Mr. Sonny Newman reports

C21 INVESTMENTS ANNOUNCES Q1 RESULTS

C21 Investments Inc. has released its interim financial statements and management discussion and analysis for the first quarter ended April 30, 2023. The company's financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). All currency is reported in U.S. dollars.

Q1 financial highlights (Feb. 1, 2023, to April 30, 2023):

• Revenue of $7.7-million -- up 9.4 per cent sequentially (note -- state of Nevada cannabis sales were flat over the comparative period);
• Earnings (loss) per share of (nil);
• Gross margin of 35.4 per cent; retail gross margin of 48 per cent;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.6-million -- a 67-per-cent increase sequentially;
• Cash flow from operations of $1.2-million -- the 16th consecutive quarter of positive free cash flow;
• Total liabilities reduced by $1.2-million in the quarter;
• Cancelled 4.8 million earnout shares.

Q1 management and operational commentary

"We are pleased to again report strong results, with revenue increasing 9.4 per cent over Q4, generating another positive cash flow quarter," stated chief executive officer and president Sonny Newman. "Despite continued industry headwinds, we experienced a record quarter for our Nevada wholesale sales leading to a strong revenue rebound both sequentially and year-over-year. Our consistent cash flow profile highlights the strength of our brand, customer loyalty, and our ability to mitigate state-level pricing pressures and broader industry challenges. The current capital drought in the industry has forced many of our competitors to focus on deleveraging their balance sheets to generate positive cash flow. This industry shift further validates what has been our long-term strategy and has afforded us the opportunity in Q1 to cancel 4.8 million earnout shares. We continue to actively assess all strategic opportunities through the lens of creating value for our shareholders."

C21's Q1 revenue of $7.7-million was up 9.4 per cent sequentially, outperforming Nevada market sales which saw total sales flat over the period. The increase in Q1 sales is attributed to a record quarter for Nevada wholesale sales, including the company's Phantom Farms branded flower in select dispensaries throughout the state.

Gross margin was 35.4 per cent for Q1, below the historical run-rate for the company, as a result of the strategic inventory curtailment in the first two months of the quarter. Yields have returned to normal as of April, 2023. Gross margin was impacted by higher wholesale revenue in the period. Retail gross margin remained strong for Q1 at 48 per cent.

The company generated $1.6-million of adjusted EBITDA, up 67 per cent sequentially from Q4.

C21 reported Q1 net loss of $500,000, or (nil) earnings per share. The period included non-cash impairment of $500,000 from inventory curtailment as well as a $400,000 derivative loss due to the settlement of 4.8 million earnout shares.

Q1 cash flow from operations was $1.2-million -- the 16th consecutive quarter of positive cash flow from operations. Free cash flow was $1.2-million for the quarter, flat sequentially and year-over-year.

Cash at the end of Q1 was $1.8-million, relatively flat from Q4. The company's senior secured note was reduced by $1-million in the quarter. In addition, $600,000 was used to cancel 4.8 million earnout shares. Total liabilities were reduced by $1.2-million in Q1.

Subsequent to the quarter-end, the company has retired the remaining balance of its senior note as of June 1, 2023.

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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