Mr. Kyle Kazan reports

GLASS HOUSE BRANDS CLOSES SECOND TRANCHE OF NON-BROKERED PRIVATE PLACEMENT OF EQUITY SECURITIES

Glass House Brands Inc. has closed the second tranche of the previously announced non-brokered private placement of Series B preferred stock, face value $1,000 (U.S.) per share of GH Group Inc., a subsidiary of the company. The second closing of the offering included approximately $4.8-million (U.S.) of fresh capital and approximately $92,000 (U.S.) face value of additional Series A preferred stock exchanged for new Series B preferred stock. The combined new cash raised from the first and second closings is approximately $19.5-million (U.S.). A total of 42,197 shares of Series B preferred stock have been issued, with an aggregate face value of approximately $42.2-million (U.S.), making the raise 84.5-per-cent complete, based on the targeted total financing amount of $50-million (U.S.). The company expects to complete the offering in the next 30 days, after which a total of approximately $50-million (U.S.) of Series B preferred stock is expected to be outstanding.

"We feel fortunate to have received such strong support from new and existing investors in this challenging market environment and we are thankful for the confidence bestowed on our company and management team," stated Kyle Kazan, Glass House Brands chairman and chief executive officer. "As we close out the remainder of this fundraise, we are putting our full focus on our stated target of achieving free cash flow positive operations by the first quarter of 2023, excluding capex [capital expenditure] spending for the phase 2 retrofit of the Socal farm."

Holders of the Series B preferred stock will be entitled to an annual dividend at a rate of 20 per cent for the first two years after the date of initial issuance of Series B preferred stock, 22.5 per cent for the third year and, thereafter, 25 per cent until the 54-month anniversary of the initial issuance. The dividend will accrue and be paid quarterly with an annual amount equal to 10 per cent of the initial investment being payable in cash and the balance of the dividend being paid in kind, accumulating and compounding on a quarterly basis until paid; provided that if the Series B preferred stock remains outstanding after the 54-month anniversary of the initial issuance, the annual dividend shall thereafter be payable solely in cash at a rate of 20 per cent.

The issuance of each share of Series B preferred stock with a face value of $1,000 (U.S.) per share was accompanied by the delivery of 200 warrants of the company. Each warrant has a five-year term from the initial issuance and entitles the holder to purchase one new equity share in the capital of the company at a price of $5 (U.S.) per warrant share, subject to customary anti-dilution adjustments. The company has the option to terminate any unexercised warrants if the underlying equity shares trade at a price of at least $12 (U.S.) per share, subject to customary anti-dilution provisions. As a condition to entering into the offering, holders of Series A preferred stock who participated in the offering and held existing warrants of the company with a $10 (U.S.) exercise price agreed to the cancellation of such existing warrants, with 100 existing warrants to be cancelled for each Series B preferred share that is issued in exchange for Series A preferred stock.

The warrants, the warrant shares issuable upon exercise of the warrants and any equity shares into which the warrant shares may convert in accordance with their terms, are subject to a four-month statutory hold period from the date of issuance of the warrants under applicable Canadian securities laws.

The intended use of net proceeds from the offering of approximately $26.5-million (U.S.) includes $10-million (U.S.) which was used to repay an interim bridge loan from the company's senior lender immediately following the first closing and approximately $16.5-million (U.S.) for working capital and transaction costs. Prior to initial closing of the offering, the company had approximately $99.5-million (U.S.) outstanding in senior secured debt, unsecured convertible debt and preferred equity. Following the final closing of the offering, this amount is expected to increase to approximately $116-million (U.S.).

About Glass House Brands Inc.

Glass House is one of the fastest-growing, vertically integrated cannabis companies in the United States, with a dedicated focus on the California market and building leading, lasting brands to serve consumers across all segments. From its greenhouse cultivation operations to its manufacturing practices, from brand-building to retailing, the company's efforts are rooted in the respect for people, the environment, and the community that co-founders Mr. Kazan, chairman and chief executive officer, and Graham Farrar, president, instilled at the outset. Through its portfolio of brands, which includes Glass House Farms, Plus Products, Allswell, Forbidden Flowers and Mama Sue Wellness, Glass House is committed to realizing its vision of excellence: outstanding cannabis products, produced sustainably, for the benefit of all.

We seek Safe Harbor.