Mr. Mark Ainsworth reports

LOWELL FARMS INC. ANNOUNCES AUDITED FOURTH QUARTER AND FISCAL YEAR 2023 FINANCIAL AND OPERATIONAL RESULTS

Lowell Farms Inc. has released its audited revenue and operating results for the fourth quarter and fiscal year (ended Dec. 31, 2023). All figures stated are in US Dollars.

Fourth Quarter and Fiscal Year Financial Highlights:

Net revenue generated for the quarter ended December 31, 2023 decreased 19% to $7.5 million, as compared to $9.3 million for the fourth quarter last year. Net revenue increased 21% from $6.2 million in the third quarter of 2023. Net revenue for the year ended December 31, 2023 was $28.3 million, down 35% for the year ended December 31, 2022.

CPG revenue decreased 19% for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022 and increased 5% compared to the third quarter of 2023.

Bulk Product revenue from self-grown wholesale products decreased 28% for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022 and increased 66% compared to the third quarter of 2023.

LFS revenue from drying, curing and trimming cannabis plants increased 67% for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022 and increased 102% compared to the third quarter of 2023.

Gross margin for the year ended December 31, 2023 was negative 26.3% representing a gross loss of $7.4 million and adversely impacted by exiting the cultivation facility.

Operating loss for the year ended December 31, 2023 was $17.6 million, compared to operating loss of $17.1 million for the year ended December 31, 2022.

Net loss was $13.1 million for the quarter ended December 31, 2023, compared to a net loss of $11.1 million for the quarter ended December 31, 2022, and a net loss of $20.2 million for the third quarter of 2023. Net loss for the year ended December 31, 2023 was $37.3 million, compared to net loss of $24.6 million for the year ended December 31, 2022. During the year ended December 31, 2023, there was impairment expense including $13.2 million related to the Lowell Brand intangible assets, $9.1 million related to long lived assets at the cultivation facility and $1.9 million of other intangible assets.

Adjusted EBITDA for the quarter ended December 31, 2023 was negative $4.1 million compared to adjusted EBITDA of negative $4.1 million for the quarter ended December 31, 2022 and adjusted EBITDA of negative $1.3 million for the third quarter of 2023. Adjusted EBITDA for the year ended December 31, 2023 was negative $7.7 million compared to negative $9.5 million for the year ended December 31, 2022. Adjusted EBITDA is a non-GAAP financial measure. See "Use of Non-GAAP Financial Information" below for further information and a detailed reconciliation to Net Loss, the closest comparable GAAP measure.

"As we move through 2024, Lowell stands today as a restructured company. The challenges of the past year have been formidable, but our team's resilience and determination have propelled us through," said Co-Founder and Chief Executive Officer Mark Ainsworth. "Our strategic decisions have now positioned us favorably and we expect to see a positive impact on the company in the quarters ahead. With our focus sharpened and our foundation strengthened, we are grateful to remain in this ever-evolving landscape that is the California cannabis industry."

Subsequent events to the fourth quarter ended December 31, 2023: Lowell Farms Announces Termination of the Zabala Road Lease, January 17, 2024 https://ir.lowellfarms.com/news-events/press-releases/detail/118/lowell-farms-inc-announces-termination-of-the-zabala-road

In January 2024, the Company surrendered possession of the cultivation facility. Lowell developed relationships with local cannabis growers whereby flower and biomass quantities are readily available at competitive prices to ensure availability of the portfolio products remain consistent.

Lowell Farms Appoints Jamie Schniedwind as Chief Financial Officer, February 14, 2024 https://ir.lowellfarms.com/news-events/press-releases/detail/119/lowell-farms-inc-appoints-jamie-schniedwind-as-chief

Operational Highlights and Ongoing Initiatives:

Cultivation

Lowell Farms saw flower product totaling 5,367 lbs during the fourth quarter of 2023 in comparison to 8,275 lbs in the fourth quarter of 2022.

The Company harvested 40 times in the fourth quarter of 2023; in contrast to 41 harvests in the fourth quarter of 2022.

The average turn time for the flowering rooms remained consistent with 60 days in the fourth quarter of 2023 compared to 58 days in the fourth quarter of 2022.

Average potency was 23% in the fourth quarter of 2023 compared to 28% in the fourth quarter of 2022.

Lowell Farm Services

Lowell Farms processing facility in Salinas Valley.

In the fourth quarter of 2023 the Company generated revenue of approximately $0.9 million associated with Lowell Farm Services in comparison to $0.5 million in the fourth quarter of 2022 with 2023 YTD revenue of $1.6 million. LFS revenue includes sales of third party bulk flower.

Lowell Farm Services processed approximately 116,762 pounds of wet weight third-party flower in the fourth quarter of 2023 yielding approximately 5,720 pounds of finished flower compared to 70,000 pounds in Q4 2022.

California Market Trends

Owned Brands Sales of owned brands generated revenue of $3.7 million in the fourth quarter ended December 31, 2023, while revenues for the year ended December 31, 2023 totaled approximately $15.4 million compared to approximately $27.7 million for the year ended December 31, 2022.

Contributing factors include significant decrease in California market purchasing trends and instability in flower purchase price.

Due to these factors, House Weed declined by 82%, with approximately $19 million in sales for the year ended December 31, 2022 versus $3.5 million for the year ended December 31, 2023.

Moon and Original Pot Co., two edible brands in the owned portfolio were largely out of the market for over three quarters in 2023 and have since been active in the first quarter of 2024.

Third-Party Brands

During the year ended December 31, 2023, the Company re-engaged the third-party brand model strategy and pursued like minded brands to increase revenues and maximize operational efficiency.

By the end of the quarter ended December 31, 2023, Lowell had brought on 16 additional third-party brands to round the offerings to dispensary partners.

Notably, Lowell placed these third-party brands in over 650 dispensaries throughout California.

Sales of third-party brands generated revenue of approximately $2.5 million for the year ended December 31, 2023 compared to a negligible amount of revenue for the year ended December 31, 2022.

Distribution and Sales Capabilities:

The average delivery drop value has decreased year-over-year by 21.9% to approximately $3,809 in the fourth quarter of 2023 from $4,879 in the fourth quarter of 2022.

Q4 and Year End Financial Results Earnings Conference Call Details:

The conference call with management at 8:30 a.m. EDT on Thursday, March 28, can be accessed using the following dial-in information:

U.S. and Canadian Toll Free: 1-800-274-8461

International: 1-203-518-9814

Webcast: Link here

Please dial-in at least 10 minutes before the call to register.

The conference call will be webcast live and archived on the investor relations section of the Lowell Farms website at https://ir.lowellfarms.com/ .

ABOUT LOWELL FARMS INC.

Lowell Farms Inc. (CSE:LOWL; OTCQX:LOWLF) (the "Company") is a California-based cannabis company with advanced production capabilities supporting the supply chain, including extraction, manufacturing, brand sales, marketing, and distribution. Lowell Farms has an exclusive portfolio of award-winning brands, including Lowell Herb Co, House Weed, Moon, Cypress Cannabis, and Original Pot Co. for licensed retailers statewide.

We seek Safe Harbor.