Mr. Obie Strickler reports

GROWN ROGUE REPORTS FOURTH QUARTER 2023 RESULTS, THIRD CONSECUTIVE QUARTER OF RECORD REVENUE

Grown Rogue International Inc. has released its unaudited fiscal fourth quarter 2023 results for the three months ended Oct. 31, 2023. All financial information is provided in United States dollars unless otherwise indicated.

Highlights:

• Revenue of $6.5-million compared with $5-million in Q4 2022, an increase of 29 per cent;
• Operating cash flow (OCF), before changes in working capital (BC WC), of $1.8-million compared with $700,000 in Q4 2022, an increase of 156 per cent;
• Announced entry into the attractive New Jersey market, with construction under way and on target to be completed in Q2 2024, with sales expected in Q3 2024;
• Free cash flow (FCF) of $100,000, after $500,000 spend on Oregon plus Michigan capex (capital expenditures) and working capital, and $1.2-million on other capex;
• Closed the second and final tranche of $1-million as part of the company's 2023 convertible debenture for total gross proceeds of $6-million;
• $1.65-million of the company's existing 2022 convertible debentures have been converted, leaving the company with $6.35-million in total convertible debt.

Management commentary

"We are pleased to announce another strong quarter, highlighted by our third consecutive quarter of record revenue. Our $6.5-million in revenue continues our upward trajectory with a sequential increase of 3 per cent, despite the cyclicality of our Oregon outdoor business, where sales were down $200,000 from the previous quarter and $500,000 from Q2 2023," said Obie Strickler, chief executive officer of Grown Rogue.

"We were free cash flow positive for the sixth consecutive quarter, despite a large increase in capex this quarter as we accelerate our growth in new and existing markets. We are particularly pleased with the construction progress in New Jersey by our partner and believe it to be one of, if not the highest return on investment in the cannabis space currently, and are extremely excited to soon be bringing Oregon quality cannabis to the great people of New Jersey.

"We also just completed a great outdoor season where a small capital investment into a new property earlier this year resulted in final harvest numbers expected to be in excess of 9,500 pounds of whole flower, beating both our projections and previous record harvest by nearly 40 per cent. A big thanks to our outdoor team as this record harvest, in addition to what appears to be stable or slightly better pricing than we saw last year, is expected to drive additional revenue and cash flow for our business throughout fiscal 2024.

"Our year-over-year revenue and OCF growth of 28 per cent and 156 per cent, respectively, shows our commitment to controlling costs and our focus on producing high-quality cannabis products that delight our consumers. We continue to add head count to our business as we prepare for New Jersey and other new opportunities, building our talent base within the organization to support the next stage of growth. Our recently released strain-specific packaging in Michigan has pushed our prepackaged product mix to approximately 40 per cent of sales, a new company record, and has led to an increase in pricing and brand awareness. We are pleased with the initial traction in our Oregon outdoor craft preroll product and, subsequent to the quarter, the company released our Yeti-branded preroll, consisting of our premium indoor flower," continued Mr. Strickler.

"We believe our focus on genetics, and our strength in branding and distribution will allow us the opportunity to be market-share leaders in new categories as we engender more customer trust and deepen the relationship we have with our existing fans.

"Finally, it's time to look forward to our corporate objectives for 2024. We plan to continue to improve our production, genetics and efficiencies in core markets, gain market share in our new product categories and release additional new products, complete construction in New Jersey and have multiple harvests from phase 1, and finalize expansion into at least one additional market. I want to thank the entire Grown Rogue team for their continued efforts and look forward to updating investors on our new market efforts shortly."

Oregon market highlights:

• No. 1 flower brand for 10 consecutive quarters, according to LeafLink's MarketScape data;
• The 10-pack craft outdoor preroll product has continued to gain market share and, subsequent to the quarter, the company released its Yeti-branded preroll, consisting of premium indoor flower;
• Indoor wet weight harvested in the state of Oregon YTD (year to date) through November decreased 1.4 per cent year-over-year, mixed wet weight YTD decreased 4.8 per cent and outdoor decreased nil per cent year-over-year, according to the Oregon Liquor and Cannabis Commission.

Michigan market highlights:

• The company's recently released strain-specific packaging has pushed prepackaged product mix to approximately 40 per cent of sales, a new company record, and has led to an increase in pricing and brand awareness;
• Sales in Michigan in Q4 were a new record at $814-million and YTD sales through October were $2.52-billion, on pace to be the second market in the United States to reach $3-billion in a year.
• Pricing per ounce of flower in Michigan in Q4 was the highest quarter in 2023, according to the Michigan Cannabis Regulatory Agency.

Michigan operations are through Golden Harvests LLC.

About Grown Rogue International Inc.

Grown Rogue International is a craft cannabis company operating in Oregon and Michigan, and in Minnesota and Maryland through an advisory agreement with Goodness Growth Holdings Inc., focused on delighting customers with premium flower and flower-derived products at fair prices. The company's roots are in southern Oregon, where it has proven its capabilities in the highly competitive and discerning Oregon market. More recently, the company successfully expanded its platform to Michigan. The company combines its passion for product and value with a disciplined approach to growth, prioritizing profitability and return on capital. Its strategy is to pursue capital-efficient methods to expand into new markets, bringing craft quality product at fair prices to more consumers. The company also continues to make modest investments to improve outdoor craft cultivation capabilities in preparation for eventual interstate commerce.

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