Mr. Mark Aiken reports

CHRISTINA LAKE CANNABIS REPORTS SECOND QUARTER 2023 RESULTS

Christina Lake Cannabis Corp. has released its financial results for the second quarter ended May 31, 2023. All amounts are expressed in Canadian dollars unless otherwise noted.

Q2'23 Highlights

Revenue up 36% to $1.4M over prior year period; increase of 81% over Q1'23

Distillate volumes sold increased by 118% compared to the six-month period ending Q2'22

Gross margin of $2.3M or 42.8% before fair value adjustments for the six-month period

Decreased G&A expenses by $188k or 8% from prior year period

"In Q2, our dedication to executing strategic initiatives has been validated through an impressive surge in sales growth of 36%," said Mark Aiken, Chief Executive Officer of Christina Lake Cannabis. "As we advance into the second half of Fiscal 2023, we maintain our unwavering commitment to meeting the escalating sales demand for our premium distillate products while driving operating efficiencies throughout our processes, and to expand our product lines available to our valued customers."

Distillate volumes sold increased by 118% from the comparative period ending Q2'22 resulting in revenue growth of 36% to $5.4M from $4.0M despite market price compression in the price of distillate. Revenue growth was driven by an expanding customer base with increased demand in distillate inputs for both vape and infused pre-rolls.

Gross Margin Before Fair Value Adjustments was 42.8% compared to 55.4% in the prior year period. The decline in gross margin is primarily attributed to a significant drop in the price of wholesale distillate. Cost of goods sold increased by 74% from the comparative period due to the significant increase in distillate volume produced and sold as noted above. The Company continues to work towards production efficiencies to combat price compression in the wholesale distillate market as production and sales continued to ramp up.

Total general & administrative ("G&A") expenses declined by $189k or 8% from prior comparative period, driven by year-over-year reductions in management fees, marketing, share based compensation and repairs and maintenance expenses. G&A decreased to 39% of revenue during the period, compared with 58% in the prior year.

Loss and comprehensive loss in Q2'23 was $(2.0M) which is a $1.2M increase from the prior year period loss of $(794k). The year-over-year increase in loss is primarily driven by an increase in changes in fair value of inventory sold, and reduction in income from other items relating to a one time settlement of $258k in the comparative period.

Cash and Working Capital

As at May 31, 2023, the Company had working capital of $1,715,664 (November 30, 2022 - $3,683,558) which consisted of cash of $1,531,378 (November 30, 2022 - $1,810,639), receivables of $2,183,575 (November 30, 2022 - $1,906,820), prepaid expenses of $19,432 (November 30, 2022 - $3,885), inventory of $4,144,802 (November 30, 2022 - $5,766,418). Current liabilities, being accounts payable and accrued liabilities, current portion of loan and current portion of convertible debentures, $6,163,533 (November 30, 2022 - $5,832,954).

About Christina Lake Cannabis Corp.

Christina Lake Cannabis is a licensed producer of cannabis under the Cannabis Act. It has secured a standard cultivation license and corresponding processing amendment from Health Canada (March 2020 and August 2020, respectively) as well as a research and development license (early 2020). Christina Lake Cannabis' facility consists of a 32-acre property, which includes over 950,000 square feet of outdoor grow space, offices, propagation and drying rooms, research facilities, and a facility dedicated to processing and extraction. Christina Lake Cannabis also owns a 99-acre plot of land adjoining its principal site. CLC focuses its production on creating high quality extracts and distillate for its B2B client base with proprietary strains specifically developed for outdoor cultivation to enhance extraction quality.

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