Mr. Edoardo Mattei reports

RED WHITE & BLOOM REPORTS ITS FISCAL 2023 ANNUAL RESULTS AND RECORDS AN INCREASE IN ADJUSTED EBITDA AND GROSS PROFIT FOR A SECOND CONSECUTIVE FISCAL YEAR

Red White & Bloom Brands Inc. has filed its consolidated audited financial statements, the management's discussion and analysis (MD&A), and associated certifications.

The company will hold its annual general meeting (AGM) on Friday, June 14, 2024. Further communication will follow for the benefit of shareholders, including details on how to access the AGM both in person and virtually.

As of the date of this news release, the company expects to complete its requisite filings and disclosures for the first quarter of 2024 by the prescribed date of May 30, 2024.

Management commentary

Colby De Zen, president and director, stated: "RWB continued to effect value-added transformations of its business during fiscal 2023. We focused on higher-margin revenue opportunities and sunsetting of low-margin products, as can be seen in our results, which has led to a 30-per-cent increase in gross margin, with revenue only increasing marginally over the same period. Moving into fiscal 2024, the company has targeted several near-term priorities, including a fulsome restructuring of its current financing arrangements, resourcing its key business segments, both in Canada and across incumbent and prospective U.S. states, providing a path for our company and its valued team members to achieve profitable growth and sustainable liquidity. In addition, in fiscal 2024, post our fiscal 2023 close, RWB successfully completed the acquisition of the former Aleafia group of companies, providing RWB with a North American and international cannabis footprint in advance of potential U.S. federal legalization. The company has also positioned itself to capitalize on market opportunities in jurisdictions, such as Florida and its emerging legalization movement, where our prior strategic investments will provide the ability to establish a stronghold. RWB management remains focused on its commitment to further streamline operations, expand and leverage its brand equity through its asset light licensing arrangements, rationalize discretionary expenditures, and focus on procurement initiatives that will drive profitability."

Recent highlights for Q4 2023 and subsequent to year-end 2023:

• On Oct. 12, 2023, Red White & Bloom was selected as the successful bidder under the sale and investment solicitation process approved by the Ontario Superior Court of Justice (Commercial List) in connection with Aleafia Health Inc. and certain of its subsidiaries (together with Aleafia Health, the Aleafia group) under the Companies' Creditors Arrangement Act (the CCAA).
• On Oct. 31, 2023, Red White & Bloom was granted by the Ontario Superior Court of Justice an approval and reverse vesting order in respect of the previously announced sale transactions (the approval and vesting order). The approval and vesting order was the sole authorization required by the Aleafia group to implement the transactions provided for under the previously announced Stalking Horse asset purchase and share subscription agreement, as amended, and restated on Oct. 24, 2023 (the amended Stalking Horse agreement) among Red White & Bloom, Aleafia Health, and certain of Aleafia Health's subsidiaries (collectively, the Aleafia purchased entities). The court also granted an ancillary relief order approving, among other things: (i) amendments to the debtor-in-possession (DIP) term sheet to increase the DIP financing available to the Aleafia group from $6.6-million to $8-million; and (ii) an extension to the stay period in the Aleafia group's CCAA proceedings to Nov. 30, 2023, in order to, among other things, permit the parties to complete the transactions contemplated under the amended Stalking Horse agreement.
• On Nov. 9, 2023, the company announced its entry into the rapidly growing Ohio cannabis market through the execution of a licensing arrangement with a first-mover, vertically integrated Ohio distributor. This strategic partnership allows Red White & Bloom to leverage the distributor's retail network to introduce its renowned Platinum Vape cartridges and disposable vapes, available in various formats, across more than 90 licensed retail locations in the state.
• On Jan. 15, 2024, the company announced that, in connection with the Aleafia group's CCAA proceedings, the parties successfully closed the previously announced sale transaction on Jan. 12, 2024. Pursuant to the transaction, RWB (PV) Canada Inc. (the purchaser), a wholly subsidiary of Red White & Bloom, acquired the intellectual property assets of Aleafia Health and subscribed for shares in the capital of each of Emblem Cannabis Corp. (ECC), Canabo Medical Corp. and Aleafia Retail Inc. (Retail, and collectively with ECC and Canabo, the companies). As a result of the transaction and approval and vesting order, the purchaser became the sole shareholder of the Aleafia purchased entities. Additional details of the consideration for the transaction can be found in the company's 2023 financial statements.

Consolidated results for the 2023 fourth quarter (Q4 2023) versus the fourth quarter 2022 (Q4 2022):

• Revenues were $19.9-million for Q4 2023, a $4.5-million increase from Q4 2022 revenues of $15.4-million.
• Gross profit, before fair value adjustments, was $7.4-million for Q4 2023, a $6.1-million increase from Q4 2022 gross profit before fair value adjustments of $1.3-million primarily related to improved margins in the company's distribution segment and the activation of the company's licensing segment in fiscal 2023.
• Gross profit, after fair value adjustments, was $8.7-million for Q4 2023, a $2.3-million increase from Q4 2022 gross profit after fair value adjustments of $6.4-million.
• Operating expenses were $11.0-million for Q4 2023, an increase of $3.6-million compared with Q4 2022 operating expenses of $7.4-million. The increase was substantially related to a reconciliation of year-to-date accruals, as well as non-cash expenses associated with the company's expected credit loss provisions in compliance with IFRS (international financial reporting standards).
• Losses from operations before other expenses were $2.3-million for Q4 2023, a $1.5-million increase from Q4 2022 losses from operations before other expenses of $900,000.
• Other expenses were $91.9-million, inclusive of non-cash impairments of $85.2-million, for Q4 2023, a decrease of $121.6-million compared with Q4 2022 other expenses of $213.5-million, inclusive of non-cash impairments of $214.5-million. Other expenses also included $600,000 of finance expenses (Q4 2022 -- nil) associated with the financing of the Aleafia group of companies during its CCAA proceedings and prior to its acquisition on Jan. 12, 2024.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.7-million for Q4 2023, an increase of $4.9-million compared with Q4 2022 adjusted EBITDA of negative $3.2-million.

Consolidated results for the fiscal year 2023 (YTD (year to date) 2023) versus fiscal 2022 (YTD 2022):

• Revenues for YTD 2023 were $88.3-million, a $600,000 increase from YTD 2022 revenues of $87.7-million.
• Gross profit, before fair value adjustments for YTD 2023, was $31.2-million, an $8.7-million increase from YTD 2022 gross profit before fair value adjustments of $22.5-million primarily related to improved margins in the company's distribution segment and the activation of the company's licensing segment in fiscal 2023.
• Gross profit, after fair value adjustments, was $29.5-million for YTD 2023, a $6.8-million increase from YTD 2022 gross profit after fair value adjustments of $22.7-million.
• Operating expenses were $37.8-million for YTD 2023, an increase of $5.5-million compared with YTD 2022 operating expenses of $32.3-million. The increase was substantially related to a reconciliation of year-to-date accruals, as well as non-cash expenses associated with the company's expected credit loss provisions in compliance with IFRS.
• Losses from operations before other expenses were $8.3-million for YTD 2023, a $1.3-million decrease from YTD 2022 losses from operations before other expenses of $9.6-million.
• Other expenses were $108.2-million, inclusive of non-cash impairments of $85.9-million, for YTD 2023, a decrease of $121.5-million compared with YTD 2022 other expenses of $229.7-million, inclusive of non-cash impairments of $214.5-million. Other expenses for YTD 2023 also included $1.2-million of finance expenses (YTD 2022 -- nil) associated with debt service tied to the financing of the Aleafia group of companies during its CCAA proceedings and prior to its acquisition on Jan. 12, 2024.
• Adjusted EBITDA was $5.5-million for YTD 2023, an increase of $7.2-million compared with YTD 2022 negative adjusted EBITDA of $1.7-million.

An attached table is a condensed summary of the company's results from operations for YTD 2023 and YTD 2022.

Adjusted EBITDA

Another table summarizes results from operations for Q4 2023 and YTD 2023 with Q4 2022 and YTD 2022 comparatives.

For additional details on the company's financial results, refer to the company's filings at SEDAR+.

About Red White & Bloom Brands Inc.

Red White & Bloom is a multistate cannabis operator and house of premium brands operating in the United States, Canada and select international jurisdictions. The company is predominantly focusing its investments on major U.S. markets, including Arizona, California, Florida, Missouri, Michigan and Ohio in addition to Canadian and international markets by virtue of its acquisition of the former Aleafia group of companies.

We seek Safe Harbor.