Mr. Sonny Newman reports

C21 INVESTMENTS ANNOUNCES UNAUDITED YEAR END RESULTS

C21 Investments Inc. has released unaudited results for its fiscal year ended Jan. 31, 2023. The company's audited financial statements are delayed while its current and previous auditors address the tax provision for the previous fiscal year. C21 and its auditors continue to work diligently toward completing the filings as soon as possible. The company's unaudited fiscal year-end financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). All currency is reported in U.S. dollars.

Unaudited fiscal year financial highlights (Feb. 1, 2022, to Jan. 31, 2023):

• Revenue of $28.9-million -- down 12 per cent year-over-year (State of Nevada cannabis sales were down 16 per cent over the comparative period);
• Net income from continuing operations of $1-million; earnings per share from continuing operations of one cent;
• Gross margin of 46.4 per cent; adjusted gross profit margin of 49 per cent;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $7.4-million -- a 26-per-cent EBITDA margin;
• Cash flow from operations of $6-million -- a fourth consecutive year of positive quarterly free cash flow;
• Total liabilities reduced by $3.8-million.

Q4 financial highlights (Nov. 1, 2022, to Jan. 31, 2023):

• Revenue of $7-million -- down 2 per cent sequentially (State of Nevada cannabis sales were down 3 per cent over the comparative period);
• Adjusted gross profit of 38 per cent;
• Adjusted EBITDA1 of $900,000;
• Cash flow from operations of $1.2-million -- a 15th consecutive quarter of positive free cash flow.

Financial year (FY) and Q4 management and operational commentary

"We are pleased to report a fourth straight year of significant positive free cash flow, notwithstanding continued industry and macro headwinds," stated chief executive officer and president of C21, Sonny Newman. "The Nevada market experienced a decline in cannabis sales year-over-year which resulted in persistent downward pressure on retail margins. C21 responded to these market dynamics by launching a new loyalty program which enabled us to maintain our half-million customer transactions annually at our dispensaries. Also, in the second half of the year, the Nevada wholesale market experienced dislocation due to a number of competitors ceasing operations and liquidating inventory. The Nevada wholesale market has since stabilized and we have generated record wholesale revenues for Nevada in the first quarter of the new year. Our strategy and relentless focus on generating sustained free cash flow and deleveraging our balance sheet allows us to capitalize on those opportunities in the current environment that support our goal of delivering value to our shareholders."

C21's revenue of $28.9-million for the year declined 12.4 per cent from the previous year, but outperformed Nevada market sales which saw an overall decline of 15.5 per cent in total sales over the same period. Revenue for Q4 was $7-million, down 2.4 per cent sequentially, due primarily to retail price discounting in Nevada (state cannabis sales were down 3.4 per cent for the comparative period3). Transaction volume was moderately affected by seasonality in the fourth quarter as well as smaller average basket size. Wholesale sales increased in Q4 as the company experienced increased demand in both the latter part of Q4 as well as continued ramp in demand into Q1 2024.

Gross profit for the year was 46.4 per cent, a decline from the previous year of 57 per cent, due to several factors, including a gradual weakening in the market of product demand as consumer discretionary habits shifted with the easing of pandemic restrictions. As the fiscal year progressed, the industry experienced an increased supply to the wholesale market resulting in falling prices as a number of players ceased operations and liquidated inventory. In response to these market dynamics, C21 made the strategic decision to shut down cultivation rooms on a rotating basis throughout Q4 and took the opportunity to perform maintenance on rooms as needed. The impact of these activities resulted in lower flower yields for the period. Gross profit for the year was also affected by retail price discounting in the market during Q4. In response to these competitive pressures, C21 began awarding loyalty points to recreational customers, further impacting margins in the short term. On the positive side, Q4 saw a large cultivator cease operations, which spurred a significant recovery in both price and volume for the company's wholesale business. C21's wholesale revenues have since hit record levels in Q1 2024 with harvest operations and yields returning to normal levels in the latter part of Q1 2024.

Adjusted Gross Profit was 49.0 per cent for FY 2023 factoring one-time adjustments for non-cash inventory revaluing and production curtailment. Due to the aforementioned cultivation curtailment and retail pricing pressure in Q4, Adjusted Gross Profit2 was 38 per cent for Q4.

For the fiscal year, the company generated $7.4-million of adjusted EBITDA -- a 26-per-cent EBITDA margin.

C21 reported net income from continuing operations of $1-million or one-cent earnings per share.

Cash flow from operations was $6-million for the year, including a 15th consecutive quarter of positive cash flow from operations in Q4 of $1.2-million. Income taxes were accrued in Q4.

Cash at the end of Q4 was $1.9-million, down $400,000 from Q3. The company's senior secured note payable to its president and chief executive officer, Mr. Newman, was reduced by $1.5-million in Q4 and $6.1-million for the year, as well as a buyout of continuing lease obligations in discontinued operations. Total liabilities were reduced $3.8-million for the year.

Subsequent to the end of Q4, the company has fully paid down the Newman note by an additional $2-million as of June 1, 2023. As well, Silver State has experienced a strong increase in wholesale sales in Q1 2024, including for the company's branded Phantom Farms flower available in select stores throughout the state.

The company has 120,047,814 issued and outstanding common shares as of June 1, 2023, no change since Jan. 31, 2022.

About C21 Investments Inc.

C21 Investments is a vertically integrated cannabis company that cultivates, processes and distributes quality cannabis and hemp-derived consumer products in the United States. The company is focused on value creation through the disciplined acquisition and integration of core retail, manufacturing and distribution assets in strategic markets, leveraging industry-leading retail revenues with high-growth potential multimarket branded consumer packaged goods. The company owns Silver State Relief and Silver State Cultivation in Nevada, including legacy Oregon brands Phantom Farms, Hood Oil and Eco Firma Farms. These brands produce and distribute a broad range of tetrahydrocannabinol and cannabidiol products from cannabis flowers, prerolls, cannabis oil, vaporizer cartridges and edibles.

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