Financial Analysis

16. COMMITMENTS AND CONTINGENCIES Contingencies Although the possession, cultivation and distribution of cannabis for medical and recreational use is permitted in certain states, cannabis is generally classified as a Schedule I controlled substance under the U.S. Controlled Substances Act and its use remains a violation of federal law. Effective April 28, 2026, Food and Drug Administration (FDA) approved drug products containing cannabis, as well as cannabis produced, distributed and dispensed under qualifying state medical marijuana licenses, are classified as a Schedule III controlled substance; however, there is uncertainty governing the application of this newly bifurcated treatment at the federal level. T he Companys operations are subject to a variety of local and state regulations. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management believes that the Company is in material compliance with applicable local and state regulations as of June 30, 2026, marijuana regulations continue to evolve and are subject to differing interpretations. As a result, the Company could be subject to regulatory fines, penalties or restrictions at any time. Since the federal law status of the use of cannabis preempts state laws that legalize its use, strict enforcement of federal law regarding cannabis would likely result in the Companys inabilit …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

8. DEBT The components of the Companys debt are as follows: Effective Interest Rate Maturity Date June 30, 2026 (unaudited) December 31, 2025 Principal amounts: 2026 Term Loan 16% March 2029 $ 160,000 $ Second Lien Notes n/a n/a 86,194 2024 Term Loan n/a n/a 46,075 Acquisition-related promissory notes payable 8% - 12% August 2026 - April 2027 27,576 28,337 Mortgage loans 6% - 10% January 2027 - September 2030 32,222 32,470 Total debt subject to scheduled repayments 219,798 193,076 Promissory notes payable to Sammartino (1) 10% September 2024 - September 2026 21,500 21,500 Total debt 241,298 214,576 Less: debt issuance costs and original issue discounts (11,299) (8,742) Total debt, net $ 229,999 $ 205,834 Debt, net - current portion $ 33,623 $ 6,639 Debt, net - non-current portion $ 196,376 $ 199,195 (1) This amount is related to the promissory notes issued to Sammartino Investments LLC (Sammartino) in connection with the acquisition of Nature's Remedy of Massachusetts, Inc. (Nature's Remedy) in September 2021. The Company currently has no obligation to pay the principal and interest. See further discussion of the Sammartino Matter in Note 16 - Commitments and Contingencies for more information. 2026 Term Loan On March 27, 2026, the Company refinanced both its senior secured term loan (2024 Term Loan) and its 12% second lien notes due 2026 (Second Lien Notes), which had outstanding principal balances of $46,075 and $86,194, respectively, as of December 31, 2025, and were sched …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table summarizes the Companys revenue from external customers, disaggregated by revenue stream: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Retail $ 61,867 $ 59,440 $ 119,741 $ 116,284 Wholesale 9,430 5,606 17,988 12,608 Total revenue, net $ 71,297 $ 65,046 $ 137,729 $ 128,892 …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

"14. INCOME TAXES The following table summarizes the Companys income tax expense and effective tax rates for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Loss before income tax $ (8,305) $ (2,403) $ (19,435) $ (10,440) Income tax benefit (expense) $ 976 $ (9,928) $ (7,741) $ (18,906) Effective income tax rate 11.8 % (413.2) % (39.8) % (181.1) % The Company computed its provision for income taxes for the three and six months ended June 30, 2026 using the actual effective tax rate for each respective interim period, taking into consideration the impact of the U.S. Department of Justices regulatory action, effective April 28, 2026, reclassifying certain state-licensed medical marijuana products and FDA-approved marijuana products from Schedule I to Schedule III under the Controlled Substances Act (the Rescheduling Rule). The Company computed its provision for income taxes for the three and six months ended June 30, 2025 using the actual effective tax rate for each respective interim period. Therefore, the Companys effective income tax rates for the three and six months ended June 30, 2026 and 2025 are not indicative of the effective income tax rate for each respective fiscal year of 2026 and 2025. The Companys effective income tax rate differs significantly from the applicable statutory income tax rates due in part to (i) uncertain tax position liabilities associated with tax positions under Inte …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Adoption of New Accounting Standards In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provide entities with a practical and expedient approach to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers , by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for annual periods beginning after December 15, 2025 and interim periods within those annual reporting periods, with early adoption permitted. The adoption of this pronouncement did not have any impact on the Companys consolidated financial statements and related disclosures. Accounting Standards Issued But Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires an entity to improve disclosures about public business entities expenses and to provide more detailed information around the types of expenses included in commonly presented expense captions. Additionally, in January 2025 the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. ASU 2024-03 is effective for fiscal years be …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

15. RELATED PARTY TRANSACTIONS The Company had the following related party transactions: Three Months Ended June 30, Six Months Ended June 30, As of 2026 2025 2026 2025 June 30, 2026 (unaudited) December 31, 2025 Nature of transaction Related Party Expense Related Party Expense Related Party Payable Second Lien Notes - interest expense and principal amount (1) $ $ (780) $ (747) $ (1,447) $ $ (25,909) 2024 Term Loan - interest expense and principal amount (1) $ $ (489) $ (421) $ (972) $ $ (15,200) 2026 Term Loan - interest expense and principal amount (2) $ (1,527) $ $ (1,611) $ $ (49,009) $ (1) The Second Lien Notes, the 2024 Term Loan payable and the related interest expense include amounts related to the Companys Chief Executive Officer, as well as a significant investor. Both the Second Lien Notes and the 2024 Term Loan were settled in March 2026. Refer to Note 8 - Debt for more information. (2) The 2026 Term Loan, together with the related interest expense, include amounts related to an entity controlled by the Companys Chief Executive Officer, as well as a significant investor. Refer to Note 8 - Debt for more information. …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

12. REVENUE The Company has two revenue streams: (i) retail and (ii) wholesale. The Companys retail revenue is comprised of cannabis sales from its dispensaries. The Companys wholesale revenue is comprised of cannabis sales to its wholesale customers for resale through their dispensaries. Any intercompany revenue and costs are eliminated to arrive at consolidated totals. The following table summarizes the Companys revenue from external customers, disaggregated by revenue stream: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Retail $ 61,867 $ 59,440 $ 119,741 $ 116,284 Wholesale 9,430 5,606 17,988 12,608 Total revenue, net $ 71,297 $ 65,046 $ 137,729 $ 128,892 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

18. SEGMENT INFORMATION The Company operates a vertically integrated cannabis business in one reportable segment for the cultivation, processing, distribution and sale of cannabis in the U.S. All of the Companys revenues were generated within the U.S., and substantially all long-lived assets are located within the U. S. The accounting policies for the Companys reportable segment are the same as those described in Note 2 in the audited consolidated financial statements for the year ended December 31, 2025, which is included in the 2025 Form 10-K . Th e chief operating decision maker is t he Chief Executive Officer. The chief operating decision maker assesses performance and decides how to allocate resourc es based on operating results that are reported on the income statement as consolidated net income (loss). The measure of segment assets is reported on the balance sheet as total consolidated assets. Refer to Note 13 - Operating Expenses for significant expenses for the reportable segment. …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

10. EQUITY Authorized, Issued and Outstanding The authorized share capital of the Company consists of an unlimited number of SVS, Multiple Voting Shares, Super Voting Shares, and Preferred Shares. As of June 30, 2026, the Company had 199,698,263 SVS issued and outstanding and no Multiple Voting Shares, Super Voting Shares or Preferred Shares issued and outstanding. Warrants Each warrant entitles the holder to purchase one SVS. Certain warrants may be net share settled. The following table summarizes the status of warrants and related transactions: Non-Derivative (Equity) Warrants Derivative Liabilities Warrants Total Number of Warrants Weighted - Average Exercise Price Balance as of January 1, 2026 57,994,087 21,400,000 79,394,087 $ 0.95 Granted 100,000 100,000 $ 0.48 Balance as of June 30, 2026 58,094,087 21,400,000 79,494,087 $ 0.95 Exercisable as of June 30, 2026 56,724,087 21,400,000 78,124,087 $ 0.96 The grant date fair value of the non-derivative warrants issued was determined using the Black-Scholes option-pricing model. The following assumptions were used for the calculation at date of issuance: Weighted average stock price $0.49 Weighted average expected stock price volatility 106.4% Expected annual dividend yield 0% Weighted average expected life of warrants 5.0 years Weighted average risk-free annual interest rate 4.2% Weighted average grant date fair value $0.39 Share-based Payment Award Plans Plan summary and description Under the Companys 2019 Equity Incentive P …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing