Cresco Labs Inc SC TO-I, filed Aug 20, 2025
Cresco Labs Inc. (CRLBF)
SC TO-I
2025-08-20
View Original
Added on
October 16, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
Cresco Labs Inc.
(Name of Subject Company (Issuer))
Cresco Labs Inc., as Issuer and Offeror
(Name of Filing Persons (Identifying status as offeror, issuer, or other person))
Options to purchase subordinate voting shares, no par value per share
(Title of Class of Securities)
(Title of Class of Securities)
CA22587M1068 for the subordinate voting shares
(CUSIP Number of Class of Securities)
(CUSIP Number of Class of Securities)
John Schetz
Cresco Labs Inc.
600 West Fulton Street, Suite 800
Chicago, IL 60661
(312) 929-0993
Cresco Labs Inc.
600 West Fulton Street, Suite 800
Chicago, IL 60661
(312) 929-0993
(Name, address and telephone number of person authorized to receive notices and communications on behalf of filing persons)
Copy to:
Heidi Steele
McDermott Will & Emery LLP
444 West Lake Street, Suite 4000
Chicago, IL 60606
(312) 372-2000
McDermott Will & Emery LLP
444 West Lake Street, Suite 4000
Chicago, IL 60606
(312) 372-2000
☐ Check the box if filing relates solely to preliminary communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the statement relates:
☐ third-party tender offer subject to Rule 14d-1.
☒ issuer tender offer subject to Rule 13e-4.
☐ going-private transaction subject to Rule 13e-3.
☐ amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results of the tender offer: ☐
If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
☐ Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
☐ Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
This Tender Offer Statement on Schedule TO (this “Schedule TO”) is being filed by Cresco Labs Inc., a corporation organized under the laws of the Province of British Columbia (the “Company”), and relates to the offer by the Company to certain employee optionholders (such optionholders, the “Eligible Participants”) to exchange (the “Exchange Offer”) certain outstanding options to purchase the Company’s subordinate voting shares for new restricted stock units (the “New Awards”). The Exchange Offer is being made upon the terms and subject to the conditions set forth in the Offer to Exchange Eligible Options for New Awards, dated August 20, 2025 (as it may be amended or supplemented from time to time, the “Offer to Exchange”), which is filed with this Schedule TO as Exhibit (a)(1)(A). The Exchange Offer will expire at 11:59 p.m., Eastern Time, on September 17, 2025, unless extended or earlier terminated (the “Expiration Time”). This Schedule TO is being filed in accordance with Rule 13e-4(c)(2) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The information contained in the Offer to Exchange is hereby expressly incorporated by reference in response to all items of this Schedule TO, and as more particularly set forth below.
ITEM 1. Summary Term Sheet.
The information set forth in the Offer to Exchange under the heading “Summary Term Sheet—Overview” and “Summary Term Sheet—Questions and Answers” is incorporated herein by reference.
ITEM 2. Subject Company Information.
(a) Name and Address. The name of the subject company, and the address and telephone number of its principal executive offices are as follows:
Cresco Labs Inc.
600 West Fulton Street, Suite 800
Chicago, IL 60661
(312) 929-0993
600 West Fulton Street, Suite 800
Chicago, IL 60661
(312) 929-0993
(b) Securities. This Schedule TO relates to certain outstanding options to purchase the Company’s subordinate voting shares. An option is eligible for exchange (an “Eligible Option”) if it is an outstanding option to purchase our subordinate voting shares that:
•is held by an Eligible Participant;
•is outstanding as of the Expiration Time;
•has an exercise price per share equal to or greater than $2.25 per share or an expiration date on or before September 30, 2030; and
•was granted under the Amended and Restated Cresco Labs Inc. 2018 Long-Term Incentive Plan.
As of August 19, 2025, there were options to purchase approximately 339,282,708 subordinate voting shares outstanding. As of August 19, 2025, there were Eligible Options to purchase 8,940,902 common shares outstanding.
The information set forth in the Offer to Exchange under the headings “Summary Term Sheet—Overview” and “Summary Term Sheet—Questions and Answers” and the information set forth under Section 1 (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) of the Offering Memorandum for the Exchange Offer contained in the Offer to Exchange (the “Offering Memorandum”) is incorporated herein by reference.
(c) Trading Market and Price. The information set forth under Section 7 (“Price Range of Our Common Shares”) of the Offering Memorandum is incorporated herein by reference.
ITEM 3. Identity and Background of Filing Person.
(a) The Company is the filing person and issuer. The information set forth under Item 2(a) of this Schedule TO is incorporated herein by reference. Pursuant to General Instruction C to Schedule TO, the following persons are the directors and/or executive officers of the Company:
Name | Position | ||||
Charles Bachtell | Chief Executive Officer and Director | ||||
Sharon Schuler | Chief Financial Officer | ||||
Greg Butler | President | ||||
Angie Demchenko | Chief People Officer | ||||
Zach Marburger | Chief Information Officer | ||||
John Schetz | General Counsel | ||||
Thomas J. Manning | Chairman of the Board of Directors | ||||
Gerald F. Corcoran | Director | ||||
Robert M. Sampson | Director | ||||
Randy D. Podolsky | Director | ||||
Marc Lustig | Director | ||||
Michele Roberts | Director | ||||
The business address and telephone number for all of the above directors and executive officers is: c/o Cresco Labs Inc. 600 West Fulton Street, Suite 800, Chicago, IL 60661, (312) 929-0993.
There is neither any person controlling the Company nor any executive officer or director of any corporation or other person ultimately in control of the Company.
ITEM 4. Terms of the Transaction.
(a) Material Terms. The information set forth in the Offer to Exchange under the headings “Summary Term Sheet—Overview” and “Summary Term Sheet—Questions and Answers” and the information set forth under Section 1 (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”), Section 3 (“Procedures for Tendering Eligible Options”), Section 4 (“Withdrawal Rights”), Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Awards”), Section 6 (“Conditions of the Exchange Offer”), Section 8 (“Information Concerning Cresco Labs; Financial Information”), Section 10 (“Accounting Consequences of the Exchange Offer”), Section 11 (“Legal Matters; Regulatory Approvals”), Section 12 (“Material Tax Consequences”) and Section 13 (“Extension of the Exchange Offer; Termination; Amendment”) of the Offering Memorandum is incorporated herein by reference.
(b) Purchases. The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.
ITEM 5. Past Contacts, Transactions, Negotiations and Agreements.
(e) Agreements Involving the Subject Company’s Securities. The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.
ITEM 6. Purposes of the Transaction and Plans or Proposals.
(a) Purposes. The information set forth under Section 2 (“Purpose of the Exchange Offer; Additional Considerations”) of the Offering Memorandum is incorporated herein by reference.
(b) Use of Securities Acquired. The information set forth under Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Awards”) of the Offering Memorandum is incorporated herein by reference.
(c) Plans. The information set forth under Section 2 (“Purpose of the Exchange Offer; Additional Considerations”) of the Offering Memorandum is incorporated herein by reference.
ITEM 7. Source and Amount of Funds or Other Consideration.
(a) Source of Funds. The information set forth under Section 14 (“Consideration; Fees and Expenses”) of the Offering Memorandum is incorporated herein by reference.
(b) Conditions. The information set forth under Section 6 (“Conditions of the Exchange Offer”) of the Offering Memorandum is incorporated herein by reference.
(d) Borrowed Funds. Not applicable.
ITEM 8. Interest in Securities of the Subject Company.
(a) Securities Ownership. The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.
(b) Securities Transactions. The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.
ITEM 9. Persons/Assets, Retained, Employed, Compensated or Used.
(a) Solicitations or Recommendations. Not applicable.
ITEM 10. Financial Statements.
(a) Financial Information. The information set forth under Section 8 (“Information Concerning Cresco Labs; Financial Information”) and Section 15 (“Additional Information”) of the Offering Memorandum is incorporated herein by reference.
(b) Pro Forma Information. Not applicable.
ITEM 11. Additional Information.
(a) Agreements, Regulatory Requirements and Legal Proceedings. The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) and Section 11 (“Legal Matters; Regulatory Approvals”) of the Offering Memorandum is incorporated herein by reference.
(c) Other Material Information. The information set forth in the Offer to Exchange, as may be amended or supplemented from time to time, is incorporated herein by reference. The Company will amend this Schedule TO to include documents that the Company may file with the SEC after the date of the Offer to Exchange pursuant to Section 13(a), 13(c) or 14 of the Exchange Act and prior to the expiration of the Exchange Offer to the extent required by Rule 13e-4(d)(2) promulgated under the Exchange Act. The information contained in all of the exhibits referred to in Item 12 below is incorporated herein by reference.
The Company intends to conduct the Exchange Offer solely for compensatory purposes and will rely on the SEC’s March 13, 2001, “Exemptive Order” (Exchange Act Release No. 34-44062) granting no-action relief for compensatory equity-award exchange programs. By relying on that Exemptive Order, the Company is permitted to limit the offer to a specified group of employees (rather than all holders of a class of options) and provide differentiated exchange terms without violating the “all-holders” and “best-price” requirements of Rule 13e-4 of the Exchange Act.
ITEM 12. Exhibits.
Exhibit Number | Description | ||||
(a)(1)(A) | |||||
(a)(1)(B) | |||||
(a)(1)(C) | |||||
(a)(1)(D) | |||||
(a)(1)(E) | |||||
(a)(1)(F) | |||||
(a)(1)(G) | |||||
(a)(1)(H) | |||||
(b) | Not applicable | ||||
(d)(1) | |||||
(g) | Not applicable | ||||
(h) | Not applicable | ||||
107 | |||||
ITEM 13. Information Required by Schedule 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Cresco Labs Inc. | |||||||||||||||||||||||||||||
By: | /s/ Charles Bachtell | ||||||||||||||||||||||||||||
Name: | Charles Bachtell | ||||||||||||||||||||||||||||
Title: | Chief Executive Officer | ||||||||||||||||||||||||||||
Date: August 20, 2025
Exhibit (a)(1)(A)
CRESCO LABS INC.
600 West Fulton Street, Suite 800
600 West Fulton Street, Suite 800
Chicago, Illinois 60661
OFFER TO EXCHANGE ELIGIBLE OPTIONS FOR NEW AWARDS
August 20, 2025
SUMMARY TERM SHEET — OVERVIEW
Offer to Exchange Eligible Options for New Awards
This offer and withdrawal rights will expire at 11:59 p.m., Eastern Time, on September 17, 2025, unless extended
By this Offer to Exchange Eligible Options for New Awards (as the context requires, this document and the actions taken hereby, the “Exchange Offer”), Cresco Labs Inc., which we refer to in this document as “we,” “us,” “our,” “Cresco” or the “Company,” is giving each Eligible Participant (as defined below) the opportunity to exchange one or more Eligible Options (as defined below) for New Awards (as defined below), as discussed below and in the attached disclosure document for the Exchange Offer beginning on page 11 (the “Offering Memorandum”).
The “Expiration Time” of the Exchange Offer is 11:59 p.m., Eastern Time, on September 17, 2025, unless extended. If we extend the period of time during which this Exchange Offer remains open, the term “Expiration Time” will refer to the last time and date on which this Exchange Offer expires.
You are an “Eligible Participant” if:
•on the date the Exchange Offer commences, you are a current employee of Cresco or one of its wholly-owned subsidiaries serving as an executive officer (including Chief Executive Officer) or member of Cresco’s senior leadership team and have not submitted a notice of resignation or termination or been notified by Cresco or such subsidiary that your employment is being terminated;
•on the date on which the surrendered Eligible Options are canceled and the New Awards are granted (the “New Award Grant Date”), you continue to be employed by Cresco or one of its wholly-owned subsidiaries and have not submitted a notice of resignation or termination or been notified by Cresco or such subsidiary that your employment is being terminated;
•you are not an employee that is represented by a labor union and covered by a collective bargaining agreement (CBA), except as provided for in your CBA or otherwise negotiated; and
•you are not an outside (i.e., non-management) member of Cresco’s board of directors (the “Board”).
An “Eligible Option” is an outstanding option to purchase our subordinate voting shares that:
•is held by an Eligible Participant;
•is outstanding as of the Expiration Time;
•has an exercise price per share equal to or greater than $2.25 per share or an expiration date on or before September 30, 2030; and
•was granted under the Amended and Restated Cresco Labs Inc. 2018 Long-Term Incentive Plan (the “2018 Incentive Plan”).
Subject to shareholder approval of the Exchange Offer, if you choose to participate in the Exchange Offer and tender Eligible Options for exchange, and if we accept your tendered Eligible Options, then we will cancel your tendered Eligible Options and grant you an award of restricted stock units (each, an “RSU” or a “New Award”) with the following terms (collectively, the “New Award Terms”):
•Each New Award will be an RSU representing the right to receive a number of subordinate voting shares equal to the number of subordinate voting shares underlying the corresponding exchanged Eligible Option, without payment of any exercise price.
•The New Awards will be granted under the 2018 Incentive Plan.
•The New Awards will not be vested or exercisable on the New Award Grant Date, even if the corresponding Eligible Options had previously been vested and exercisable. Instead, the New Awards will vest ratably in one-third increments on each of the first three anniversaries of the New Award Grant Date, in each case, subject to continued employment through the applicable vesting date.
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The commencement date of the Exchange Offer is August 20, 2025. We are making the Exchange Offer upon the terms and subject to the conditions described in the Offering Memorandum and in the related Election Form distributed with the Offering Memorandum. In addition, consummation of the Exchange Offer is subject to approval by the Company’s shareholders at an annual general and special meeting to be held on September 16, 2025 (“Shareholder Approval”). The Exchange Offer is voluntary. You are not required to participate in the Exchange Offer. If you hold more than one option grant that qualifies as an Eligible Option and elect to participate in the Exchange Offer, you will be allowed to tender for exchange as few or as many of your Eligible Option grants as you wish; however, if you elect to tender an Eligible Option for exchange, you must tender the entire unexercised portion of such selected Eligible Option grant (i.e., all options granted to you on the same date must be subject to the same election). Subject to receipt of Shareholder Approval, Eligible Options properly tendered in this Exchange Offer and accepted by us for exchange will be canceled, and your New Awards will be granted with the New Award Terms on or around September 17, 2025 (the “New Award Grant Date”). If Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
We are conducting the Exchange Offer solely for compensatory purposes and will rely on the SEC’s March 13, 2001, “Exemptive Order” (Exchange Act Release No. 34-44062) granting no-action relief for compensatory equity-award exchange programs. By relying on that Exemptive Order, we are permitted to limit the offer to a specified group of employees (rather than all holders of a class of options) and provide differentiated exchange terms without violating the “all-holders” and “best-price” requirements of Rule 13e-4.
See the “Risk Factors” section of this Exchange Offer beginning on page 10 for a discussion of risks and uncertainties that you should consider before agreeing to exchange your Eligible Options for New Awards. You should consider, among other things, these risks and uncertainties before deciding whether to participate in the Exchange Offer.
Our subordinate voting shares are listed on the OTCQX Market (“OTC”) under the symbol “CRLBF” and on the Canadian Securities Exchange under the symbol “CL.” On August 19, 2025, the closing price of our subordinate voting shares as reported on the OTC was U.S. $1.02 per share. We recommend that you obtain the current market price for our subordinate voting shares before deciding whether to elect to participate in the Exchange Offer.
You should direct any questions about the Exchange Offer or requests for assistance (including requests for additional copies of the Offering Memorandum or any other documents relating to the Exchange Offer) by email to equity@crescolabs.com.
IMPORTANT INFORMATION
If you choose to participate in the Exchange Offer, you must properly complete and submit the accompanying Election Form on the option exchange website on or before 11:59 p.m., Eastern Time, on September 17, 2025 (or such later date as may apply if the Exchange Offer is extended).
You are responsible for making sure that the Election Form is submitted as indicated above. You must allow for sufficient time to complete and submit your Election Form to ensure that we receive your Election Form before the Expiration Time.
You do not need to return your option agreements relating to any tendered Eligible Options to be canceled and exchanged in the Exchange Offer. We will provide you with a written confirmation of the cancellation of any such options along with an RSU award agreement for your New Awards through our online equity administration portal. A form of RSU award agreement for the New Awards (the “New Award Agreement”) is filed as an exhibit to the Tender Offer Statement on Schedule TO (as it may be amended, the “Schedule TO”), which was filed with the Securities and Exchange Commission (the “SEC”).
Although the Board has approved the Exchange Offer, consummation of the Exchange Offer is subject to approval by the Company’s shareholders at an annual general and special meeting to be held on September 16, 2025 and to the satisfaction or waiver of the conditions described in Section 6 of the Offering Memorandum (“Conditions of the Exchange Offer”). Neither we nor the Board (or the compensation committee thereof (the “Compensation Committee”)) makes any recommendation as to whether you should participate, or refrain from participating, in the Exchange Offer. You must make your own decision whether to participate. You should consult your personal financial and tax advisors if you have questions about your financial or tax situation as it relates to the Exchange Offer.
Neither the SEC nor any state or provincial or territorial securities commission has approved or disapproved of this transaction or passed upon the fairness or merits of this transaction or the accuracy or adequacy of the information contained in the Exchange Offer. Any representation to the contrary is a criminal offense.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER OR NOT YOU SHOULD PARTICIPATE IN THE EXCHANGE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT, THE RELATED ELECTION FORMS AND ANY OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT, THE RELATED ELECTION FORMS AND THE OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU SHOULD NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY CRESCO.
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SUMMARY TERM SHEET — QUESTIONS AND ANSWERS
Offer to Exchange Eligible Options for New Awards
Set forth below are answers to some of the questions that you may have about the Exchange Offer. This Summary Term Sheet does not contain all of the information that you should consider in deciding whether to participate in the Exchange Offer. We encourage you to carefully read the remainder of this Offer to Exchange Eligible Options for New Awards and the accompanying Election Form. Where appropriate, we have included references to the relevant sections of the Offering Memorandum where you can find a more complete description of the topics in this summary.
No. | Question | Page | ||||||
1 | Why is Cresco making the Exchange Offer? | 4 | ||||||
2 | Who is eligible to participate in the Exchange Offer? | 4 | ||||||
3 | Which options are subject to the Exchange Offer? | 4 | ||||||
4 | Will the terms and conditions of my New Awards be the same as those of my exchanged options? | 5 | ||||||
5 | How many New Awards will I receive for the Eligible Options I exchange? | 5 | ||||||
6 | What is the value of my New Award? | 5 | ||||||
7 | When will my New Awards vest? | 5 | ||||||
8 | Do I need to exercise my New Awards in order to receive shares? | 5 | ||||||
9 | If I participate in the Exchange Offer, when will my New Awards be granted? | 5 | ||||||
10 | What happens to my New Awards if I terminate my employment with Cresco? | 5 | ||||||
11 | Must I participate in the Exchange Offer? | 6 | ||||||
12 | How should I decide whether or not to participate in the Exchange Offer? | 6 | ||||||
13 | How do I find out how many Eligible Options I have and what their exercise prices are? | 6 | ||||||
14 | Can I tender for exchange options that I have already fully exercised? | 6 | ||||||
15 | Can I tender for exchange the remaining unexercised portion of an Eligible Option that I have already partially exercised? | 6 | ||||||
16 | Can I tender for exchange a portion of an Eligible Option? | 6 | ||||||
17 | What if I am on an authorized leave of absence during the Exchange Offer? | 7 | ||||||
18 | What happens if my employment with Cresco terminates before the Expiration Time? | 7 | ||||||
19 | Will I owe taxes if I participate in the Exchange Offer? | 7 | ||||||
20 | Will I owe taxes if I do not participate in the Exchange Offer? | 7 | ||||||
21 | What will happen to my Eligible Options if I participate in the Exchange Offer? | 7 | ||||||
22 | Is it possible for my New Awards to be or become underwater? | 7 | ||||||
23 | What happens to Eligible Options that I choose not to tender or that are not accepted for exchange in the Exchange Offer? | 7 | ||||||
24 | How long do I have to decide whether to participate in the Exchange Offer? | 7 | ||||||
25 | How do I tender my Eligible Options for exchange? | 8 | ||||||
26 | Can I withdraw previously tendered Eligible Options? | 8 | ||||||
27 | How will I know whether you have received my Election Form? | 8 | ||||||
28 | What will happen if I do not return my Election Form by the deadline? | 8 | ||||||
29 | What if I have any questions regarding the Exchange Offer? | 9 | ||||||
30 | What if Shareholders do not approve the Exchange Offer? | 9 | ||||||
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1.Why is Cresco making the Exchange Offer?
We believe that the Exchange Offer will provide us with an opportunity to enhance long-term shareholder value by restoring competitive incentives among the Eligible Participants who choose to participate in the Award Exchange so they are further motivated to remain with us and to contribute to the future growth and success of Cresco. We believe that an effective and competitive incentive program for our senior leaders is imperative for our future growth and success. Our ability to compete in the highly competitive cannabis industry depends upon our ability to attract, motivate and retain highly qualified leaders. Competition for skilled leaders in our industry is intense. Share-based compensation has historically constituted a key part of our hiring, incentive, and retention programs for senior management because our Board believes that equity compensation encourages these individuals to act like owners of the business, motivating them to work toward our success and rewarding their contributions by allowing them to benefit from increases in the value of our subordinate voting shares. Effective equity compensation is key to linking pay to performance as it aligns the interests of these leaders with those of our shareholders.
In recent years, the market price of our subordinate voting shares has been subject to significant fluctuations. As a result, as of August 19, 2025, the trading day immediately preceding the commencement of the Exchange Offer, 15 Eligible Participants held options to purchase an aggregate of 8,940,902 subordinate voting shares with exercise prices ranging from U.S.$2.25 per share to U.S.$6.62 per share, all of which were above the U.S. $1.02 closing price of our subordinate voting shares on August 19, 2025, as reported on the OTC.
We believe that the “out-of-the-money” options are no longer effective as performance and retention incentives. We believe that to enhance long-term shareholder value, we need to maintain competitive incentive and retention programs. An equity stake in the success of our Company is a critical component of these programs. Many of our senior leaders view their existing options as having little or no value due to the difference between the exercise prices of those options and the current market price of our subordinate voting shares. As a result, for many of them, these options are ineffective at providing the incentives and retention value that our Board believes is necessary to motivate them to increase long-term shareholder value. We believe that it is essential to continue to retain and motivate these senior leaders, and that the inherent value of the RSUs and vesting periods of the RSUs may be more effective in incentivizing and retaining employees than the existing out-of-the-money options.
Therefore, the Compensation Committee recommended to the Board, and the Board approved, the Award Exchange for certain key leaders, to encourage an increasing alignment of their interests with those of our Shareholders and their stake in the long-term performance and success of the Corporation.
Under applicable accounting rules, we would recognize a total of approximately $29.3 million in non-cash compensation expense related to these Eligible Options, US$27.9 million of which was previously expensed as of July 31, 2025 and $1.4 million of which we would continue to be obligated to expense, even if these stock options are never exercised because they remain underwater. We believe the Award Exchange will allow us to return to having more retentive and incentive value from the compensation expense that we record in our financial statements with respect to Eligible Options that are exchanged. Further, under the applicable accounting rules, this exchange would create approximately $4.75 million in incremental non-cash compensation expense that would be recognized over the three-year vesting period of the new RSUs.
See Section 2 of the Offering Memorandum (“Purpose of The Exchange Offer; Additional Considerations”) for more information.
2.Who is eligible to participate in the Exchange Offer?
Only Eligible Participants are eligible to participate in the Exchange Offer. You are an “Eligible Participant” if:
•on the date the Exchange Offer commences, you are a current employee of Cresco or one of its wholly-owned subsidiaries serving as an executive officer (including Chief Executive Officer) or member of Cresco’s senior leadership team and have not submitted a notice of resignation or termination or been notified by Cresco or such subsidiary that your employment is being terminated;
•on the New Award Grant Date, you continue to be employed by Cresco or one of its wholly-owned subsidiaries and have not submitted a notice of resignation or termination or been notified by Cresco or such subsidiary that your employment is being terminated;
•you are not an employee that is represented by a labor union and covered by a collective bargaining agreement (CBA), except as provided for in your CBA or otherwise negotiated; and
•you are not an outside member of the Board.
See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.
3.Which options are subject to the Exchange Offer?
Under the Exchange Offer, Eligible Participants will be able to elect to tender outstanding Eligible Options for exchange. An “Eligible Option” is an outstanding option to purchase our subordinate voting shares that:
•is held by an Eligible Participant;
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•is outstanding as of the Expiration Time;
•has an exercise price per share equal to or greater than $2.25 per share or an expiration date on or before September 30, 2030; and
•was granted under the 2018 Incentive Plan.
See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.
4.Will the terms and conditions of my New Awards be the same as those of my exchanged Eligible Options?
No. Your New Awards are restricted stock units, a full value award that operates differently than your Eligible Options and that will have a new vesting schedule. The material differences between the Eligible Options and the New Awards are described in this Summary Term Sheet and in the Offering Memorandum. Subject to Shareholder Approval, New Awards will be granted under the 2018 Incentive Plan and will be subject to New Award Agreements to be provided to you, a form of which is filed as an exhibit to the Schedule TO.
5.How many New Awards will I receive for the Eligible Options I exchange?
Each New Award will represent the right to receive one subordinate voting share upon vesting. The number of New Awards you will receive will be equal on a one-for-one basis to the number of subordinate voting shares underlying your exchanged Eligible Options.
6.What is the value of my New Award?
Each New Award is a restricted stock unit that will entitle you to receive one subordinate voting share upon vesting, without payment of any exercise price. The value of each New Award will fluctuate with the market price of our subordinate voting shares.
See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information and Section 7 of the Offering Memorandum (“Price Range of Our Subordinate voting shares”) for information concerning the historical market prices of our subordinate voting shares.
7.When will my New Awards vest?
The New Awards will not be vested on the New Award Grant Date, even if the corresponding Eligible Options had previously been vested and exercisable. Instead, the New Awards will vest ratably in one-third increments on each of the first three anniversaries of the New Award Grant Date, in each case, subject to continued employment through the applicable vesting date. In the event that your employment with Cresco terminates for any reason prior to the vesting date of any unvested portion of your New Awards, such unvested portion shall be forfeited on your termination date.
8.Do I need to exercise my New Awards in order to receive shares?
No. Unlike stock options, restricted stock units do not require exercise or payment of an exercise price. Upon vesting, you will automatically receive subordinate voting shares equal to the number of vested New Awards, subject to reduction for any shares sold at your election to satisfy applicable withholding taxes.
9.If I participate in the Exchange Offer, when will my New Awards be granted?
Unless we amend or terminate the Exchange Offer in accordance with its terms and subject to receipt of Shareholder Approval, we will grant you New Awards in exchange for Eligible Options with respect to which you properly made a valid election (and did not validly revoke that election), on or around September 17, 2025. If the Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.
10.What happens to my New Awards if I terminate my employment with Cresco?
Vesting of your New Awards will cease upon termination of your employment with Cresco. Your unvested New Awards will be forfeited.
Nothing in the Exchange Offer should be construed to confer upon you the right to remain employed with Cresco. In participating in the Exchange Offer, you are representing to the Company that you are not participating by expectation of employment or continued employment. The terms of your employment with Cresco remain unchanged. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain employed by Cresco until the expiration of the Exchange Offer, the New Award Grant Date or thereafter during the vesting period of the New Awards. In addition, we cannot provide any assurance that your employment with Cresco will continue until or past the vesting date of any New Award issued in exchange for an Eligible Option that would have been vested and exercisable as of your termination date had the Eligible Option not been exchanged for a New Award.
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See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) and Section 5 of the Offering Memorandum (“Acceptance of Eligible Options for Exchange; Grant of New Awards”) for more information.
11.Must I participate in the Exchange Offer?
No. Participation in the Exchange Offer is completely voluntary. If you hold more than one option grant that qualifies as an Eligible Option and would like to participate in the Exchange Offer, you will be allowed to elect to tender for exchange as few or as many of your Eligible Option grants as you wish; however, if you elect to tender an Eligible Option for exchange, you must tender the entire unexercised portion of such selected Eligible Option grant (i.e., all options granted to you on the same date must be subject to the same election). If you choose not to participate in the Exchange Offer, then your Eligible Options will remain outstanding and subject to their current terms.
12.How should I decide whether or not to participate in the Exchange Offer?
We are providing substantial information to assist you in making your own informed decision. Please read all the information contained in the various sections of the Offering Memorandum below, including the information in Section 2 (“Purpose of The Exchange Offer; Additional Considerations”), Section 7 (“Price Range of Our Subordinate voting shares”), Section 8 (“Information Concerning Cresco; Financial Information”), Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”), Section 12 (“Material Tax Consequences”) and Section 15 (“Additional Information”) of the Offering Memorandum. You should seek further advice from your legal counsel, accountant and financial and tax advisors. Participation in the Exchange Offer is entirely your decision and should be made based on your personal circumstances. No one from Cresco is, or will be, authorized to provide you with legal, tax, financial or other advice or recommendations regarding whether you should participate in the Exchange Offer.
In addition to reviewing the materials provided, please note the following:
•The Exchange Offer is a one-for-one exchange of Eligible Options for RSUs, which are full value awards that do not require payment of an exercise price.
•The value of your New Awards will fluctuate with the market price of our subordinate voting shares. If the price of our subordinate voting shares decreases after the New Award Grant Date, then the value of your New Awards will also decrease.
•Irrespective of whether your tendered Eligible Options are vested, New Awards will have a new three-year vesting schedule with one-third vesting on each anniversary of the New Award Grant Date.
•You should carefully consider the tax consequences of the Exchange Offer and the New Awards.
You are strongly encouraged to consult with your personal legal counsel, accountant and financial and tax advisors for advice on these matters. Please also review the “Risk Factors” that appear on page 10.
13.How do I find out how many Eligible Options I have and what their exercise prices are?
The Election Form distributed along with the Exchange Offer includes a list of your Eligible Options as of August 19, 2025. At any time during the Exchange Offer, you may contact us via email at equity@crescolabs.com to confirm the number of option grants that you have and the grant dates, remaining term, exercise prices, vesting schedule and other information regarding such option grants.
14.Can I tender for exchange options that I have already fully exercised?
No. The Exchange Offer applies only to outstanding Eligible Options. An option that has been fully exercised is no longer outstanding and is therefore not an Eligible Option.
15.Can I tender for exchange the remaining unexercised portion of an Eligible Option that I have already partially exercised?
Yes. If you exercised an Eligible Option in part before August 20, 2025, the entire remaining unexercised portion of the Eligible Option can be tendered for exchange in the Exchange Offer.
See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.
16.Can I tender for exchange a portion of an Eligible Option?
No partial exchange of an Eligible Option grant will be permitted. If you elect to tender an Eligible Option for exchange, you must tender the entire unexercised portion of such selected Eligible Option grant (i.e., all options granted to you on the same date must be subject to the same election). You may elect to tender as few or as many of your Eligible Option grants as you wish. If you attempt to tender a portion but not all of an outstanding Eligible Option grant, we will reject your tender of that particular grant. Such rejection will not affect any other Eligible Option grants that you have properly tendered for exchange.
See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.
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17.What if I am on an authorized leave of absence during the Exchange Offer?
Any Eligible Participant who is on an authorized leave of absence will be eligible to participate in the Exchange Offer.
See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.
18.What happens if my employment with Cresco terminates before the Expiration Time or the New Award Grant Date?
If you have tendered Eligible Options under the Exchange Offer and your employment with Cresco terminates for any reason on or prior to the Expiration Time or the New Award Grant Date, you will no longer be eligible to participate in the Exchange Offer. Accordingly, we will not accept your Eligible Options for exchange, and you will not be eligible to receive New Awards. In such a case, you may be able to exercise the vested portion of your existing Eligible Options for a limited time after your termination date, subject to and in accordance with their original terms.
Nothing in the Exchange Offer should be construed to confer upon you the right to remain an employee of Cresco. The terms of your employment with Cresco remain unchanged. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain in our service until the New Award Grant Date or thereafter. In addition, we cannot provide any assurance that your employment with Cresco will continue until or past the vesting date of any New Award granted in exchange for an Eligible Option that would have been vested and exercisable as of your termination date had the Eligible Option not been exchanged for a New Award.
See Section 1 (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) and Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Awards”) of the Offering Memorandum for more information.
19.Will I owe taxes if I participate in the Exchange Offer?
Neither the acceptance of your Eligible Options for exchange nor the grant of any New Awards are expected to be a taxable event for U.S. federal income tax purposes.
You should consult with your tax advisor to determine the personal tax consequences of participating in the Exchange Offer. If you are an Eligible Participant who is subject to the tax laws of a country other than the United States or of more than one country, you should be aware that there may be additional or different tax consequences that may apply to you. We advise all Eligible Participants who may consider tendering their Eligible Options for exchange to consult with their own tax advisors with respect to the federal, state, provincial, territorial, local and foreign tax consequences of participating in the Exchange Offer.
See Section 12 of the Offering Memorandum (“Material Tax Consequences”) for more information regarding the tax aspects of the Exchange Offer.
20.Will I owe taxes if I do not participate in the Exchange Offer?
Your decision not to participate in the Exchange Offer will not be a taxable event for U.S. federal income tax purposes.
See Section 12 of the Offering Memorandum (“Material Tax Consequences”) for more information.
21.What will happen to my Eligible Options if I participate in the Exchange Offer?
Subject to receipt of Shareholder Approval, we will cancel all Eligible Options tendered by you and accepted by Cresco for exchange in the Exchange Offer. If Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
22.Is it possible for my New Awards to be or become underwater?
No. The New Awards are RSUs representing the right to receive a number of subordinate voting shares equal to the number of subordinate voting shares underlying the corresponding exchanged Eligible Option, without payment of any exercise price. The value of the New Awards will be equal to the value of our subordinated shares at any given time, subject to vesting requirements. The value of your New Awards will fluctuate with the market price of our subordinate voting shares. If the price of our subordinate voting shares decreases after the New Award Grant Date, then the value of your New Awards will also decrease. However, unlike stock options, New Awards will have value as long as our subordinate voting shares have value, since they do not have an exercise price that must be exceeded.
23.What happens to Eligible Options that I choose not to tender or that are not accepted for exchange in the Exchange Offer?
Generally, there will be no impact to Eligible Options that you choose not to tender for exchange prior to the original Expiration Time. We will not accept for exchange any options that are tendered that do not qualify as Eligible Options. If you tender an option that is not accepted for exchange, we will send you a separate email following the Expiration Time notifying you that your tendered option was not accepted for exchange.
24.How long do I have to decide whether to participate in the Exchange Offer?
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The Exchange Offer expires at 11:59 p.m., Eastern Time, on September 17, 2025 (or such later date as may apply if the Exchange Offer is extended). We will not make any exceptions to this deadline. However, although we do not currently intend to do so, we may, in our sole discretion, extend the Expiration Time of the Exchange Offer at any time. If we extend the Exchange Offer, we will publicly announce the extension and the new Expiration Time no later than 9:00 a.m., Eastern Time, on the next business day after the last previously scheduled or announced expiration time.
See Section 13 of the Offering Memorandum (“Extension of Exchange Offer; Termination; Amendment”) for more information.
25.How do I tender my Eligible Options for exchange?
If you are an Eligible Participant, you may tender your Eligible Options for exchange at any time before the Exchange Offer expires at 11:59 p.m., Eastern Time, on September 17, 2025 (or such later date as may apply if the Exchange Offer is extended).
To validly tender your Eligible Options, you must properly complete and submit an Election Form.
You do not need to return your option agreements relating to any tendered Eligible Options as they will be automatically canceled effective as of the New Award Grant Date if we accept your Eligible Options for exchange. We will separately provide to you the grant documents relating to your New Awards for your acceptance following the New Award Grant Date.
Your Eligible Options will not be considered tendered until we receive your properly completed Election Form. We must receive your properly completed Election Form before 11:59 p.m., Eastern Time, on September 17, 2025 (or such later date as may apply if the Exchange Offer is extended). If you miss this deadline, you will not be permitted to participate in the Exchange Offer.
You are responsible for making sure that the Election Form is completed and submitted as indicated above. You must allow for sufficient time to complete and submit your Election Form to ensure that we receive your Election Form before the Expiration Time.
We reserve the right to reject any or all tenders of Eligible Options that we determine are not in appropriate form or that we determine would be unlawful to accept. Subject to our rights to extend, terminate and amend the Exchange Offer, we expect to accept all properly tendered Eligible Options following the Expiration Time.
See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.
26.Can I withdraw previously tendered Eligible Options?
Yes. You may withdraw your tendered Eligible Options at any time before the Exchange Offer expires at 11:59 p.m., Eastern Time, on September 17, 2025 (or such later date as may apply if the Exchange Offer is extended). If we have not accepted your tendered Eligible Options, you may also withdraw them at any time after such date.
To withdraw tendered Eligible Options, you must change your previous election to tender such Eligible Options and instead select to not tender such Eligible Options through the Exchange Portal prior to the Expiration Time.
If you miss the deadline to withdraw but remain an Eligible Participant, any previously tendered Eligible Options will be exchanged pursuant to the Exchange Offer. You may change your mind as many times as you wish, but you will be bound by the last properly submitted Election Form that we receive before the Expiration Time.
You are responsible for making sure that you properly submit a new Election Form for any tendered Eligible Option that you wish to subsequently withdraw. You must allow sufficient time to complete and submit this new Election Form to ensure that we receive it before the Expiration Time.
Once you have withdrawn Eligible Options, you may re-tender such Eligible Options prior to the Expiration Time by submitting a new Election Form and following the procedures for validly tendering Eligible Options in the Exchange Offer described in Question 25 above.
See Section 4 of the Offering Memorandum (“Withdrawal Rights”) for more information.
27.How will I know whether you have received my Election Form?
We will send you an email or other form of communication, as appropriate, to confirm receipt of your Election Form shortly after we receive it. However, it is your responsibility to ensure that we receive your Election Form prior to the Expiration Time.
See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.
28.What will happen if I do not return my Election Form by the deadline?
If we do not receive a properly completed Election Form from you by the Expiration Time (or such later date as may apply if the Exchange Offer is extended), then all of your Eligible Options will remain outstanding at their original exercise price and subject to their original terms. If you prefer not to tender any of your Eligible Options for exchange in the Exchange Offer, you do not need to do anything.
See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.
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29.What if I have any questions regarding the Exchange Offer?
You should direct questions about the Exchange Offer (including requests for additional copies of the Exchange Offer and other Exchange Offer documents which we will promptly furnish to you at our expense) by email to equity@crescolabs.com. It is your responsibility to make those requests with sufficient time prior to the Expiration Time.
30.What if Shareholders do not approve the Exchange Offer?
If the Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
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RISK FACTORS
Participation in the Exchange Offer involves a number of potential risks and uncertainties, including those described below. You should consider, among other things, these risks and uncertainties before deciding whether or not to request that we exchange your Eligible Options in the manner described in the Exchange Offer. You should carefully review the risk factors set forth below and those contained in our Annual Information Form of the Company for the year ended December 31, 2024 (the “AIF”), filed as Exhibit 99.4 to the Company’s Annual Report on Form 40-F for the year ended December 31, 2024, as with the SEC on March 14, 2025 (the “Form 40-F”), as well as the other information provided in the Exchange Offer and the other materials that we have filed with the SEC and with the Canadian Securities Administrators on SEDAR+, before making a decision as to whether or not to tender your Eligible Options. See Section 15 of the Offering Memorandum (“Additional Information”) for more information regarding reports we file with the SEC and Canadian Securities Administrators and how to obtain copies of or otherwise review these reports.
Risks Related to the Exchange Offer
Your vested Eligible Options may be worth more than the unvested New Awards that you receive in exchange.
Whether you will be in a better position if you surrender your Eligible Options for New Awards instead of retaining your Eligible Options depends on many factors, including the number of Eligible Options you hold and therefore the number of New Awards that you would receive, the exercise price of your Eligible Options, the vesting status of your Eligible Options, the market price of our subordinate voting shares in the future, how long you remain employed by Cresco or one of our subsidiaries, and the expiration date of your Eligible Options. For example, while the RSUs you would receive in the Exchange Offer are full value awards with no exercise price to acquire the underlying shares, your Eligible Options may be fully vested and in-the-money at a time when your New Awards remain unvested (or only partially vested) and thus would have more realizable value than your New Awards. We encourage you to consult with your financial, tax, legal and other advisors when determining whether to participate in the Exchange Offer.
If your employment with Cresco terminates before your New Awards vest, you will not receive value for your unvested New Awards, but you may have been able to receive value for the Eligible Options you exchanged for the New Awards.
The New Awards will be subject to a new vesting schedule that differs from the vesting schedules of the Eligible Options that you exchange. The New Awards will vest ratably in one-third increments on each of the first three anniversaries of the New Award Grant Date, in each case, subject to continued employment through the applicable vesting date. None of the New Awards will be vested on the New Award Grant Date even if your Eligible Options are fully or partially vested. Accordingly, if your service with Cresco terminates after you exchange your Eligible Options for New Awards, you may not be able to realize as much value from your New Awards as you could have realized from vested Eligible Options you exchanged. For example, if you do not exchange your vested Eligible Options for New Awards, and your employment with Cresco terminates, if the market price of our subordinate voting shares increases above the exercise price per share of your vested Eligible Options, you would still be able to exercise and sell the underlying subordinate voting shares for these vested Eligible Options at a gain. However, if you exchange your vested Eligible Options for New Awards, and your employment with Cresco terminates after you receive New Awards but before such New Awards have vested, you will receive no value from the unvested portion of the New Awards.
You may incur additional taxes in connection with settlement of the New Awards upon vesting.
For more detailed information regarding the U.S. federal income tax consequences, see Section 12 of the Offering Memorandum (“Material Tax Consequences”). If you are subject to the tax laws of other jurisdictions or multiple jurisdictions, you should be aware that there may be additional tax consequences. You are encouraged to consult your own legal counsel, accountant and financial and tax advisors to discuss tax, social insurance and other consequences of participating in the Exchange Offer.
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OFFERING MEMORANDUM
Offer to Exchange Eligible Options for New Awards
Table of Contents
Secti Section 1. Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer | 12 | ||||
Secti Section 2. Purpose of the Exchange Offer; Additional Considerations | 13 | ||||
Secti Section 3. Procedures for Tendering Eligible Options | 15 | ||||
Secti Section 4. Withdrawal Rights | 15 | ||||
Secti Section 5. Acceptance of Eligible Options for Exchange; Grant of New Awards | 16 | ||||
Secti Section 6. Conditions of the Exchange Offer | 16 | ||||
Secti Section 7. Price Range of Our Subordinate Voting Shares | 18 | ||||
Secti Section 8. Information Concerning Cresco; Financial Information | 18 | ||||
Secti Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities | 19 | ||||
Secti Section 10. Accounting Consequences of the Exchange Offer | 19 | ||||
Secti Section 11. Legal Matters; Regulatory Approvals | 20 | ||||
Secti Section 12. Material Tax Consequences | 20 | ||||
Secti Section 13. Extension of the Exchange Offer; Termination; Amendment | 20 | ||||
Secti Section 14. Consideration; Fees and Expenses | 21 | ||||
Secti Section 15. Additional Information | 21 | ||||
Sesd Section 16. Miscellaneous. | 22 | ||||
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Section 1. Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer
Cresco Labs Inc. (“Cresco,” the “Company,” “we,” “us” or “our”) is offering Eligible Participants the opportunity to exchange certain outstanding options for New Awards. As described in this Section 1 of this Offering Memorandum—Offer to Exchange Eligible Options for New Awards (this “Offering Memorandum”), Eligible Options that are validly tendered prior to the Expiration Time will be exchanged for New Awards in exchange for cancellation of the tendered Eligible Options and the Eligible Participant’s agreement to accept the New Awards. Each capitalized term that is used in this paragraph without being defined has the meaning set forth below.
We are making the offer on the terms and subject to the conditions described in this Offering Memorandum, as they may be amended from time to time, and these terms and conditions constitute the “Exchange Offer.” The Exchange Offer is not conditioned on the acceptance of the Exchange Offer by a minimum number of option holders or the tender of elections to exchange Eligible Options covering a minimum number of shares. In addition, consummation of the Exchange Offer is subject to approval by the Company’s shareholders at the annual and special meeting to be held on September 16, 2025 (the “Shareholder Approval”). If the Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
Eligible Participants
All individuals who hold Eligible Options (as defined below) and who (i) on the date the Exchange Offer commences, are a current employee of Cresco or one of its wholly-owned subsidiaries serving as an executive officer (including Chief Executive Officer) or member of Cresco’s senior leadership team and have not submitted a notice of resignation or termination or been notified by Cresco or such subsidiary that such individual’s employment is being terminated, (ii) on the date on which the surrendered Eligible Options are canceled and the New Awards are granted, subject to Shareholder Approval (the “New Award Grant Date”), continue to be employed by Cresco or one of its wholly-owned subsidiaries and have not submitted a notice of resignation or termination or been notified by Cresco or such subsidiary that such individual’s employment is being terminated, and (iii) are not a non-management member of Cresco’ board of directors (the “Board”), may participate in the Exchange Offer (such individuals, the “Eligible Participants”).
You will not be eligible to tender Eligible Options for exchange in the Exchange Offer if you cease to be an Eligible Participant for any reason prior to the New Award Grant Date, including due to your voluntary resignation, retirement, involuntary termination, layoff, death or disability. An individual who is on an authorized leave of absence and is otherwise an Eligible Participant at the Expiration Time will be eligible to tender Eligible Options in the Exchange Offer. A leave of absence is considered “authorized” if it was approved in accordance with Cresco’ policies.
Your employment with Cresco will not be affected by your participation in the Exchange Offer, and can be terminated by you or Cresco subject to your current employment arrangements and applicable law. Nothing in the Exchange Offer should be construed to confer upon you the right to remain employed by Cresco. The terms of your employment with Cresco remain unchanged. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain employed by Cresco until the New Award Grant Date or any vesting date of your New Awards in the future.
Eligible Options
An “Eligible Option” is an outstanding option to purchase our subordinate voting shares that:
•is held by an Eligible Participant;
•is outstanding as of the Expiration Time;
•has an exercise price per share equal to or greater than $2.25 per share or an expiration date on or before September 30, 2030; and
•was granted under the Amended and Restated Cresco Labs Inc. 2018 Long-Term Incentive Plan (the “2018 Incentive Plan”).
The Proposed Exchange
Subject to Shareholder Approval, if you choose to participate in the Exchange Offer and tender Eligible Options for exchange, and if we accept your tendered Eligible Options, then we will cancel your tendered Eligible Options and grant you an award of restricted stock units (each, an “RSU” or a “New Award”) with the following terms (collectively, the “New Award Terms”):
•Each New Award will be an RSU representing the right to receive a number of subordinate voting shares equal to the number of subordinate voting shares underlying the corresponding exchanged Eligible Option, without payment of any exercise price.
•The New Awards will be granted under the 2018 Incentive Plan.
•The New Awards will not be vested on the New Award Grant Date, even if the corresponding Eligible Options had previously been vested and exercisable. Instead, the New Awards will vest ratably in one-third increments on each of the first three anniversaries of the New Award Grant Date, in each case, subject to continued employment through the applicable vesting date.
You are not required to participate in the Exchange Offer. If you hold more than one option grant that qualifies as an Eligible Option and elect to participate in the Exchange Offer, you will be allowed to tender for exchange as few or as many of your Eligible Option grants as you wish;
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however, if you elect to tender an Eligible Option for exchange, you must tender the entire unexercised portion of such selected Eligible Option grant (i.e., all options granted to you on the same date must be subject to the same election). Eligible Options properly tendered in this Exchange Offer and accepted by us for exchange will be canceled, and your New Awards will be granted with the New Award Terms on or around September 17, 2025. If Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
Expiration and Extension of the Exchange Offer
The Exchange Offer is scheduled to expire at 11:59 p.m., Eastern Time, on September 17, 2025, unless we, in our sole discretion, extend the expiration time of the Exchange Offer (such time and date referred to herein as the “Expiration Time”). See Section 13 (“Extension of Exchange Offer; Termination; Amendment”) for a description of our rights to extend, terminate and amend the Exchange Offer.
If you do not elect to tender your Eligible Options before the Expiration Time, such Eligible Options will remain subject to their current terms, including the current exercise prices and vesting schedules.
Section 2. Purpose of the Exchange Offer; Additional Considerations
We believe that the Award Exchange will provide us with an opportunity to enhance long-term shareholder value by restoring competitive incentives among the Eligible Participants who choose to participate in the Award Exchange so they are further motivated to remain with us and to contribute to the future growth and success of Cresco. We believe that an effective and competitive incentive program for our senior leaders is imperative for our future growth and success. Our ability to compete in the highly competitive cannabis industry depends upon our ability to attract, motivate and retain highly qualified leaders. Competition for skilled leaders in our industry is intense. Share-based compensation has historically constituted a key part of our hiring, incentive, and retention programs for senior management because our Board believes that equity compensation encourages these individuals to act like owners of the business, motivating them to work toward our success and rewarding their contributions by allowing them to benefit from increases in the value of our subordinate voting shares. Effective equity compensation is key to linking pay to performance as it aligns the interests of these leaders with those of our shareholders.
In recent years, the market price of our subordinate voting shares has been subject to significant fluctuations. As a result, as of August 19, 2025, the trading day immediately preceding the commencement of the Exchange Offer, 15 Eligible Participants held options to purchase an aggregate of 8,940,902 subordinate voting shares with exercise prices ranging from U.S.$2.25 per share to U.S.$6.62 per share, all of which were above the U.S. $1.02 closing price of our subordinate voting shares on August 19, 2025, as reported on the OTCQX Market (“OTC”).
We believe that the “out-of-the-money” options are no longer effective as performance and retention incentives. We believe that to enhance long-term shareholder value, we need to maintain competitive incentive and retention programs. An equity stake in the success of our Company is a critical component of these programs. Many of our senior leaders view their existing options as having little or no value due to the difference between the exercise prices of those options and the current market price of our subordinate voting shares. As a result, for many of them, these options are ineffective at providing the incentives and retention value that our Board believes is necessary to motivate them to increase long-term shareholder value. We believe that it is essential to continue to retain and motivate these senior leaders, and that the inherent value of the RSUs and vesting periods of the RSUs may be more effective in incentivizing and retaining employees than the existing out-of-the-money options.
Therefore, the Compensation Committee recommended to the Board, and the Board approved, the Award Exchange for certain key leaders, to encourage an increasing alignment of their interests with those of our Shareholders and their stake in the long-term performance and success of the Corporation.
Under applicable accounting rules, we would recognize a total of approximately $29.3 million in non-cash compensation expense related to these Eligible Options, US$27.9 million of which was previously expensed as of July 31, 2025 and $1.4 million of which we would continue to be obligated to expense, even if these stock options are never exercised because they remain underwater. We believe the Award Exchange will allow us to return to having more retentive and incentive value from the compensation expense that we record in our financial statements with respect to Eligible Options that are exchanged. Further, under the applicable accounting rules, this exchange would create approximately $4.75 million in incremental non-cash compensation expense that would be recognized over the three-year vesting period of the new RSUs.
The Compensation Committee, in consultation with Aon, its independent compensation consultant, reviewed market practices and Cresco’s particular situation and evaluated several alternatives for remaining competitive within our industry. Given Cresco’s particular circumstances, the Compensation Committee identified a stock option for RSU exchange program as the preferred potential alternative. As part of this evaluation, the Compensation Committee identified the likely participants in an exchange program and analyzed the value of the equity awards to be exchanged, the general parameters of an exchange program, and the potential impact of an exchange program on our current hiring and retention goals. The Compensation Committee determined that, compared to other alternatives, the Award Exchange provides better performance and retention incentives. The following considerations recommended proposing this approach:
•Reasonable, balanced incentives. We believe that the opportunity to exchange Eligible Options for New Awards, with a new vesting requirement, represents a reasonable and balanced exchange program with the potential for a significant positive impact on the retention, motivation and performance of our key leaders. This ultimately benefits Shareholders because maintaining a stable and consistent leadership team tends to increase the chances for successful execution of our strategy, in contrast to experiencing turnover in the leadership ranks, having to recruit new executives, and trying to execute with a team that has not worked together.
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•Converts compensatory equity grants from unproductive to productive. The Eligible Options are out-of-the-money options and have little or no retention value. As such, this particular compensatory equity that the Corporation has granted, which is designed to motivate our leaders to achieve business goals and increase shareholder value, has not been effective in achieving its intended purpose. With the Award Exchange, the New Awards granted to the Eligible Participants, which are full value awards rather than appreciation awards, will have value and, we believe, will be perceived by Eligible Participants as having value (otherwise they will not choose to participate). The New Awards, including the new vesting schedule, will provide a meaningful incentive to increase Shareholder value, which is favorable for the Corporation and aligned with our Shareholders, and a meaningful retentive hold on the Eligible Participants who participate.
•Impact on accounting expense. Under applicable accounting rules, we are required to continue to recognize compensation expense related to these underwater options until they fully vest, even if they are never exercised because they remain underwater. We believe the Award Exchange will allow us to return to having more incentive and retentive value from the compensation expense that we have recorded and would continue to record in our financial statements with respect to the Eligible Options and newly-issued RSUs.
•The Compensation Committee considered alternatives to the Award Exchange, including, exchanging underwater options for new options with exercise prices reflecting our current share price, or increasing cash compensation. We were concerned that if we did not improve the Eligible Option holders’ prospects of receiving long-term value from their incentive equity, as can and did happen with certain options granted previously even with lower exercise prices, we would undermine their long-term commitment to us and potentially lose key contributors to our success. Significant increases in cash compensation would substantially increase our compensation expense and reduce our cash flow from operations, which could adversely affect our business and operating results. The Compensation Committee determined that the Award Exchange serves to best align senior leaders’ interests with Shareholders’ interests and provides appropriate performance and retention incentive with reduced cost to the Corporation and to Shareholders than the other alternatives.
In deciding whether to tender one or more Eligible Options pursuant to the Exchange Offer, you should know that we continually evaluate and explore strategic opportunities as they arise. At any given time, we may be engaged in discussions or negotiations with respect to one or more corporate transactions. We also grant equity awards in the ordinary course of business to our directors and current and new employees, including our executive officers. Our directors and employees, including our executive officers, from time to time may acquire or dispose of our securities. In addition, we may pursue opportunities to raise additional capital through the issuance of equity or debt securities, including convertible debt securities, debt financings and/or other forms of financing and collaborations, licensing opportunities and strategic partnerships. If this occurs, the percentage ownership of our shareholders could be significantly diluted, and where such a transaction or event results in our issuance of additional securities, these newly-issued securities may have rights, preferences or privileges senior to those of existing shareholders.
Subject to the foregoing and except as otherwise disclosed in the Exchange Offer or in our filings with the Securities and Exchange Commission (the “SEC”), we currently have no plans, proposals or negotiations (although we often consider such matters in the ordinary course of our business and intend to continue to do so in the future) that relate to or would result in:
•any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries;
•any purchase, sale or transfer of a material amount of our or any of our subsidiaries’ assets;
•any material change in our present dividend rate or policy or our indebtedness or capitalization;
•any material change in our Board or management, including, but not limited to, any plans or proposals to change the number or term of our directors or to fill any existing vacancies on the board or to change any material term of the employment contract of any executive officer;
•any other material change in our corporate structure or business;
•any class of our equity securities to be delisted from a Canadian or United States national securities exchange or cease to be authorized to be quoted in an automated quotations system operated by a national securities association;
•any class of our equity securities becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);
•the suspension of our obligation to file reports pursuant to Section 15(d) of the Exchange Act;
•the acquisition by any person of any of our securities or the disposition of any of our securities, other than in the ordinary course of business or pursuant to existing options or other rights; or
•any change in our notice of articles or articles or any actions that may impede the acquisition of control of us by any person.
WE DO NOT MAKE ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER YOUR ELIGIBLE OPTIONS, NOR HAVE WE AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. YOU SHOULD EVALUATE CAREFULLY ALL OF THE
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INFORMATION IN THE EXCHANGE OFFER AND CONSULT YOUR OWN FINANCIAL AND TAX ADVISORS. YOU MUST MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR ELIGIBLE OPTIONS FOR EXCHANGE.
Section 3. Procedures for Tendering Eligible Options
If you wish to tender your Eligible Options for exchange, you must properly complete and submit the accompanying Election Form that we will provide to you.
Except as described in the following sentence, the Election Form must be signed by the Eligible Participant who holds the Eligible Options to be tendered using the same name for such Eligible Participant as appears on the applicable option agreement. If the signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on the Election Form.
Your Eligible Options will not be considered tendered until we receive the properly completed Election Form. We must receive your properly completed Election Form before the Expiration Time. If you fail to meet this deadline or submit an Election Form that is not properly completed as of the deadline, you will not be permitted to participate in the Exchange Offer.
You do not need to return your option agreements relating to any tendered Eligible Options, as they will be automatically canceled in exchange for New Awards on the New Award Grant Date, if we accept your Eligible Options for exchange.
Determination of Validity; Rejection of Eligible Options; Waiver of Defects; No Obligation to Give Notice of Defects
To validly tender your Eligible Options pursuant to the Exchange Offer, you must remain an Eligible Participant and your employment with us must not have terminated for any other reason, including due to your voluntary resignation, retirement, involuntary termination, layoff, death or disability, prior to the New Award Grant Date.
If you hold multiple option grants that each qualify as an Eligible Option and elect to participate in the Exchange Offer, you will be able to elect to tender as few or as many of your Eligible Option grants as you wish. However, if you elect to tender an Eligible Option for exchange, you must tender the entire unexercised portion of such selected Eligible Option grant (i.e., all options granted to you on the same date must be subject to the same election). If you attempt to tender a portion but not all of an outstanding Eligible Option grant, we will reject your tender of that particular grant. Such rejection will not affect any other Eligible Options that you have properly tendered for exchange.
We will determine all questions as to form of documents and the validity, eligibility, time of receipt and acceptance of any tender of Eligible Options. Neither Cresco nor any other person is obligated to give notice of any defects or irregularities in tenders. No tender of Eligible Options will be deemed to have been properly made until all defects or irregularities have been cured by the tendering Eligible Participant or waived by Cresco. Subject to any order or decision by a court or arbitrator of competent jurisdiction, our determination of these matters will be final and binding on all parties.
The Exchange Offer is a one-time offer, and we will strictly enforce the offer period, subject to any extension of the Expiration Time that we may grant in our sole discretion. Subject to Rule 13e-4 under the Exchange Act, we also reserve the right to waive any of the conditions of the Exchange Offer or any defect or irregularity in any tender with respect to any particular Eligible Option or any particular Eligible Participant (with any such waiver to be applied consistently among all Eligible Participants).
Our Acceptance Constitutes an Agreement
Your tender of Eligible Options pursuant to the procedures described above constitutes your acceptance of the terms and conditions of the Exchange Offer and will be controlling, absolute and final, subject to your withdrawal rights under Section 4 (“Withdrawal Rights”) and our acceptance of your tendered Eligible Options in accordance with Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Awards”). Our acceptance for exchange of Eligible Options that you tender pursuant to the Exchange Offer will constitute a binding agreement between Cresco and you upon the terms and subject to the conditions of the Exchange Offer.
Subject to our rights to terminate and amend the Exchange Offer in accordance with Section 6 (“Conditions of the Exchange Offer”) and to receipt of Shareholder Approval, on the New Award Grant Date, we expect to accept for exchange all properly tendered Eligible Options that have not been validly withdrawn by the Expiration Time. Eligible Options properly tendered in this Exchange Offer and accepted by us for exchange will be canceled, and your New Awards will be granted with the New Award Terms on or around September 17, 2025. If Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
Section 4. Withdrawal Rights
If you elect to accept the Exchange Offer with respect to some or all of your Eligible Options and later change your mind, you may withdraw any tendered Eligible Options prior to the Expiration Time by following the procedures described in this Section 4. Just as you may not tender only part of an Eligible Option grant, you also may not withdraw your election with respect to only a portion of an Eligible Option grant. If you elect to withdraw a previously tendered Eligible Option grant, you must withdraw the entire Eligible Option, but you are not required to withdraw any other tendered Eligible Options.
We will permit any Eligible Options tendered in the Exchange Offer to be withdrawn at any time during the period the Exchange Offer remains open, and unless we have accepted the Eligible Options pursuant to the Exchange Offer, you may also withdraw any tendered Eligible Options that
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have not been accepted at any time after the Expiration Time. Please note that, upon the terms and subject to the conditions of the Exchange Offer, we expect to accept for exchange all Eligible Options properly tendered and not validly withdrawn by the Expiration Time.
To validly withdraw tendered Eligible Options, you must submit (using the same delivery method described in Section 3) a new properly completed Election Form to change your previous election to tender such Eligible Options and instead select to not tender such Eligible Options during a period in which you have the right to withdraw the tendered Eligible Options. Your tendered Eligible Options will not be considered withdrawn until we receive your new properly completed Election Form. If you miss the deadline for withdrawal but remain an Eligible Participant, we will exchange any previously tendered Eligible Options pursuant to the Exchange Offer and your previously submitted Election Form.
You are responsible for making sure that, if you wish to withdraw tendered Eligible Options, the new Election Form is submitted as indicated in Section 3 above. Except as described in the following sentence, the new Election Form must be signed by the Eligible Participant who holds the Eligible Options to be tendered using the same name for such Eligible Participant as appears on the applicable option agreement and the previously submitted Election Form. If the signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on the new Election Form. We have filed a form of the Election Form as an exhibit to the Tender Offer Statement on Schedule TO filed by Cresco with the SEC on August 20, 2025 (the “Schedule TO”).
You may not rescind any withdrawal, and any Eligible Options you withdraw will thereafter be deemed not properly tendered for purposes of the Exchange Offer unless you properly re-tender those Eligible Options before the Expiration Time by following the procedures described in Section 3 of this Offering Memorandum.
Neither we nor any other person is obligated to give notice of any defects or irregularities in any Election Form, nor will anyone incur any liability for failing to give notice of any defects or irregularities. We will determine all questions as to the form and validity, including time of receipt, of any Election Form. Subject to any order or decision by a court or arbitrator of competent jurisdiction, our determinations of these matters will be final and binding.
Section 5. Acceptance of Eligible Options for Exchange; Grant of New Awards
Upon the terms and subject to the conditions of the Exchange Offer and to receipt of Shareholder Approval, we expect to accept for exchange all Eligible Options properly tendered and not validly withdrawn by the Expiration Time, unless extended (or if we have not accepted the Eligible Option, you may also withdraw any such tendered securities at any time after 11:59 p.m., Eastern Time on September 17, 2025). On the New Award Grant Date, we expect to cancel the Eligible Options we have accepted in exchange for the grant of the New Awards with the New Award Terms. If the Expiration Time is extended, then the New Award Grant Date will be similarly extended. If the Shareholder Approval is not obtained, your Eligible Options will remain in effect in accordance with their existing terms and the New Awards will not be granted.
The New Awards will not be vested on the New Award Grant Date, even if the corresponding Eligible Options had previously been vested and exercisable. Instead, the New Awards will vest ratably in one-third increments on each of the first three anniversaries of the New Award Grant Date, in each case, subject to continued employment through the applicable vesting date.
Promptly after we grant the New Awards, we will send each tendering Eligible Participant a confirmation email with respect to the Eligible Options that we have accepted for exchange. [We have filed a form of such confirmation email as an exhibit to the Schedule TO.] In addition, we will separately provide to each tendering Eligible Participant for acceptance the documentation relating to the Eligible Participant’s New Awards. You must accept in accordance with the terms therein your New Award agreement that replaces your existing option agreement for the grant of your New Awards to be completed. [A form of RSU award agreement for the New Awards is filed as an exhibit to the Schedule TO.]
If you have tendered Eligible Options under the Exchange Offer and your employment terminates for any reason, or if you submit a notice of resignation or receive a notice of termination, before the New Award Grant Date, you will no longer be eligible to participate in the Exchange Offer, and we will not accept your Eligible Options for exchange. In that case, you may be able to exercise your existing vested Eligible Options for a limited time after your termination date in accordance with and subject to their terms.
Section 6. Conditions of the Exchange Offer
Completion of the Exchange Offer is subject to receipt of the Shareholder Approval. In addition to the Shareholder Approval, notwithstanding any other provision of the Exchange Offer, we will not be required to accept any Eligible Options tendered for exchange, and we may terminate or amend the Exchange Offer, in each case subject to Rule 13e-4(f)(5) under the Exchange Act, if at any time on or after the date hereof and prior to the Expiration Time, any of the following events has occurred, or if we have determined, in our reasonable judgment, that any of the following events has occurred:
•there shall have been threatened or instituted any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or other person, domestic or foreign, before any court, authority, agency or tribunal that (i) directly or indirectly challenges the making of the Exchange Offer or the exchange of some or all of the Eligible Options tendered for exchange, (ii) otherwise relates in any manner to the Exchange Offer, or (iii) in our reasonable judgment, could materially affect our business, condition (financial or other), assets, income, operations, prospects or share ownership;
•there shall have been threatened, instituted or taken any action, or any approval, exemption or consent shall have been withheld, or any statute, rule, regulation, judgment, order or injunction shall have been proposed, sought, promulgated, enacted, entered, amended, interpreted, enforced or deemed to be applicable to the Exchange Offer or Cresco, by or from any court or any regulatory or
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administrative authority, agency or tribunal that, in our reasonable judgment, would directly or indirectly:
omake it illegal for us to accept some or all of the tendered Eligible Options for exchange, otherwise restrict or prohibit consummation of the Exchange Offer or otherwise relate in any manner to the Exchange Offer;
odelay or restrict our ability, or render us unable, to accept the tendered Eligible Options for exchange; or
oimpair the contemplated benefits of the Exchange Offer to Cresco;
•there will have occurred:
oany general suspension of trading in securities on any United States or Canadian national securities exchange or automated quotation system or in the over-the-counter market;
othe declaration of a banking moratorium or any suspension of payments with respect to banks in North America;
oany limitation, whether or not mandatory, by any governmental, regulatory or administrative agency or authority on, or any event that, in our reasonable judgment, might affect the extension of credit to us by banks or other lending institutions in North America;
oin our reasonable judgment, any extraordinary or material adverse change in North American financial markets generally;
othe commencement or escalation of a war or other national or international calamity directly or indirectly involving the United States, which could reasonably be expected to affect materially or adversely, or to delay materially, the completion of the Exchange Offer; or
oany of the situations described above which existed at the time of commencement of the Exchange Offer, where such situation, in our reasonable judgment, deteriorates materially after commencement of the Exchange Offer;
•a tender or exchange offer (other than the Exchange Offer) with respect to some or all of our share capital, or a merger or acquisition proposal for Cresco, shall have been proposed, announced or publicly disclosed or we shall have learned that:
oany person, entity or group (where “group” has the meaning given within Section 13(d)(3) of the Exchange Act) has acquired more than 5% of our outstanding subordinate voting shares, other than a person, entity or group that had publicly disclosed such ownership with the SEC prior to the date of commencement of the Exchange Offer;
oany such person, entity or group that had publicly disclosed such ownership prior to such date has acquired additional subordinate voting shares constituting more than 1% of our outstanding shares; or
oany new group has been formed that beneficially owns more than 5% of our outstanding subordinate voting shares that, in our judgment in any such case, and regardless of the circumstances, makes it inadvisable to proceed with the Exchange Offer or with such acceptance of Eligible Options for exchange;
•any change, development, clarification or position taken in generally accepted accounting principles that could or would require us to record for financial reporting purposes compensation expense against our earnings in connection with the Exchange Offer, other than as contemplated as of the commencement date of this Exchange Offer (as described in Section 10 of this Offering Memorandum, “Accounting Consequences of this Exchange Offer”);
•any change occurs in our business, financial condition, assets, income, operations, prospects or share ownership that, in our reasonable judgment, is or may be material to Cresco;
•any event or events occur that have resulted or may result, in our reasonable judgment, in a material impairment of the contemplated benefits of the Exchange Offer to Cresco (see Section 2 of this Offering Memorandum, “Purpose of the Exchange Offer; Additional Consideration,” for a description of the contemplated benefits of the Exchange Offer to Cresco); and
•any rules or regulations by any governmental authority, other regulatory or administrative authority or any Canadian or United States national securities exchange have been enacted, enforced, or deemed applicable to us that have resulted or may result, in our reasonable judgment, in a material impairment of the contemplated benefits of the Exchange Offer to Cresco (see Section 2 of this Offering Memorandum, “Purpose of the Exchange Offer; Additional Consideration,” for a description of the contemplated benefits of the Exchange Offer to Cresco).
The conditions to the Exchange Offer are for Cresco’s benefit. We may assert them prior to the Expiration Time regardless of the circumstances giving rise to them. We may waive the conditions, in whole or in part, at any time and from time to time prior to the Expiration Time (with any such waiver to be applied consistently among all Eligible Participants), whether or not we waive any other condition to the Exchange Offer. Subject to any order or decision by a court or arbitrator of competent jurisdiction, any determination we make concerning the events described in this Section 6 will be final and binding upon all persons.
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Section 7. Price Range of Our Subordinate Voting Shares
The Eligible Options give Eligible Participants the right to acquire our subordinate voting shares. None of the Eligible Options are traded on any trading market. Our subordinate voting shares are listed on the OTC under the symbol “CRLBF.” The following table sets forth the high and low per share sales prices of our subordinate voting shares on the OTC during the periods indicated. All prices set forth below are expressed in U.S. dollars.
Year Ended December 31, 2023 | High | Low | ||||||||||||||||||||||||
First quarter | $ | 2.01 | $ | 1.52 | ||||||||||||||||||||||
Second quarter | $ | 1.91 | $ | 1.39 | ||||||||||||||||||||||
Third quarter | $ | 2.67 | $ | 1.00 | ||||||||||||||||||||||
Fourth quarter | $ | 2.02 | $ | 1.09 | ||||||||||||||||||||||
Year Ended December 31, 2024 | High | Low | ||||||||||||||||||||||||
First quarter | $ | 2.59 | $ | 0.69 | ||||||||||||||||||||||
Second quarter | $ | 2.48 | $ | 0.85 | ||||||||||||||||||||||
Third quarter | $ | 2.02 | $ | 0.97 | ||||||||||||||||||||||
Fourth quarter | $ | 1.64 | $ | 0.71 | ||||||||||||||||||||||
As of August 15, 2025, we had 1,041 shareholders of record of our subordinate voting shares. The actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include shareholders whose shares may be held in trust or by other entities. As of August 15, 2025, we had 338,562,708 subordinate voting shares outstanding. On August 19, 2025, the closing price of our subordinate voting shares as reported on the OTC was U.S. $1.02 per share. We recommend that you obtain the current market prices for our subordinate voting shares before deciding whether or not to tender your Eligible Options for exchange. The market price of our subordinate voting shares has been, and in the future may continue to be, volatile and may fluctuate due to factors beyond our control. In addition, the stock market has historically experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks, which volatility often does not relate to the operating performance of the companies represented by the stock.
Section 8. Information Concerning Cresco; Financial Information
Information Concerning Cresco
We are one of the largest vertically-integrated multi-state cannabis operators in the U.S. licensed to cultivate, manufacture and sell retail and medical cannabis products primarily through Sunnyside*®, Cresco Labs’ national dispensary brand and third-party retail stores. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (“CPG”) approach to cannabis, Cresco’s house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco®, High Supply® or Supply®, Good News®, Wonder Wellness Co. ®, FloraCal® Farms or FloraCal®, RemediTM and Mindy’sTM, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*® is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers.
We are a corporation organized under the laws of British Columbia. Our principal executive office is located at 600 West Fulton Street, Suite 800, Chicago, Illinois 60661 and our telephone number is (312) 929-0993. Our website is www.crescolabs.com. The reference to our website is an inactive textual reference only, and information contained therein or connected thereto is not incorporated into this Offering Memorandum or the Schedule TO of which it forms a part.
Financial Information
This Offering Memorandum should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included as Exhibits 99.5 and 99.6, respectively, to our Form 40-F filed with the SEC on March 14, 2025 and as Exhibits 99.2 and 99.1, respectively, to our Reports on Form 6-K filed with the SEC on May 30, 2025 and August 7, 2025, which are incorporated herein by reference.
Our book value per share as of December 31, 2024, which is the date of the most recent balance sheet incorporated herein by reference, was U.S. $1.17 per share.
Our consolidated financial statements incorporated herein by reference are presented in U.S. dollars and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Additional Information
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For more information about Cresco, please refer to our Form 40-F, the exhibits included therein (including the AIF), and our other filings made with the SEC. We recommend that you review the materials that we have filed with the SEC and with the Canadian Securities Administrators at SEDAR+ before making a decision on whether or not to tender your Eligible Options. We will also provide, without charge to you, upon your written or oral request, a copy of any or all of the documents to which we have referred you. See Section 15 (“Additional Information”) for more information regarding reports we file with the SEC and how to obtain copies of or otherwise review such reports.
Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities
Our executive officers are eligible to participate in the Exchange Offer but members of our Board (other than our Chief Executive Officer who is also a director) are not eligible. Accordingly, members of our non-management members of Board are not Eligible Participants, and they do not hold any Eligible Options.
Except as otherwise disclosed in the Exchange Offer or in our filings with the SEC, including our Annual Report, and other than outstanding options and other equity awards granted to our directors, executive officers and other employees pursuant to our various equity incentive plans, which are described in our Annual Report or our other filings made with the SEC, neither Cresco nor, to our knowledge, any of our executive officers or directors, any person controlling Cresco or any executive officer or director of such control person is a party to any agreement, arrangement or understanding with respect to any of our securities, including any agreement, arrangement or understanding concerning the transfer or the voting of any of our securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.
The following table sets forth the beneficial ownership of Eligible Options held by the Company’s executive officers, and the percentage of total Eligible Options outstanding beneficially owned by them, as of August 19, 2025. Unless otherwise noted, the address of each of the persons set forth below is c/o Cresco Labs Inc., 600 West Fulton Street, Suite 800, Chicago, Illinois 60661.
| Name | Number of Shares of Common Stock Underlying Eligible Options | Percentage of All Eligible Options | ||||||||||||||||||||||||
Charles Bachtell | 6,290,000 | 70.4% | ||||||||||||||||||||||||
| Greg Butler | 625,000 | 7.0% | ||||||||||||||||||||||||
| Zach Marburger | 100,000 | 1.1% | ||||||||||||||||||||||||
| Angie Demchenko | 125,000 | 1.4% | ||||||||||||||||||||||||
| John Schetz | 87,500 | 1.0% | ||||||||||||||||||||||||
Sharon Schuler | 0 | 0% | ||||||||||||||||||||||||
All executive officers as a group (6 persons) | 7,227,500 | 80.8% | ||||||||||||||||||||||||
During the 60-day period prior to the date of this Offering Memorandum, we have not granted any options that are Eligible Options. During such 60-day period, neither we, nor, to the best of our knowledge, any member of our Board or any of our executive officers, nor any of our affiliates, has engaged in any transaction involving the Eligible Options.
Section 10. Accounting Consequences of the Exchange Offer
We follow the provisions of the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718: Compensation—Stock Compensation (Topic 718) (“ASC 718”) regarding accounting for share-based payments. Under ASC 718, we will recognize compensation cost equal to the excess, if any, of the fair value of each New Award granted to participants in the Award Exchange, measured as of the date the New Awards are granted, over the fair value of the stock options surrendered in exchange for the New Awards, measured immediately prior to the cancellation. This incremental compensation cost will be recognized over the vesting period of the New Award. As of August 8, 2025, the estimated potential incremental compensation expense from this Award Exchange is $4.75 million, which will be recognized over the three-year vesting period of the New Awards.
The amount of compensation cost will depend on a number of factors, including the level of participation in the Exchange Offer and the exercise price per share of Eligible Options, as applicable, exchanged in the Exchange Offer. Since these factors cannot be predicted with any certainty as of
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the date of this Offering Memorandum and will not be known until the Expiration Time, we cannot predict the exact amount of the charge (if any) that will result from the Exchange Offer.
Section 11. Legal Matters; Regulatory Approvals
The Exchange Offer is required to comply with the SEC’s rules and regulations, including the requirements of Schedule TO. We are conducting the Exchange Offer solely for compensatory purposes and will rely on the SEC’s March 13, 2001, “Exemptive Order” (Exchange Act Release No. 34-44062) granting no-action relief for compensatory equity-award exchange programs. By relying on that Exemptive Order, we are permitted to limit the offer to a specified group of employees (rather than all holders of a class of options) and provide differentiated exchange terms without violating the “all-holders” and “best-price” requirements of Rule 13e-4.We are not aware of any material pending or threatened legal actions or proceedings relating to the Exchange Offer. We are not aware of any margin requirements or antitrust laws applicable to the Exchange Offer. We are not aware of any license or regulatory permit that appears to be material to our business that might be adversely affected by our acceptance of Eligible Options for exchange and grant of New Awards as contemplated by the Exchange Offer, or of any regulatory requirements that we must comply with or approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the completion of the Exchange Offer as contemplated herein. Should any such compliance or approval or other action be required, we currently contemplate that we will use commercially reasonable efforts to comply with such requirements or seek such approval or take such other action. We cannot assure you that any such compliance or approval or other action, if needed, would be achieved or obtained or would be achieved or obtained without substantial conditions or that the failure to achieve such compliance or obtain any such approval or other action would not adversely affect our business. Our obligation under the Exchange Offer to accept tendered Eligible Options for exchange and to grant New Awards with the New Award Terms would be subject to achieving such compliance or obtaining any such governmental approval or other action.
Section 12. Material Tax Consequences
The following is a summary of the anticipated material United States federal income tax income tax consequences of the Exchange Offer. This tax summary does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to apply in all respects to all categories of Eligible Participants. The tax consequences for individuals who are subject to the tax laws of a country other than the United States or Canada or of more than one country may differ from the United States federal income tax and Canadian income tax consequences summarized herein. The rules governing the tax treatment of options and restricted stock units are complex. You should consult with your tax advisor to determine the personal tax consequences to you of participating or not participating in the Exchange Offer.
Material United States Tax Consequences
Tax Effects of Rejecting the Offer
In general, your rejection of the Exchange Offer will not be a taxable event for United States federal income tax purposes.
Tax Effects of Accepting the Offer
The exchange of Eligible Options for RSUs pursuant to the Exchange Offer should be treated as a non-taxable exchange of compensatory rights under Section 83 of the U.S. Internal Revenue Code. Accordingly, neither Cresco nor Eligible Participants will recognize any taxable income upon (i) surrender of the Eligible Options or (ii) grant of the New Awards.
Taxation of New Awards
Each participant will recognize ordinary income when the RSUs vest, measured by the fair market value of the underlying shares on the vesting date, and the Corporation will be entitled to a corresponding deduction at that time.
Withholding
We will withhold all required local, state, federal, foreign and other taxes and any other amount required to be withheld by any governmental authority or law with respect to ordinary compensation income recognized with respect to the vesting of a restricted stock unit held by an Eligible Participant. We will require any such Eligible Participants to make arrangements to satisfy this withholding obligation prior to the delivery or transfer of any of our subordinate voting shares.
Section 13. Extension of the Exchange Offer; Termination; Amendment
We may, from time to time, extend the period of time during which the Exchange Offer is open and delay accepting any Eligible Options tendered to us by disseminating notice of the extension to Eligible Participants by public announcement, written notice, including electronically posted or delivered notices, or otherwise as permitted by Rule 13e-4(e)(3) under the Exchange Act. If the Exchange Offer is extended, we will provide appropriate notice of the extension and the new Expiration Time no later than 9:00 a.m., Eastern Time on the next business day following the previously scheduled Expiration Time. For purposes of the Exchange Offer, a “business day” means any day other than a Saturday, Sunday or United States federal holiday and consists of the time period from 12:00 a.m. through 11:59 p.m., Eastern Time.
We also expressly reserve the right, in our reasonable judgment, prior to the Expiration Time, to terminate or amend the Exchange Offer upon the occurrence of any of the conditions specified in Section 6 (“Conditions of the Exchange Offer”), by disseminating notice of such termination or amendment to Eligible Participants by public announcement, written notice, including electronically posted or delivered notices, or otherwise as permitted by applicable law.
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Subject to compliance with applicable law, we further reserve the right, in our discretion, and regardless of whether any event set forth in Section 6 (“Conditions of the Exchange Offer”) has occurred or we deem any such event to have occurred, to amend the Exchange Offer in any respect prior to the Expiration Time. We will promptly disseminate any notice of such amendment required pursuant to the Exchange Offer or applicable law to Eligible Participants in a manner reasonably designed to inform Eligible Participants of such change and will file such notice with the SEC as an amendment to the Schedule TO.
If we materially change the terms of the Exchange Offer or the information concerning the Exchange Offer, or if we waive a material condition of the Exchange Offer, we will extend the Exchange Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act. Under these rules, the minimum period during which a tender or Exchange Offer must remain open following material changes in the terms of or information concerning a tender or Exchange Offer, other than a change in price or a change in percentage of securities sought, will depend on the facts and circumstances, including the relative materiality of such terms or information.
In addition, we will publicly notify or otherwise inform Eligible Participants in writing if we decide to take any of the following actions and will keep the Exchange Offer open for at least 10 business days after the date of such notification: (i) we increase or decrease the amount of consideration offered for the Eligible Options; or (ii) we increase or decrease the number of Eligible Options that may be tendered in the Exchange Offer.
Section 14. Consideration; Fees and Expenses
Each Eligible Participant who properly tenders an Eligible Option to be exchanged and which is accepted by Cresco pursuant to this Exchange Offer will receive a New Award. New Awards are restricted stock units under which the holder will receive subordinate voting shares upon vesting, subject to compliance with the applicable award terms.
Subject to the terms and conditions of this Exchange Offer and to receipt of the Shareholder Approval, upon our acceptance of your properly tendered Eligible Options, you will be entitled to receive New Awards for a number of subordinate voting shares equal on a one-for-one basis to the number of subordinate voting shares underlying your tendered Eligible Options, as described in Section 1 of this Offering Memorandum. New Awards will be fully unvested as of the New Award Grant Date and will be subject to a new three-year vesting schedule, as described in Section 1 of this Offering Memorandum. If you receive New Awards, you do not have to make any cash payment to Cresco to receive your New Awards, and upon vesting of your New Awards, you will automatically receive subordinate voting shares equal to the number of vested New Awards without payment of any exercise price.
If we receive and accept tenders from Eligible Participants of all Eligible Options (comprising vested or unvested options to purchase approximately 8,940,902 shares outstanding as of August 19, 2025) subject to the terms and conditions of this Exchange Offer (including the receipt of Shareholder Approval), we will grant New Awards covering a total of approximately 8,940,902 subordinate voting shares.
We will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Eligible Options pursuant to the Exchange Offer. You will be responsible for any expenses that you incur in connection with your election to participate in the Exchange Offer, including mailing, internet and telephone expenses, as well as any expenses associated with any tax, legal or other advisor that you consult or retain in connection with the Exchange Offer.
Section 15. Additional Information
With respect to the Exchange Offer, we have filed the Schedule TO, as may be amended, of which the Exchange Offer is a part. The Exchange Offer document (of which this Offering Memorandum is a part) does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We intend to supplement and amend the Schedule TO to the extent required to reflect information we subsequently file with the SEC. Before making a decision on whether or not to tender your Eligible Options, we highly recommend that you review the Schedule TO, as may be amended, including its exhibits, and the following documents that we have filed with the SEC:
•our Annual Report on Form 40-F for the year ended December 31, 2024, and the exhibits filed with respect thereto, filed with the SEC on March 14, 2025; and
•our Reports on Form 6-K filed with the SEC on March 12, 2025, May 30, 2025, June 13, 2025, August 7, 2025, and August 15, 2025.
Our SEC filings are available to the public on the SEC’s website at www.sec.gov. We also make our SEC filings available on or through our corporate website at https://investors.crescolabs.com/financials/sec-filings, free of charge, copies of these reports as soon as reasonably practicable after we electronically file or furnish them to the SEC.
We will also promptly provide without charge to each Eligible Participant to whom we deliver a copy of the Exchange Offer, upon written or oral request, a copy of any or all of the documents to which we have referred you, other than exhibits to such documents (unless specifically incorporated by reference into such documents). Written requests should be directed to equity@crescolabs.com.
The information about us contained in the Exchange Offer should be read together with the information contained in the documents to which we have referred you.
Section 16. Miscellaneous.
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The Exchange Offer and our SEC reports referred to above include forward-looking statements. All statements other than statements of historical facts are forward-looking statements. Many of the forward-looking statements can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” “will” and “potential,” among others. These forward-looking statements involve risks and uncertainties, including those described in this Offering Memorandum, our Annual Report and our other SEC filings that are incorporated by reference into this Offering Memorandum, that could cause actual results to differ materially from those expressed in the forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements.
WE ENCOURAGE YOU TO REVIEW THE RISK FACTORS CONTAINED IN OUR ANNUAL REPORT AND IN THIS EXCHANGE OFFER DOCUMENT BEFORE YOU DECIDE WHETHER TO PARTICIPATE IN THE EXCHANGE OFFER.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD PARTICIPATE IN THE EXCHANGE OFFER. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT, THE RELATED ELECTION FORMS AND THE OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU SHOULD NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.
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Exhibit (a)(1)(B)
From: Charlie Bachtell
Subject: Confidential: Cresco Labs Option Exchange Program
Subject: Confidential: Cresco Labs Option Exchange Program
THIS IS A PRE-COMMENCEMENT COMMUNICATION. This communication relates to a proposed exchange program (the “Exchange Offer”) that the Company expects to commence on or about August 20, 2025. This communication is not an offer to purchase, nor a solicitation of an offer to sell, any securities. A formal Offer to Exchange and related documents will be filed with the U.S. Securities and Exchange Commission (the “SEC”) and will be available free of charge on the SEC’s website (www.sec.gov) when filed. Please read those materials carefully when they become available.
Hello Leaders,
I am pleased to share that we are rolling out a new option exchange program to this small group of our most senior leaders. This options exchange is designed to recalibrate our equity program so that it’s serving as the long-term reward it was designed to be. There will be an optional meeting later this week to run through program specifics and answer questions, but I wanted to get a few high-level details to you first. Please refer to the attached FAQ and see the program overview below:
•This program allows you to exchange eligible Cresco Labs options for RSUs at a 1:1 ratio – eligible options are:
oPriced at $2.25 or greater or are five (5) years or less from expiration date
•On Wednesday, August 20, you will receive a DocuSign email from Aon, via John Hammond, that outlines your eligibility and the exchange process – this will be a personalized document that details your specific option grants that are eligible for exchange.
•You will have between August 20 and September 17 to make your decisions on a grant-by-grant basis. Elections will be locked at 10:59 PM CT/11:59 PM ET on September 17th
•The final exchange is contingent on shareholder approval at the Annual General Meeting (AGM) on September 16 – the program is public knowledge because it was included in the AGM proxy materials circulated last week. If you have team members with questions about the program, please reach out to Angie.
•If you elect to participate in the program, the exchanged options will be cancelled, and your new RSUs will have a 3-year vesting schedule, effective Sept. 17, 2025
•This exchange is a one-time offer and completely voluntary
•I encourage you to speak with your financial advisor to better understand how the exchange might impact your financial situation
Finally, as a reminder, this exchange has only been offered to a very small group of leaders, so please refrain from discussing with colleagues outside of the ELT (Angie is your main point of contact if you have questions).
Thank you,
Charlie
Cresco Labs Option Exchange Program Frequently Asked Questions What is the Cresco Labs Option Exchange Program? This program is an offer for eligible employees (as defined below) to exchange out-of-the-money or “underwater” stock options for new Restricted Stock Units (RSUs). This new program only applies to option grants with exercise prices at or above $2.25 or an expiration date on or prior to September 30, 2030 granted to certain employees through Cresco Labs’s equity incentive plans. For this program to be consummated, it must be approved by shareholders. Shareholders will be voting on the program at an annual and special meeting in September. What are stock options? Stock options are long-term awards that lock in an exercise price for you to buy company stock later, regardless of how much the price changes between the time you receive them and when they vest. What are Restricted Stock Units (RSUs)? Each RSU represents the right to receive one Cresco common share when that RSU vests. These units vest in equal amounts over three years on the anniversary of the new award grant date The new grant date will be September 17, 2025. Why am I being offered the chance to exchange my current Cresco Labs options for new RSUs? Equity awards are an essential part of Cresco Labs’s total rewards program because we believe our employees should be owners of our long-term success as a company. The challenges in the cannabis industry and economy in recent years have flattened stock prices for all cannabis companies, including Cresco Labs. This means that many employees’ stock options have an exercise price that is well above Cresco Labs’s current share price (they are “underwater”). The Award Exchange Program allows employees to exchange certain stock options that are underwater for the same number of new RSUs. Who is eligible to participate in the Award Exchange Program? The program is open to executive officers, including the CEO, and other members of the senior leadership team, and (i) you hold certain underwater stock options that were granted through Cresco Labs equity incentive plans; (ii) you are a current employee of Cresco Labs when the program launches on August 20, 2025; and (iii) you are a current employee on September 17, 2025, when your surrendered options are canceled, and the new RSUs are granted to replace them, subject to shareholder approval of the Award Exchange Program. Advisers, consultants, contractors, and current or former directors are not eligible. What stock options are eligible to be exchanged? An eligible stock option is an outstanding Cresco Labs stock option that has not been exercised and: (i) is held by an eligible employee on August 20, 2025, and continues to be held through September 17, 2025 at 10:59 p.m. Central Time, when the program expires; (ii) was granted through Cresco Labs equity incentive plans; (iii) has a per-share exercise price greater than or equal to $2.25; or (iv) expires on or prior to September 30. 2030. Note, only unexercised stock options are eligible. If I choose to participate in the program, do I have to exchange all of my eligible options? No. If you hold more than one eligible equity grant, you may choose to participate in the program on a grant-by-grant basis, meaning that you do not have to exchange all of your grants. However, if you choose to exchange a grant, you must exchange all of the unexercised stock options that are part of that grant. How many new RSUs will I receive if I choose to exchange my grant? You will get one RSU for each Option exchanged. (continued) Exhibit (a)(1)(C)
Cresco Labs Option Exchange Program Frequently Asked Questions (continued) Will my new RSUs have a different vesting schedule? Yes, all new RSUs exchanged are subject to a new vesting schedule, regardless of whether the stock options were vested or unvested at the time of exchange. The RSUs will have a new 3-year “graded” schedule, which means one third of the RSU grant will vest per year, regardless of the original stock option grant date. What if the options I exchanged were already vested? All new awards issued will be subject to the new vesting schedule, regardless of whether you exchanged vested or unvested options. The new RSUs will vest one third annually on the anniversary of the new award grant date. What is the timeline for the program? The Award Exchange Program is open August 20. 2025, and will expire September 17, at 10:59 p.m. Central Time, unless otherwise communicated. Eligible options properly exchanged through the program will be cancelled on September 17, 2025, and your new RSUs will be granted with the terms described above, subject to the receipt of shareholder approval of the exchange. You will receive your new RSU in the Siebert platform only after the exchange has been approved through a shareholder vote at Cresco Labs’s Annual General Meeting. This vote is expected to take place on September 16, 2025. If the shareholder approval is not obtained, then your current options will remain in effect. All options exchanged will be subject to review by Cresco Labs to confirm they were (i) eligible options and (ii) properly tendered. Do I have to participate in the Award Exchange Program? No. This program is completely voluntary. Your existing equity grants will remain with existing option prices if you take no action. The Award Exchange Program allows employees to exchange equity grants so that their equity is more aligned with the current stock price, with room to grow in value as the company’s stock price rises. However, Cresco Labs cannot provide financial, legal or tax advice, participation in the program is entirely your decision and at your discretion. Please speak with a financial advisor if you have questions about how this program will impact your unique financial circumstances. How do I participate in the Exchange Offer? First, educate yourself about the program by reviewing the resources here: Cresco Labs Option Exchange Program If you choose to participate, you will receive an e-mail on the opening day of the tender offer period in addition to a docusign with your eligible exchange information. Instructions and required acknowledgements on how to complete the exchange will be provided. The docusign email will come from "John Hammond via Docusign". Please review the documentation for more information and instructions on how to elect to participate, change a prior election, and withdraw your election before the end of the offering period. By participating in the program, you are confirming that you have read these materials. Can I withdraw previously tendered Eligible Options? Yes. You may withdraw your election of the grant at any time before the program expires September 17, 2025, at 10:59 p.m. Central Time, unless otherwise communicated. You are responsible for making sure that you complete and submit the change form through Docusign before the program expires. (continued)
Cresco Labs Option Exchange Program Frequently Asked Questions (continued) Does this program have tax implications? Generally no. Exchanging your options as we have it structured should not be a taxable event for U.S. federal income tax purposes. You should consult with your tax or financial advisor to determine the personal tax consequences of participating in the program. If you are subject to the tax laws of more than one country, you should be aware that there may be additional or different tax consequences that may apply to you. Cresco Labs cannot provide financial, legal or tax advice, and participation in the program is entirely your decision and at your discretion. Please speak with a financial advisor if you have questions about how this program will impact your unique financial circumstances. How do I receive the new RSUs? If you participate in the program, you will receive an email from equity@crescolabs.com that will direct you to go to Siebert Financial to review and accept your newly issued awards. The awards will be held at Siebert Financial. Please note that it may take a few weeks for you to receive this email and for the new RSUs to be reflected in your online Siebert account. Following the shareholder approval of the exchange, you will receive a communication letting you know when your account has been updated. Who should I contact with questions? If you have any questions, please email equity@crescolabs.com. Cresco Lab has not authorized any person to make any recommendation on its behalf as to whether or not you should surrender your eligible options for exchange pursuant to the Award Exchange Program. You should rely only on the information in these materials or in other documents to which the Company has referred you. The Company has not authorized any person to provide you with any information or to make any representation in connection with the Award Exchange Program other than the information and representations contained or referred to in these materials. If any person makes any recommendation or representation to you or provides you with any information, you should treat that recommendation, representation or information as not having been authorized by the Company. The Company is not conducting the Award Exchange Program in any jurisdiction in which participation in the Award Exchange Program by its employees is not permitted. However, the Company may, at its discretion, take any actions necessary to permit participation in the Award Exchange Program by employees in any of these jurisdictions. You should not assume that the information provided in this FAQ is accurate as of any date other than the date as of which it is shown, or if no date is otherwise indicated, the date of this letter. This FAQ summarizes various agreements, documents and other information. These summaries are qualified in their entirety by reference to the agreements, documents and information to which they relate. Neither the United States Securities and Exchange Commission (the SEC) nor any state or foreign securities commission has approved or disapproved of these securities or passed judgment upon the adequacy of the disclosures of any materials provided in connection with the Award Exchange Program. Any representation to the contrary is a criminal offense. You are advised to exercise caution in relation to the Award Exchange Program. If you are in any doubt about any of the contents of this FAQ or any documents provided in connection with the Award Exchange Program, you should obtain independent professional advice. This notice does not constitute an offer. The full terms of the Award Exchange Program are described in the Schedule TO-I and accompanying documents, which you may access on our website at https://investors.crescolabs.com/financials/ sec-filings or through the SEC website at www.sec.gov.
Exhibit (a)(1)(D)
CRESCO LABS INC.
600 W. Fulton Street, Suite 800, Chicago, Illinois, 60661
OPTION EXCHANGE – ELECTION FORM
THIS OFFER AND YOUR WITHDRAWAL RIGHTS WILL EXPIRE AT 10:59 P.M., CENTRAL TIME, ON WEDNESDAY, SEPTEMBER 17, 2025, UNLESS EXTENDED
Before completing and signing this Election Form, we encourage you to read the documents that make up this tender offer, including (1) the Offer to Exchange Eligible Options for New Awards, dated August 20, 2025 (the “Offer to Exchange”), filed with the U.S. Securities and Exchange Commission and separately delivered to you by email from Cresco Labs Inc. (“Cresco”), describing the terms of the Exchange Offer (together with the related documents filed with and incorporated by reference into the Offer to Exchange, the “Offer Documents”); (2) the email from Cresco on August 20, 2025 announcing the commencement of the Exchange Offer; and (3) this Election Form, including the Agreement to the Terms of Election and Instructions to Election Form attached below. The Exchange Offer is subject to the terms set forth in the Offer Documents, as they may be amended. The Exchange Offer expires at 10:59 p.m., Central Time, on September 17, 2025, unless extended. All capitalized terms used in this Election Form but not defined herein shall have the meanings given in the Offer Documents.
PLEASE CAREFULLY REVIEW AND FOLLOW THE INSTRUCTIONS BELOW AND ATTACHED TO THIS FORM.
If you wish to participate in the Exchange Offer with respect to an Eligible Option, please check the box next to “Yes, exchange Eligible Option for New RSU(s)” in order to tender such Eligible Option in exchange for the grant of new RSU(s) under the terms of the Exchange Offer. Each Eligible Option you elect to tender for exchange must be tendered in whole. If you check the box next to “No, retain Eligible Option” with respect to an Eligible Option, such Eligible Option will remain outstanding subject to its original terms, and no new RSUs will be granted to you in exchange for such Eligible Option.
If you make no election, or do not return this Election Form before the Expiration Time, you will retain your Eligible Options subject to their original terms, and no New Awards will be granted to you.
If you wish to reject the Exchange Offer and retain all of your Eligible Options, you may check the box next to “No, reject the Exchange Offer and retain all Eligible Options” above the table set forth below.
If you complete your initial election form, you can still modify your election prior to the close of the tender offer period, by submitting a new election form via e-mail (see Tender Offer Election – Manual Change Form for further instructions)
If you would like to participate in the Exchange Offer, please complete and submit this Election Form
You will be asked to acknowledge terms and instructions to this Election Form as part of this process. If you see data that you think to be incorrect, you can contact the equity team at equity@crescolabs.com for clarification or a corrected form.
☐ No, reject the Exchange Offer and retain all Eligible Options. If you check this box, you do not need to make any elections in the table below.
For each Eligible Option you would like to exchange under this Exchange Offer you must select the “Yes, exchange Eligible Options for new RSUs” box in the table below
| Eligible Options | Election to tender Eligible Option in exchange for new RSUs | ||||||||||||||||||||||
Grant Number | Grant Date | Grant Type | Exercise Price | Total Eligible Options | Eligible Vested Options | Eligible Unvested Options | Election Decision | ||||||||||||||||
Yes, exchange Eligible Options for new RSU(s) No, retain Eligible Option | |||||||||||||||||||||||
Yes, exchange Eligible Options for new RSU(s) No, retain Eligible Option | |||||||||||||||||||||||
Yes, exchange Eligible Options for new RSU(s) No, retain Eligible Option | |||||||||||||||||||||||
Yes, exchange Eligible Options for new RSU(s) No, retain Eligible Option | |||||||||||||||||||||||
Please read and acknowledge the following agreement to the terms of the election:
By completing, initialing, and signing this Election Form, I acknowledge and agree that:
I have received from Cresco the Offer to Exchange Eligible Options for New Awards (the “Offer to Exchange”), including the Summary Term Sheet – Questions and Answers therein, dated August 20, 2025 (together with the related documents filed with and incorporated by reference into the Offer to Exchange, the “Offer Documents”), and upon making an election herein, I agree to all of the terms and conditions of the Offer Documents.
1.By choosing to use this form, I am deciding on how to tender to Cresco the exchange of Eligible Options specified on this Election Form, if applicable, and understand that, upon acceptance, this Election Form will constitute a binding agreement between Cresco and me. I have checked the box(es) corresponding to the Eligible Options that I elect to tender, or not tender, for exchange. I understand that any election that I make to tender
an option for exchange that does not qualify as an Eligible Option will not be accepted, and such options will remain outstanding subject to their original terms following the expiration of the Exchange Offer.
2.If I validly tender an Eligible Option for exchange and such Eligible Option is accepted by Cresco, such Eligible Option will automatically be cancelled by Cresco in exchange for the grant of one or more new RSUs with the applicable new RSU terms described in the Offer Documents.
3.Each RSU granted as part of the Exchange Offer will vest over three years and will be 100% unvested at the time of grant no matter the portion vested from the Eligible Options elected to be exchanged.
4.The vesting schedule of my New RSUs will be as follows:
•One third vesting on September 17, 2026
•One third vesting on September 17, 2027
•One third vesting on September 17, 2028
5.To remain eligible to tender Eligible Options for exchange pursuant to the Exchange Offer, I must remain an Eligible Participant and must not have received a notice of termination nor given a notice of resignation with respect to my employment prior to Expiration Time, which is currently scheduled to be 10:59 p.m., Central Time, on Wednesday, September 17, 2025, unless extended. I understand that if my employment with Cresco ceases prior to the Expiration Time, Cresco will not accept my Eligible Options for exchange and I or my estate or beneficiaries, as the case may be, will retain my Eligible Options subject to their original terms and conditions. If I cease providing services to Cresco for any reason before the shares underlying my new RSUs vest, I will forfeit any unvested portion of my new RSUs, subject to the terms of the Cresco Labs Inc. 2018 Long-Term Incentive Plan, as amended.
6.Neither the ability to participate in the Exchange Offer nor actual participation in the Exchange Offer will be construed as a right to continued employment or service with Cresco.
7.This election is entirely voluntary, and I am aware that I may change or withdraw my decision to tender my Eligible Options at any time until the Expiration Time, as described in the Instructions to Election Form. I understand that this decision to tender my Eligible Options will be irrevocable as of 10:59 p.m., Central Time, Wednesday, September 17, 2025, unless the Exchange Offer is extended. Participation in the Exchange Offer is entirely my decision and should be made based on my personal circumstances. Cresco has not authorized any person to make any recommendation on its behalf as to whether or not I should participate in the Exchange Offer.
8.I may receive certain future confirmation letters or other communications from Cresco in connection with the Exchange Offer, including a communication confirming that Cresco
has received this Election Form and whether Cresco ultimately accepts or rejects this Election Form.
By my signature below, I acknowledge and agree to the above.
INSTRUCTIONS TO ELECTION FORM
Please read and acknowledge the following agreement to the terms of the election.
DEFINED TERMS. All capitalized terms used in this Election Form but not defined herein have the meanings given in the Offer to Exchange. The use of “Cresco,” “we,” “us” and “our” in this Election Form refers to Cresco Labs Inc.
EXPIRATION TIME. The Exchange Offer and any rights to tender or to withdraw a tender of Eligible Options expire at 10:59 p.m., Central Time, on Wednesday, September 17, 2025, unless the Exchange Offer is extended.
DELIVERY OF ELECTION FORM. If you intend to tender Eligible Options under the Exchange Offer, you must complete and submit this Election Form 10:59 p.m., Central Time, on Wednesday, September 17, 2025 (or such later date as may apply if the Exchange Offer is extended).
Your Election Form will be effective only upon receipt by us. You are responsible for making sure that the Election Form is submitted and completed via DocuSign. You must allow for sufficient time to complete this Election Form to ensure that we receive your Election Form on time.
You are not required to tender any of your Eligible Options for exchange, and participation in the Exchange Offer is completely voluntary. If you choose to tender one or more of your Eligible Options for exchange, please check the box on your Election Form corresponding to each Eligible Option that you wish to tender for exchange. You do not need to return your stock option agreements relating to any tendered Eligible Options, as they will be automatically cancelled if we accept your Eligible Options for exchange and grant you new RSUs.
WITHDRAWAL AND MODIFICATIONS OF ELECTION. Tenders of Eligible Options made under the Exchange Offer may be withdrawn at any time before 10:59 p.m., Central Time, on Wednesday, September 17, 2025, unless we extend the expiration date, in which case withdrawals must be received before such later expiration date and time.
To withdraw tendered Eligible Options, you must complete the Tender Offer Election – Manual Change Form page 7 of this completed document can be printed, filled out manually and sent via email to equity@crescolabs.com) prior to the Expiration Time.
Withdrawals may not be rescinded unless the withdrawn Eligible Options are properly re-tendered before the Expiration Time by following the procedures described above.
SIGNATURES. Please sign and date this Election Form. Except as described in the following sentence, this Election Form must be signed by the Eligible Participant who holds the Eligible Options to be tendered using the same name for such Eligible Participant as appears on the applicable stock option agreement.
6. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance regarding the Exchange Offer (including requests for additional or hard copies of the Offer Documents or this Election Form) should be directed via email to equity@crescolabs.com.
7. IRREGULARITIES. We will determine all questions as to the number of shares subject to Eligible Options tendered and the validity, form, eligibility (including time of receipt) and acceptance of any tender of Eligible Options for exchange. Subject to any order or decision by a court or arbitrator of competent jurisdiction, our determination of these matters will be final and binding on all parties. We may reject any or all tenders of Eligible Options for exchange that we determine are not in appropriate form or that we determine are unlawful to accept. We may waive any defect or irregularity in any tender with respect to any particular Eligible Options or any particular Eligible Participant before the Expiration Time. No Eligible Options will be accepted for exchange until the Eligible Participant exchanging the Eligible Options has cured all defects or irregularities to our satisfaction, or they have been waived by us, prior to the Expiration Time. Neither we nor any other person is obligated to give notice of any defects or irregularities involved in the exchange of any Eligible Options.
8. ALTERNATIVE, CONDITIONAL OR CONTINGENT OFFERS. We will not accept any alternative, conditional or contingent tenders.
IMPORTANT U.S. TAX INFORMATION. You should refer to the Offer to Exchange included in the Offer Documents, which contains important U.S. tax information. We encourage you to consult with your own financial and tax advisors if you have questions about your financial or tax situation.
I acknowledge and agree to the above.
YOUR SIGNATURE AND SUBMISSION OF THIS ELECTION FORM INDICATES THAT YOU AGREE TO ALL TERMS OF THE EXCHANGE OFFER AS SET FORTH IN THE OFFER DOCUMENTS, AS WELL AS THE AGREEMENT TO THE TERMS OF THE ELECTION ATTACHED HERETO.
Please note that you may change your election by submitting a new properly completed and signed Election Form prior to the expiration time, which is 10:59 p.m., Central Time, on Wednesday, September 17, 2025, unless extended. The last valid election submitted to Cresco prior to the expiration of the Exchange Offer shall be effective and supersede any prior Election Forms you submit.
(Signature)
(Print Name)
(Date)
Tender Offer Election – Manual Change Form
Employee Name:
The following is a secondary copy of the exchange election materials. If you choose to modify your election following your initial DocuSign completion yet prior to the close of the tender period, you can print the following pages and submit your revised form manually to equity@crescolabs.com.
I understand I only need to complete the following pages of the form manually if I choose to revise my tender offer election prior to the close of the tender period. This revised tender election must be received via e-mail by equity@crescolabs.com prior to 10:59 PM CT on September 17, 2025.
<Duplicate of initial form – allowing for completion via pen>
Exhibit (a)(1)(E)
Option Exchange Program
Important Disclaimers • Cresco cannot advise you about what to do – this is a financial decision that is entirely yours • This program is regulated by the SEC, and there are strict guidelines • We know this program is complex, but if you ask for advice, we are required to say ‘read through your materials’ / ‘talk to your advisor’ • If you have questions, email equity@crescolabs.com • You must complete your tender offer on time • By 10:59 pm CT/11:59 PM Eastern on September 17, 2025 • This is a one-time event and is only 20 business days long – schedule time for yourself now to review the materials
Agenda • Overview • Option Exchange Program Overview • How an Option Exchange Works • Eligibility • Eligible options • New RSUs • Timeline for exchange • Process • Important disclaimers • Q & A – send all questions to: equity@crescolabs.com
• Equity is an important component of your Total Rewards package at Cresco Labs • Many stock options granted to date are “underwater” • That means the exercise price is greater than the current stock price • You are our most important asset we want to incentivize, motivate and reward you • The Option Exchange Program is an opportunity to trade underwater stock options for Restricted Stock Units (“RSUs”) • Applies to most stock options that have an exercise price at or above $2.25 or has an expiration date on or prior to September 30, 2030 • New RSUs will have a new vesting schedule and terms • You decide whether to keep or exchange your eligible stock options Option Exchange Program Overview
How an Option Exchange Works
How An Option Exchange Works • Opportunity to exchange existing underwater options for new RSUs • Eligible option holders and eligible grants • Exchanging is not required – you can choose to retain your existing option grants • For each option exchanged, you will receive one RSU Underwater Stock Option An option whose exercise price is above the current trading price of the company’s stock
How an Option Exchange Works • The offer to exchange is managed through a formal process called a “tender offer” • Offer is open from August 20th to September 17th • All elections must be made by 10:59pm CT/11:59 ET on September 17, 2025 • No election changes will be accepted after this time; there will be no exceptions • If you choose to exchange: • When the option exchange period is completed, your original equity award is cancelled, and you receive a new RSU award • New grant(s), if approved, will be granted on or around September 17, 2025, subject to shareholder approval of the Option Exchange, which is expected to occur on September 16th • If you do not elect to exchange: • Your original option grant will remain with its original terms and conditions • You can change your election as often as you want until the exchange period closes. When it closes, your decision is locked. There will be no exceptions. Important: New award grants will only be issued if approved by shareholders at the Company’s AGM
Eligibility
Eligibility • Our executive officers, including our CEO, and other members of our senior leadership team • All other employees are not eligible • Have options that are eligible for the exchange • Granted through Cresco Labs equity incentive plans
Eligible Options | An Outstanding Option Either expires on or before September 30, 2030 Or has a grant date strike price greater than $2.25 Granted under the Cresco Labs 2018 Long-Term Incentive Plan Option price, exercise price, grant price and strike price – four terms that mean the same thing – the price you pay for a share when you exercise the option.
New Award Terms
New Restricted Stock Units Expected grant date – September 17, 2025 (Subject to shareholder approval of the Option Exchange) Same number of RSUs granted as Options Exchanged New vesting schedule for new RSUs 1/3 will vest on the one-year exchange anniversary annually for 3 years
What is a Restricted Stock Unit? Definition: An award that represents shares of Cresco stock Because RSUs do not have a fixed exercise price like stock options, they can never go under water. Price: Full-value shares. There is no price you pay as a recipient Value: The value is the full value of Cresco stock Vesting: The process of turning units into shares ◆ Time and continued service Release: Shares vest automatically. There is no decision to purchase. You own them at vest Taxation: Taxable at vest/delivery Termination: Unvested RSUs cancel if you leave the company, but all vested shares are yours to keep See grant agreement for termination provisions
Example Current: 1,500 eligible options at $2.25 exercise price Offer to Exchange: Would be receiving 1,500 RSUs with 3-year graded vesting Eligible Option Exercise Price Range (U.S. $) Exchange Ratio (Surrendered Eligible Options: New RSUs) $2.25 and over 1:1
Timeline for Exchange Grant Date September 17, 2025 October 2025 Siebert Financial will be updated with new grant paperwork *Dates are subject to change if offer period is extended Grant of new options and cancellation of eligible options is subject to shareholder approval of the Option Exchange Closes September 17, 2025 at 10:59 pm (CT)/11:59 PM (ET) Option Exchange Begins August 20, 2025
Process You should have received an email with details on August 20, 2025 DocuSign You can change your ‘current’ election until it closes • Email will be sent to your “primary email” that is listed in Wurk • Email will come from DocuSign via John Hammond from Aon • The election will be made through DocuSign • Your election is locked at the time the offer expires, September 17, 2025, at 10:59pm CT/11:59 PM ET • No election changes will be accepted after this time; there will be no exceptions *You will be notified of your new award details via Siebert Financial once they are available in early October
Important Disclaimers • Cresco cannot advise you about what to do – this is a financial decision that is entirely yours • This program is regulated by the SEC, and there are strict guidelines • We know this program is complex, but if you ask for advice, we are required to say ‘read through your materials’ / ‘talk to your advisor’ • If you have general questions, email equity@crescolabs.com • You must complete your tender offer on time • By 10:59 pm CT/11:59 pm ET on September 17, 2025 • This is a one-time event and is only 20 business days long – schedule time for yourself now to review the materials
Q&A
Exhibit (a)(1)(F)
| Cresco – Stock Option Exchange Program Presentation | ||
Slide 1: Title Slide
Slide 2: Welcome everyone to the Cresco Labs option exchange program presentation. This presentation will walk you through the option exchange program. Beginning with a few disclaimers then talk about our agenda for today.
Slide 3: Important disclaimers. Cresco cannot advise you on what to do. This is a financial decision that's entirely yours. Option exchanges are regulated by the SEC, which has strict legal requirements. If you ask for advice, we are required to say: Read through your materials, talk to an advisor. If you have general equity questions, you can email equity at equity@crescolabs.com. We can answer questions as it relates to options, but you will need to handle the process of the options exchange without our input.
And this is also very important: you must complete this process on time. If you miss it, it’s done. There is no way to modify or add an election after the close. This is a one-time offer. It's only 20 business days long. Make time to review the materials as soon as possible.
Slide 4: First the overview of the option exchange program, how an option exchange works, the eligibility, we’re going to review the new award terms, Important disclaimers, and then answer questions after that.
Slide 5: Why is Cresco giving employees the opportunity to exchange their current equity awards? There are a few reasons…equity is a very important part of your total rewards package because it rewards you for the company’s long-term success. Today, many stock options that have been granted to employees are underwater due to many factors. Underwater means that the options’ exercise price is greater than the current stock price of Cresco. It is fairly normal for stock options to fluctuate in value and become “underwater.” As they are granted at the current stock price at a point in time. However, when options are significantly underwater because the stock price has dropped since the grant date, those options are no longer as valuable as a long-term reward. There’s still some value in the options, but you would need to wait for however long it takes for the stock price to go up above the exercise price to attain that value. Cresco Labs wants your equity awards to be an effective long-term reward for you.
This exchange is an offer to trade your underwater options for New RSUs. The stock option exchange offer only applies to stock options with a $2.25 or higher strike price or options with an expiration date prior to September 30, 2030. In this exchange, the number of total RSUs you receive back will be the same as the number of options you exchange. If you decide to exchange your existing options for new RSUs, the new RSU grant will have a new vesting schedule so that’s part of the deal.
Slide 6: How an Option Exchange Works: Your Offer to Exchange Options for New RSUs
Slide 7: Your stock option exchange is an opportunity to exchange certain existing underwater options for new RSUs. There are specific eligible grants. It's also not required – this is only an offer. You can retain all of your existing stock option grants exactly as they are now. There is not one right answer for everybody’s unique financial situation, and I am not going to explicitly recommend you exchange your options. That is something that
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| Cresco – Stock Option Exchange Program Presentation | ||
you have to work out on your own or with a financial advisor, and it is based on how you expect the company’s stock price to change, how you feel about your current options versus receiving new RSUs, and the overall structure of your equity related to things like the vesting schedule. Remember, an underwater option is an option whose exercise price is above the current trading price. But, yes, underwater options do have value. You would only be able to access that value when and if Cresco’s stock price goes higher than the exercise price on your option.
Slide 8: The offer is managed as a formal process called a tender offer. The offer is open from August 20th to September 17th. All elections must be made by 10:59pm Central Time/11:59 PM Eastern on September 17th. If you choose to exchange your existing options, the grant date of your new RSU award will be on September 17th, subject to shareholder approval of the Option Exchange, which is expected to occur on September 16th 2025. You’ll receive the new RSU grant in Siebert at a later date, pending approval of the program by shareholders at the company’s Annual General Meeting, in September. If you do not choose to exchange your equity grants, then nothing changes for you. You can also change your mind and opt in or out of the program, as long as you make your final election by September 17th by 10:59 PM Central/11:59 PM Eastern When it closes, no more changes can be made. There are no exceptions.
Slide 9: Eligibility
Slide 10: Eligible participants are executive officers, including the CEO, and other members of our senior leadership team and must hold eligible options.
Slide 11: Eligible options are held by an eligible employee and are outstanding and have a grant date exercise price of $2.25 or greater OR expires prior to September 30, 2030. Let’s talk for a minute about a few terms on this slide. Let’s start with options. Options are contracts that give you the option – or choice – to purchase a company’s stock at a set price. The idea is that you get to buy stock when the stock price is higher than your option price, which means you get a great deal because you’re paying less for the stock that’s worth a higher value. Next, when you hear the words exercise price, option price, grant price, or strike price – know that they all mean the same thing, it is the price you pay for the option when you decide to exercise it, meaning you purchase Cresco Labs stock. An outstanding option is a grant of stock that has not yet been exercised or cancelled.
Slide 12: Let’s understand your new award terms – the contractual conditions of the awards you would be given in the exchange.
Slide 13: The expected grant date of your new RSU grant will be September 17, 2025. It is important to note that the new RSU will be granted subject to the receipt of stockholder approval of the Option Exchange, which is expected to occur on September 16th, 2025. The vesting period is the amount of time you must work for Cresco Labs before you completely own the entire equity grant. Usually vesting is done in stages over a period of years, so the percentage of the contract that you own will grow over time. Your new RSUs will vested 1/3 on each anniversary of the grant date for the next 3 years.
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| Cresco – Stock Option Exchange Program Presentation | ||
Slide 14: An RSU is a full value share, meaning you do not pay a price as the recipient. On the vesting date the units will convert into shares of Cresco stock. There is no decision that you make to purchase, this will happen automatically at the time of vesting. There will be taxes that are calculated and due at the time of vesting, which you can cover in cash or withheld shares. If you leave Cresco Labs prior to the RSUs vesting, those unvested units will be forfeited.
Slide 15: This is an example of 1,500 eligible options at an exercise price of $2.25. If the option to exchange is made, the original option of 1,500 is cancelled and a new grant of RSUs will be made on September 17, 2025 for 1,500 units. This grant will vest 500 units on each anniversary over the next 3 years. 500 units vesting on September 17, 2026, 500 units vesting on September 17, 2027, and 500 units vesting on September 17, 2028.
Slide 16: The timeline for the exchange looks like this. It opens on August 20th and will close on September 17th at 10:59 pm Central Time/11:59 PM Eastern. The grant date for your new RSU is expected to be on September 17, 2025, when the exchange offer closes, but the grant will be subject to stockholder approval of the Option Exchange, which is expected to occur on September 16th, 2025. In early October, Siebert systems will be updated with your new grant paperwork.
Slide 17: Here’s the process. A DocuSign email with details will be sent to you on August 20th to your “primary email” that is listed in Wurk, on behalf of John.HammondUS@aon.com. If you wish to participate, click the DocuSign to select your awards and sign the agreement. You can change your election as many times as you want until September 17th, by 10:59 PM Central/11:59 PM Eastern. Your current election is locked when the option exchange period closes. Once it’s locked, if you elected to participate, you'll get a grant notification email from equity@crescolabs.com when the grant is available in Siebert. You will also see your current option canceled in the system, subject to the shareholder approval of the Option Exchange program.
Slide 18: Important disclaimers. Cresco cannot advise you on what to do. This is a financial decision that's entirely yours. Option exchanges are regulated by the SEC, which has strict legal requirements. If you ask for advice, we are required to say: Read through your materials, talk to an advisor. If you have general equity questions, you can email equity at equity@crescolabs.com. We can answer questions as it relates to options, but you will need to handle the process of the options exchange without our input.
And this is also very important: you must complete this process on time. If you miss it, it’s done. There is no way to modify or add an election after the close. This is a one-time event – we won’t be repeating this offer again. It's only 20 business days long. Make time to review the materials as soon as possible. 20 business days goes quickly.
Slide 19: With those caveats, you can send questions to equity@crescolabs.com if they come up. Remember – nothing on what to do or what’s right for you, but anything truly factual about the process or the award types we can definitely answer questions. Thank you very much for your time.
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Exhibit (a)(1)(G)
From: Angie Demchenko
Subject: FW: Confidential: Cresco Labs Option Exchange Program (additional information)
Subject: FW: Confidential: Cresco Labs Option Exchange Program (additional information)
THIS IS A PRE-COMMENCEMENT COMMUNICATION. This communication relates to a proposed exchange program (the “Exchange Offer”) that the Company expects to commence on or about August 20, 2025. This communication is not an offer to purchase, nor a solicitation of an offer to sell, any securities. A formal Offer to Exchange and related documents will be filed with the U.S. Securities and Exchange Commission (the “SEC”) and will be available free of charge on the SEC’s website (www.sec.gov) when filed. Please read those materials carefully when they become available.
Hi everyone – I wanted to follow up with a few items – please see below and let me know if you have any questions or would like to connect live
•there was a small tweak needed in the FAQs sent yesterday – please find attached the updated version (change noted below).
Why am I being offered the chance to exchange my current Cresco Labs options for new RSUs?
Equity awards are an essential part of Cresco Labs’s total rewards program because we believe our employees should be owners of our long-term success as a company. The challenges in the cannabis industry and economy in recent years have flattened stock prices for all cannabis companies, including Cresco Labs. This means that many employees’ stock options have an exercise price that is well below <changed to well above> Cresco Labs’s current share price (they are “underwater”). The Award Exchange Program allows employees to exchange certain stock options that are underwater for the same number of new RSUs.
•We will be hosting two optional sessions to run through program detail (everything is covered in the FAQ but this gives you the opportunity to ask questions with me and our Aon contact on the line). I am also available to connect individually if you have questions on the program itself but as a reminder, anything related to your financial situation or how you choose to proceed are best managed with your personal financial contact. Please accept or decline the invites depending on whether or not you plan to attend. Meeting invites to follow:
Friday August 22nd 9:00 to 9:30 CST
Monday August 25th 10:00 to 10:30 CST
Thanks,
ang
Exhibit (a)(1)(H)
RESTRICED STOCK UNIT AWARD AGREEMENT
THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is made as of [[GRANTDATE]] (the “Grant Date”) by and between Cresco Labs Inc., a British Columbia corporation (“Cresco” or the “Corporation”), and the undersigned employee (the “Recipient”), in accordance with and subject to the Amended and Restated Cresco Labs Inc. 2018 Long-Term Incentive Plan (the “Plan”). As used in this Agreement, the term “Corporation” shall include, where applicable, any and all of Cresco’s subsidiaries or related entities. Capitalized terms used but not defined in this Agreement have the meanings attributed to them in the Plan.
WHEREAS, in accordance with the Plan, the provisions of which are incorporated herein by reference, and in connection with the services to be performed by Recipient, the Corporation has authorized the grant of Restricted Stock Units (each an “RSU,” and collectively the “RSUs”) to the Recipient as set forth in this Agreement. The RSUs granted under this Agreement represent a contractual obligation by Cresco to issue and deliver to Recipient an equivalent number of Common Shares, subject to the terms and conditions set forth in this Agreement and the Plan.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cresco and Recipient agree as follows:
1.Grant of the RSUs. Subject to the terms, conditions, limitations and restrictions set forth in this Agreement and the Plan, Cresco hereby awards and grants to Recipient the aggregate amount of [[SHARESGRATNED]] RSUs on the Grant Date.
2.Vesting of the RSUs. Subject to earlier termination, acceleration or cancellation of the RSUs as provided in this Agreement and/or the Plan, the RSUs shall vest and be converted to Common Shares issued and delivered to Recipient on the dates set forth in the following vesting table (each a “Vesting Date”), commencing and continuing in accordance with the vesting table; provided, however, that no portion of the RSUs shall vest (and no Common Shares shall be issued and delivered) under this Agreement unless Recipient has remained and is actively employed in good standing with the Corporation on each such Vesting Date:
Date Vested Shares
September 17, 2026 1/3rd of the grant
September 17, 2027 1/3rd of the grant
September 17, 2028 1/3rd of the grant
Subject to the terms and conditions of the Plan and this Agreement (including Paragraphs 6 and 10), on each Vesting Date the then-vested RSUs will be settled and converted to Common Shares (or, in accordance with the Plan and at the discretion of the Administrator, an amount in cash (or combination of Common Shares and cash) equal to the Fair Market Value of the specified number of Common Shares as of the applicable Vesting Date(s)) and, upon such settlement and conversion, each vested RSU shall terminate. As soon as administratively practicable after each
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Vesting Date, but no later than 30 days following such vesting, Cresco shall issue and deliver the Common Shares (and/or payment) to the Recipient.
3.Transferability Restriction. The RSUs may not be assigned, transferred or otherwise disposed of, or pledged or hypothecated in any way (whether by operation of law or otherwise) except in compliance with Section 9 of the Plan. Except as otherwise permitted under the Plan or authorized by the Administrator, any assignment, transfer, pledge, hypothecation or other disposition of an RSU or any attempt to make any levy of execution, attachment or other process will cause the RSU to terminate immediately upon the happening of any such event; provided, however, that any such termination of the RSU under the provisions of this Paragraph 3 will not prejudice any rights or remedies which Cresco may have under this Agreement or otherwise.
4.Effect of Termination of Service. Except as provided in this Agreement or as otherwise provided in the Plan, upon Recipient’s Termination of Service for any reason, or failure to satisfy any other condition precedent to the delivery of Common Shares and/or payment to which such RSUs relate, all RSUs and any accrued but unpaid Dividend Equivalents shall be forfeited and cancelled, and Recipient shall no longer have any rights with respect to the forfeited and cancelled RSUs and/or Dividend Equivalents; provided, however, the Administrator may, in its sole discretion, accelerate vesting of all or a portion of the RSUs to the date of Recipient’s Termination of Service.
5.Recipient’s Rights as Shareholder. Prior to the vesting of the RSUs, the Recipient shall have no rights as a shareholder with respect to the RSUs or any of the Common Shares to be issued upon vesting. Subject to the terms and conditions of this Agreement and the Plan, however, the Administrator in its sole discretion may grant to the Recipient, for each RSU awarded under this Agreement, the unvested right to accrue and receive monetary payment in an amount equal to any dividends that would have been paid to the Recipient if one Common Share had been issued to the Recipient on the Grant Date (“Dividend Equivalents”). Should Recipient be granted the right to receive Dividend Equivalents in connection with an RSU, then upon vesting of the RSU, in addition to the issuance and delivery of a Common Share and/or cash in accordance with Paragraph 2 of this Agreement, the Recipient shall at that time also receive payment equal to any Dividend Equivalents that have accrued with respect to that RSU as of the Vesting Date. Upon vesting of an RSU, the Dividend Equivalents (if any) associated with that RSU shall terminate.
6.Adjustments. The RSUs shall be subject to adjustment upon the occurrence of certain events as set forth in Section 10 of the Plan.
7.Notices. Each notice relating to this Agreement will be in writing and delivered in person or by certified mail to the proper address. Notices to Cresco shall be addressed to Cresco, attention: Chief Financial Officer and General Counsel, Cresco Labs Inc., 600 W. Fulton St., Suite 800, Chicago, Illinois 60661, or at such other address as may constitute Cresco’s principal place of business at the time. Notices to Recipient or other person or persons then entitled to the RSUs granted under this Agreement shall be addressed to Recipient or such other person or persons at Recipient’s or such other person’s address then on file with Cresco. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to that effect given pursuant to this Paragraph 7.
8.Successors and Assigns; No Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Corporation and Recipient and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer on any person other than the Corporation and Recipient, and
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their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
9.Compliance with Laws and Other Restrictions. The RSUs and Cresco’s obligation to issue and deliver shares related to an RSU are subject to: (a) all applicable federal, state and provincial laws, rules and regulations (including those of any national securities exchange(s) on which the Common Shares may be listed); (b) such approvals as may be required by any regulatory or governmental agency; and (c) any restrictions imposed under any internal Cresco policy or any written agreement or instrument by which Recipient is bound.
10.Withholding of Taxes. Whenever the Corporation is required to issue Common Shares under this Agreement, then prior to – and as a necessary condition precedent of – Cresco’s issuance and delivery of the Common Shares, the Recipient shall remit to Cresco payment in cash (or cash equivalents) in an amount sufficient to satisfy any and all income tax, employment tax, and any other tax or social insurance contribution required by federal, state, provincial and/or local law to be withheld in connection with the RSUs granted under this Agreement (“Tax Withholding Obligations”); provided however, that Cresco may at its discretion allow the Recipient to satisfy such Tax Withholding Obligations by: (i) authorizing the Corporation to withhold from the Common Shares to be issued a number of shares with an aggregate Fair Market Value that would fully satisfy the Tax Withholding Obligations; or (ii) any other reasonable method to satisfy the applicable Tax Withholding Obligations, as provided in the Plan or determined by the Administrator. Notwithstanding the provisions of clause (i) of the preceding sentence, the Fair Market Value of shares withheld shall not exceed the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the RSUs or the underlying shares as a liability for financial accounting purposes). In accordance with Section 8 of the Plan, Recipient acknowledges and hereby agrees that the Corporation or its subsidiary may deduct, to the extent permitted by law, Tax Withholding Obligations from any payment of any kind, including but not limited to payment of any Dividend Equivalents, commissions, wages or other compensation, otherwise due to Recipient.
11.Plan Governs. In the event that any provision in this Agreement conflicts with a provision in the Plan, the provision of the Plan shall govern.
12.Recipient Undertaking; Acceptance. Recipient agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable to carry out or give effect to the provisions of this Agreement. Recipient acknowledges receipt of a copy of the Plan and this Agreement and understands that material definitions and provisions concerning the RSUs and Recipient’s rights and obligations with respect thereto are set forth in the Plan. Recipient has read carefully, and understands, the provisions of this Agreement and the Plan.
13.Severability. Any provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such invalidity or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
14.Tax Consequences. None of Cresco, any Subsidiary, or any officer, director, employee or agent of either, shall be responsible to Recipient or any other person for the tax consequences of the RSUs thereof or the sale or other disposition of the underlying Common Shares.
15.Section 409A and 457A. It is the intent of Cresco and Recipient that this Agreement shall comply with the requirements of Section 409A and 457A of the Code, to the
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extent applicable to RSUs granted to a Recipient who is subject to income taxation in the United States, and the provisions of the Agreement shall be interpreted in a manner that satisfies the requirements of Section 409A and 457A of the Code. If any provision of the Agreement would otherwise frustrate or conflict with this intent, the provision, term or condition will be interpreted and deemed amended so as to avoid this conflict. Notwithstanding the foregoing, the tax treatment of the benefits provided under the Plan or any award document is not warranted or guaranteed, and in no event shall the Corporation be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Recipient on account of non-compliance with Section 409A and 457A of the Code.
16.Waiver or Modification. No amendment or modification of any provision of this Agreement shall be effective unless signed in writing by or on behalf of Cresco and Recipient; provided that Cresco may amend or modify this Award Agreement without Recipient’s consent in accordance with the provisions of the Plan or as otherwise set forth in this Agreement. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature. Any amendment or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.
17.Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any prior agreements, arrangements or understandings by or between the parties, written or oral, that may have related in any way to such subject matter. This Agreement does not modify any terms or conditions of employment (including any “at will” employment relationship) with the Corporation, and nothing in this Agreement constitutes or shall be construed as creating an express or implied contract of employment for any definite term.
18.
[Signature Page Follows]
[Signature Page Follows]
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19.
IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the date first above written.
CRESCO: CRESCO LABS INC. By:  Name: Sharon Schuler Title: Chief Financial Officer | RECIPIENT: __________________________________ [[First Name]] [[Last Name]] | ||||
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