash is placed with U.S. financial institutions in good standing with regulatory authorities, changes in U.S. federal banking laws related to the deposit and holding of funds derived from activities related to the cannabis industry require additional reforms and protections. In 2023, the Senate Banking Committee passed the SAFER Banking Act with bipartisan support, but it was not taken up on the Senate floor and died at the end of the 118th Congress. In June 2026, the SAFE Banking Act bill was refiled in both the Senate and House of Representatives. However, as of the date of this MD&A, the SAFE Banking Act has not been brought to a vote in the Senate or the House of Representatives, and there have been no further substantive legislative actions. Given that current U.S. federal law provides that the production and possession of cannabis is

illegal, there is a strong argument that banks cannot accept or deposit funds from businesses involved with the cannabis industry, leading to an increased risk of legal actions against the Company and forfeitures of the Company’s assets. While recent federal rescheduling actions may reduce risks associated with state-licensed medical cannabis activities, cannabis remains subject to significant federal regulation, and adult-use cannabis activities remain federally prohibited. Accordingly, uncertainty regarding access to banking and other financial services persists.

Because the cannabis industry remains illegal under U.S. federal law, any property owned by participants in the cannabis industry, which are either used in the course of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture. Even if the owner of the property was never charged with a crime, the property in question could still be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject to forfeiture. Although recent federal rescheduling actions may reduce risks associated with state-licensed medical cannabis activities, cannabis-related assets remain subject to potential federal enforcement and forfeiture, and the extent to which such actions may affect asset forfeiture risk remains uncertain.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company primarily manages liquidity risk through the management of its capital structure by ensuring that it will have sufficient liquidity to settle obligations and liabilities when due. As of June 30, 2026, the Company had working capital (defined as current assets less current liabilities) of $108.0 million. The Company also expects to be able to continue to raise debt or equity based capital, or sell certain assets, if needed, to fund operations and the expansion of its business.

The operating results and balance sheet of the Company are reported in USD. As of June 30, 2026 and December 31, 2025, the Company’s financial assets and liabilities are primarily in USD. However, from time to time, some of the Company’s financial transactions are denominated in currencies other than USD. The results of the Company’s operations are subject to currency transaction and translation risks. During the three and six months ended June 30, 2026, the Company recorded a $0.2 million and $0.4 million gain in foreign currency exchange, respectively. The Company recorded a $0.6 million loss in foreign currency exchange during both the three and six months ended June 30, 2025.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. An increase or decrease in the Company’s incremental borrowing rate would result in an associated increase or decrease in interest expense, net. The Company’s Senior Secured Term Loan accrues interest at a rate of 12.5% per annum and has an effective interest rate of 13.8%. The Company’s Revolving Credit Facility accrues interest at a rate of 7.99% per annum. The Company’s Mortgage Loans accrue interest at a rate of 8.4% per annum and have an effective interest rate of 10.2%.

Price risk is the risk of variability in fair value due to movements in equity or market prices. The Company is subject to price risk related to deferred and contingent considerations that are valued based on the Company’s own stock price. An increase or decrease in stock price would result in an associated increase or decrease to deferred and contingent considerations with a corresponding change to Other expense, net.

Tax risk is the risk of changes in the tax environment that would have a material adverse effect on the Company’s business, results of operations, and financial condition. Currently, state-licensed marijuana businesses are assessed a comparatively high effective federal tax rate on adult use cannabis due to IRC Section 280E, which bars businesses from deducting all expenses except their COGS when calculating federal tax liability. Any increase in tax levies resulting from additional tax measures may have a further adverse effect on the operations of the Company, while any decrease in such tax levies will be beneficial to future operations. See Note 17 “Provision for Income Taxes and Deferred Income Taxes” for the Company’s disclosure of uncertain tax positions.

Regulatory risk pertains to the risk that the Company’s business objectives are contingent, in part, upon the compliance of regulatory requirements. Due to the nature of the industry, the Company recognizes that regulatory requirements are more stringent and punitive in nature. Any delays in obtaining, or failure to obtain regulatory approvals can significantly delay operational and product development and can have a material adverse effect on the Company’s business, results of operations, and financial condition. The Company is cognizant of the advent of regulatory changes occurring in the cannabis industry on the city, state, and national levels. Although the regulatory outlook on the cannabis industry has been moving in a positive trend, any unforeseen regulatory changes could have a material adverse impact on the goals and operations of the Company’s business.

The Company’s business, financial condition, and operating results may be negatively impacted by challenging global economic conditions. A global economic slowdown would cause disruptions and extreme volatility in global financial markets, increased rates of default and bankruptcy and declining consumer and business confidence, which can lead to decreased levels of consumer spending. These macroeconomic developments could negatively impact the Company’s business, which depends on the general economic environment and levels of consumer spending. As a result, the Company may not be able to maintain its existing customers or attract new customers, or the Company may be forced to reduce the price of its products. The Company is unable to predict the likelihood of the occurrence, duration, or severity of such disruptions in the credit and financial markets or adverse global economic conditions. Any general or market-specific economic downturns could have a material adverse effect on our business, financial condition, and operating results.


Securities						Number of Shares (in thousands)

Super Voting Shares						500
Subordinate Voting Shares1						355,589
Proportionate Voting Shares2						16,258

Special Subordinate Voting Shares3						2
Redeemable Units4						84,299