Mr. Ben Kovler reports

GREEN THUMB INDUSTRIES (GTI) ANNOUNCES REVENUE UP 291% IN SECOND QUARTER 2018

Green Thumb Industries Inc. has released its financial results for the second quarter ended June 30, 2018.

Financial highlights:

• Second quarter 2018 revenues increased by 291 per cent year over year to $13.6-million and quarter-over-quarter revenues increased by 25 per cent.
• EBITDA (earnings before interest, taxes, depreciation and amortization) was negative $4.7-million for the quarter. Adjusted EBITDA, which excludes non-cash and one-time expenses related to the Bayswater reverse takeover transaction (RTO), was $500,000.
• Green Thumb Industries' net income was $400,000, up from a loss of $1.6-million in the first quarter 2018.
• Current assets totalled $128.4-million as of June 30, 2018, including cash and cash equivalents of $112.7-million.
• The company has approximately $7.9-million of total debt, $1.4-million of which is due within 12 months.
• The company raised net proceeds of $61-million through a brokered and non-brokered private placement in connection with the RTO of a Canadian public company.

Management commentary

"The second quarter was a critical quarter for GTI. We became a publicly traded company on June 13. The team has been hard at work and that is reflected in the results for our first reporting period as a public company -- generating solid revenue growth, raising capital, entering new markets and attracting top talent," commented Ben Kovler, founder and chairman of Green Thumb Industries.

"What lies ahead is even more exciting as this rapidly evolving industry takes shape. We strongly believe that brands developed and produced thoughtfully, consistently and with the consumer in mind is the path to creating and capturing the most long-term shareholder value. Over the past four years, we've built a solid base business on that conviction and our strategy to distribute brands at scale is supported by our vertically integrated business and leading national distribution platform across eight states, with a total reach of over 94 million people. We also have a strong balance sheet and are focused on allocating that capital to position the business for growth opportunities ahead."

Business infrastructure development

Through business development and acquisition-related activities, the company's geographic reach expanded to eight U.S. markets, with a total population of over 94 million, and includes eight cultivation and manufacturing facilities as well as licences for 59 retail stores. The company made substantive progress in the following areas:

• New York licence -- the company executed a definitive agreement to acquire a New York licensee, which will make Green Thumb Industries one of 10 licence holders in the regulated New York cannabis market.
• Ohio dispensary licences -- the company was awarded licences to open five dispensaries in Ohio, the maximum number permitted under current regulations.
• Talent -- the company hired over 150 new team members across the country, bringing the total head count to approximately 400. Over 100 employees are equityholders in the company. A stock option plan has been developed to continue to align incentives with shareholders.
• Board of directors -- the company is building a world-class board of directors with strong independent members. Additions include Glen Senk and Wes Moore. Mr. Senk, former chief executive officer of Urban Outfitters, scaled the Anthropologie retail concept. Mr. Moore is the chief executive officer of Robin Hood, New York's largest poverty-fighting organization.

Consumer packaged goods business development:

• At the end of the second quarter, the company generated wholesale revenue by producing and distributing consumer packaged products in three out of eight Green Thumb Industries markets -- Illinois, Maryland and Pennsylvania.
• Nevada, Massachusetts, Florida and New York are in various stages of production.
• Green Thumb Industries continues to build out and increase the reach of its suite of branded products, including Rythm, DogWalkers and The Feel Collection.

Retail business development:

• The company opened five Rise retail stores in the second quarter, bringing the total store count to 13.
• The company opened stores in Pennsylvania (Erie, Steelton and Carlisle), Maryland (Joppa) and Massachusetts (Amherst).
• Total consolidated revenue includes 10 of the 13 open stores, as two are pending the closing of the transaction (Steelton and Carlisle) and the other is a non-consolidated joint venture (Effingham).

Capital markets and financing activities:

• The company listed subordinate voting shares on the Canadian Securities Exchange under the ticker symbol GTII, which began trading on June 13, 2018.
• Following the quarter, the company listed subordinate voting shares on the OTCQX Best Market under the ticker symbol GTBIF, which began trading on July 9, 2018.
• Subsequent to the end of the second quarter, Green Thumb Industries closed a bought deal financing transaction, raising $59-million in net proceeds, which will be used to close the definitive agreement to acquire a licence in New York and build out the five Ohio dispensaries.

Second quarter 2018 financial overview

For the purpose of analysis, total revenue is segmented into wholesale and retail. Wholesale revenue is attributable to the manufacture, sale and distribution of packaged cannabis products to third party retail customers. Retail revenue is attributable to direct sales to end consumers in the company's retail stores.

As of the three months ended June 30, 2018, Green Thumb Industries has operating revenue in five of its eight markets: Nevada, Illinois, Pennsylvania, Massachusetts and Maryland. The company has ramped up expenses related to the buildout of new markets in Florida, Ohio and New York in preparation for revenue generation in the second half of 2018 and into 2019.

Total revenue for the second quarter of 2018 was $13.6-million, compared with $3.5-million for the second quarter of 2017 and $10.9-million for the first quarter of 2018. The year-over-year revenue increase was primarily driven by increased wholesale distribution of the company's finished branded products to retail customers in Illinois and Maryland, along with increased foot traffic in the company's retail stores across all five markets. In particular, year-over-year retail growth was driven by new store openings and acquisitions, most notably revenue from the acquisition of two Illinois stores, a new Rise store in Nevada, the opening of Rise stores in Pennsylvania and Maryland, and the commencement of adult-use sales in the Nevada market.

Gross profit before biological asset adjustment for the second quarter of 2018 was $6.3-million, or 46 per cent, compared with $1.7-million, or 50 per cent, for the second quarter of 2017. Gross profit after net gains on biological asset transformation for the second quarter was $6.9-million, representing a gross margin of 50 per cent, compared with 36 per cent for the same period one year ago, and driven by increased harvested cannabis and wholesale shipments.

General and administrative expenses were $11.3-million for the second quarter of 2018, compared with $2.5-million for the same period last year. The increase was driven by $4-million of salaries and benefits due to an increase in head count from the company's new retail facilities in Illinois, Nevada, Maryland and Pennsylvania, along with corporate staff development and a non-cash charge related to equity incentive compensation of $1-million. The company also recorded a non-cash listing fee of $3-million in addition to $1.3-million of one-time professional fees related to the RTO.

Other income was $34.5-million for the second quarter of 2018, primarily reflecting the fair market value of outstanding warrants held by iAnthus Capital Holdings related to a debenture purchase agreement with the company that was executed in January, 2018.

Green Thumb Industries' net income for the second quarter of 2018 was $400,000, compared with a net loss of $1.3-million for the second quarter of 2017 and a net loss of $1.6-million for the first quarter of 2018.

EBITDA was negative $4.7-million for the second quarter of 2018, compared with a negative EBITDA of $1.3-million for the second quarter of 2017. Excluding one-time charges of $1-million in expenses related to employee equity grants (non-cash) and $4.3-million related to the RTO, Green Thumb Industries generated $500,000 in adjusted EBITDA for the second quarter of 2018.

Balance sheet and liquidity

As of June 30, 2018, total assets were $230.1-million, including cash and cash equivalents of $112.7-million and long-term liabilities of $10.4-million. The company has $7.9-million of total debt, $1.4-million of which is due within 12 months. Total authorized and issued common shares on a fully diluted basis totalled 139,471,034.

Subsequent to the end of the second quarter, Green Thumb Industries closed a bought deal financing for net proceeds of $59-million. The net proceeds will provide financing to close the definitive agreement to acquire a licence in New York and build out the five Ohio dispensaries.

Total authorized and issued common shares on a fully diluted basis, including the subsequent raise, totalled 146,771,034.

Additional information

Additional information relating to the company's second quarter 2018 results is available on SEDAR in the company's interim financial statements and management's discussion and analysis.

Conference call and webcast

Green Thumb Industries will host a conference call on Tuesday, Aug. 28, 2018, at 5 p.m. ET to discuss its financial results for the second quarter of 2018. The conference call may be accessed by dialling 877-273-8145 (toll-free) or 647-689-5400 (international) and entering the conference ID 6479046. A live audio webcast of the call will also be available at Green Thumb Industries' website. The webcast will be archived for replay.

About Green Thumb Industries Inc.

Green Thumb Industries, a national cannabis cultivator, processor and dispensary operator, is dedicated to providing dignified access to safe and effective cannabis nationwide while giving back to the communities in which it serves. As a vertically integrated company, the company manufactures and sells a well-rounded suite of branded cannabis products including flower, concentrates, edibles and topicals.

                              
                  UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                    
                                     (amounts in U.S. dollars)                                      
                                                                                                       
                                                                             Three months ended June 30,    
                                                                                     2018          2017     
                                                                                                       
Revenues, net of discounts                                                   $ 13,624,658  $  3,480,568 
Cost of goods sold, net                                                        (7,337,040)   (1,741,556)
Gross profit before biological asset adjustment                                 6,287,618     1,739,012 
Net effect of changes in fair value of biological assets                          584,764      (494,960)
Gross profit                                                                    6,872,382     1,244,052 
Expenses                                                                                              
General and administrative                                                     11,251,399     2,471,811 
Sales and marketing                                                               354,292        32,324
Depreciation and amortization                                                     522,550        54,026
Total expenses                                                                 12,128,241     2,558,161
(Loss) from operations                                                         (5,255,859)   (1,314,109
Other income (expense)                                                                                
Other income (expense), net                                                    34,612,194             - 
Interest income                                                                   378,082             - 
Interest expense                                                                 (466,668)       (9,667)
Total other income (expense)                                                   34,523,608        (9,667)
Income (loss) before provision for income taxes 
and non-controlling interest                                                   29,267,749    (1,323,776)
Provision for income taxes                                                      4,253,000             - 
Net income (loss) before non-controlling interest                              25,014,749    (1,323,776)
Net income (loss) attributable to non-controlling interest                     24,621,861             -      
Net income (loss) attributable to Green Thumb Industries                          392,888    (1,323,776)   
Net income (loss) per share -- basic and diluted                                        0             -     

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