CRLBF 0001832928-25-000006 40-F as filed: Mar 14, 2025

Exhibit 99.4

CRESCO LABS INC.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED

DECEMBER 31, 2024

DATED MARCH 14, 2025

TABLE OF CONTENTS


GENERAL			1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION			1
MARKET DATA AND INDUSTRY FORECASTS			2
CORPORATE STRUCTURE			3
GENERAL DEVELOPMENT OF THE BUSINESS			6
DESCRIPTION OF THE BUSINESS			10
RISK FACTORS			21
DIVIDENDS AND DISTRIBUTIONS			52
DESCRIPTION OF CAPITAL STRUCTURE			52
MARKET FOR SECURITIES			71
CONSOLIDATED CAPITALIZATION			72
DIRECTORS AND EXECUTIVE OFFICERS			73
PROMOTERS			78
LEGAL PROCEEDINGS AND REGULATORY ACTIONS			78
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS			78
AUDITOR, TRANSFER AGENT, AND REGISTRAR			78
MATERIAL CONTRACTS			78
INTERESTS OF EXPERTS			78
ADDITIONAL INFORMATION			79

GENERAL

Unless otherwise noted herein, information in this annual information form (the “AIF”) applies to the business activities and operations of Cresco Labs Inc. (together with its subsidiaries, as the context requires, “Cresco”, “Cresco Labs” or the “Company”) for the year ended December 31, 2024, as updated where applicable to March 14, 2025. Financial information presented in this AIF is presented in United States (“U.S.”) dollars (“USD” or “$”), unless otherwise indicated. All references to “C$” refer to Canadian dollars.

Reference is made to the audited consolidated financial statements (the “Financial Statements”), together with the auditor’s report thereon, and management’s discussion and analysis (the “MD&A”) for Cresco Labs for the financial year ended December 31, 2024. Additional financial information is provided in the Financial Statements and MD&A, which are available for review under the Company’s profile on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This AIF includes “forward-looking information” and “forward-looking statements” within the meaning of Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All information, other than statements of historical facts, included in this AIF that address activities, events, or developments that the Company expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect,” or similar expressions and includes, among others, information regarding: the Company’s intention regarding cash flows from operating activities in future periods; statements relating to the business; and future activities of, and developments related to, the Company after the date of this AIF, including but not limited to such things as future business strategy, competitive strengths, goals, expansion, and growth of the Company’s business, operations, and plans, including new revenue streams, the completion of contemplated acquisitions by the Company, the application for additional licenses and the grant of licenses that have been applied for, the expansion of existing cultivation and production facilities, the completion of cultivation and production facilities that are under construction, the construction of additional cultivation and production facilities, the expansion into additional states within the U.S., international markets and Canada; any potential future legalization of adult-use and/or medical cannabis under U.S. federal law; expectations of market size and growth in the U.S. and the states in which the Company operates; expectations for other economic, business, regulatory, and/or competitive factors related to the Company or the cannabis industry generally; and other events or conditions that may occur in the future.

Readers are cautioned that forward-looking information and statements are not based on historical facts but instead are based on reasonable assumptions, estimates, analysis, and opinions of management of the Company at the time they were provided or made, in light of its experience and its perception of trends, current conditions, and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company, as applicable, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking information and statements. Forward-looking information and statements are not a guarantee of future performance and are based upon a number of estimates and assumptions of management at the date the statements are made including, among other things, assumptions about: development costs remaining consistent with budgets; the ability to manage anticipated and unanticipated costs; access to favorable equity and debt capital markets; the ability to raise sufficient capital to advance the business of the Company; favorable operating and economic conditions; political and regulatory stability; obtaining and maintaining all required licenses and permits; receipt of governmental approvals and permits; sustained labor stability; stability in financial and capital goods markets; favorable production levels and costs from the Company’s operations; the pricing of various cannabis products; the level of demand for cannabis products; the availability of third-party service providers and other inputs for the Company’s operations; and the Company’s ability to conduct operations in a safe, efficient, and effective manner. While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic,

political, regulatory, competitive, and other risks and uncertainties, contingencies, and other factors that could cause actual performance, achievements, actions, events, results, or conditions to be materially different from those projected in the forward-looking information and statements. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.

See “Risk Factors” for discussion of material risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company, as applicable, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking information and statements.

Readers are cautioned that the foregoing lists are not exhaustive of all factors and assumptions that may have been used. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, or intended. There can be no assurance that such forward-looking information and statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such information and statements. Accordingly, readers should not place undue reliance on forward-looking information and statements. The forward-looking information and statements contained herein are presented for the purposes of assisting readers in understanding the Company’s expected financial and operating performance and the Company’s plans and objectives and may not be appropriate for other purposes. Forward-looking information and statements are provided and made as of the date of this AIF and the Company does not undertake any obligation to revise or update any forward-looking information or statements other than as required by applicable law.

Financial Information Not in Accordance with Generally Accepted Accounting Principles in the United States (“GAAP”)

In certain of its financial disclosures such as its Financial Statements, MD&A, and earnings releases the Company uses pro forma financial information as well as certain non-GAAP financial measures that do not have standardized definitions under U.S. GAAP. The non-GAAP measures include: Earnings before interest, taxes, depreciation, and amortization (“EBITDA”); Adjusted EBITDA; Adjusted EBITDA margin; Adjusted gross profit; Adjusted gross profit margin; Adjusted selling, general, and administrative expenses (“Adjusted SG&A”), Adjusted SG&A margin; and Free Cash Flow. The Company provides the non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP, and may not be comparable to similar measures presented by other issuers. These supplemental non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. However, such measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the most comparable GAAP financial measures. As such, these supplemental non-GAAP financial measures shall always include reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Foreign Currency Information

The Company’s expenses are primarily denominated in USD and its operations are primarily in the U.S. The Company’s current exposure to exchange rate fluctuations relate primarily to the activities of its Canadian entities.

MARKET DATA AND INDUSTRY FORECASTS

This AIF includes market and industry data that has been obtained from third-party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third-party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third-party sources referred to in this AIF or ascertained the underlying economic assumptions relied upon by such sources and as such the Company does not

make any representation as to the accuracy of such information. Further, market and industry data is subject to variations and cannot be verified due to limits on the availability and reliability of data inputs, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. See also “Cautionary Statement Regarding Forward-Looking Information.”

CORPORATE STRUCTURE

The Company, formerly known as Randsburg International Gold Corp. (“Randsburg”), was incorporated in the Province of British Columbia under the Company Act (British Columbia) on July 6, 1990. On December 30, 1997, the Company changed its name from Randsburg Gold Corporation to Randsburg International Gold Corp., and consolidated its outstanding common shares on a five (5) old for one (1) new basis. On November 30, 2018, a series of transactions were completed among Randsburg and Cresco Labs, LLC (“Cresco LLC”) resulting in a reorganization of Cresco LLC and Randsburg, pursuant to which Randsburg became the indirect parent and sole voting unitholder of Cresco LLC (the “Business Combination”). The Business Combination constituted a reverse takeover of Randsburg by Cresco LLC under applicable securities laws.

Cresco LLC was formed as a limited liability company under the laws of the state of Illinois on October 8, 2013, and is governed by a Pre-Combination LLC Agreement1. The Pre-Combination LLC Agreement was further amended and restated (the “A&R LLC Agreement”) in connection with the completion of the Business Combination. Please see “Description of Capital Structure – A&R LLC Agreement” for additional details as to the A&R LLC Agreement.

On November 30, 2018, in connection with the Business Combination, the Company:

(i)consolidated its outstanding Randsburg common shares on an 812.63 old for one (1) new basis, and

(ii)filed an alteration to its Notice of Articles with the British Columbia Registrar of Companies to change its name from Randsburg International Gold Corp. to Cresco Labs Inc. and to amend the rights and restrictions of its existing class of common shares, redesignate such class as the class of Subordinate Voting Shares (“SVS”), and create the classes of Proportionate Voting Shares (“PVS”) and Super Voting Shares (“MVS”).

On June 29, 2020, the Company filed an alteration to its Notice of Articles with the British Columbia Registrar of Companies to create a class of Special Subordinate Voting Shares (“SSVS”) and amend the rights and restrictions of SVS, PVS, and MVS.

On June 3, 2022, the Company amended and restated the investment agreement originally dated as of November 30, 2018, among the holders of MVS and the Company. As amended and restated, the investment agreement provides that the Company will repurchase (the “Share Repurchase”) all of the MVS not later than the first business day after the first annual meeting of shareholders of the Company following any future listing of the SVS on a United States national securities exchange.

At the meeting of shareholders of the Company held on July 15, 2022, the shareholders approved a special resolution that the Company’s articles be altered. On June 1, 2023, the Company amended its articles with the approved shareholder resolution, such that following a listing of the SVS on a United States national securities exchange:

(i)the Company may not issue any new MVS,

(ii)any MVS repurchased by the Company must be cancelled and may not be reissued, and

1 Pre-Combination LLC Agreement means the Cresco LLC limited liability company agreement dated October 8, 2013, as amended and restated as of March 28, 2015, and as further amended and restated as of March 17, 2018, and as of July 1, 2018.

(iii)at the time that there are no MVS outstanding, the Company may take such appropriate action (without the need for shareholder action or approval) as may be necessary to remove the MVS from the Company’s authorized share structure.

The Company’s corporate headquarters is located at 600 W. Fulton Street, Suite 800, Chicago, IL 60661 and the registered office is located at 666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8.

Set forth below is the condensed organization chart of the Company as of March 14, 2025.

Super Voting Shareholders1

Thomas J. Manning

Robert M. Sampson

Charles Bachtell

Brian McCormack Trust1

Holders of Subordinate

Voting Shares

Holders of Proportionate

Voting Shares

Cresco Labs Inc.

[British Columbia]

Holders of Cresco Units

Operating Subsidiaries

Cresco U.S. Corp. Voting Shares

Cresco U.S. Corp.

[Illinois]

Cresco
Redeemable Units

Cresco
Non-Redeemable Units

Operating Subsidiaries

Cresco Labs, LLC

[Illinois]

1 Super Voting Share

ownership percentages:

• Thomas J. Manning - 26.75%

• Robert M. Sampson - 26.66%

• Charles Bachtell - 26.59%

• Brian McCormack Trust - 20.00%

Cresco Labs Notes Issuer, LLC

[Illinois]

Operating Subsidiaries

1 During the year ended December 31, 2024, MVS shares owned by Brian McCormack were transferred to the Brian T. McCormack Self Declaration of Trust (“Brian McCormack Trust”).

The Company operates its business through its directly and indirectly owned subsidiaries that hold licenses and have entered into managed service agreements in the states in which they operate. For additional information on wholly-owned or effectively controlled subsidiaries and affiliates of Cresco Labs, refer to Note 2 “Summary of Significant Accounting Policies” under the heading “Basis of Consolidation” of the Company’s Consolidated Financial Statements for the years ended December 31, 2024 and 2023, which section is incorporated by reference herein.

GENERAL DEVELOPMENT OF THE BUSINESS

Cresco exists to provide high-quality and consistent cannabis-based products to consumers. Cresco blends regulatory compliance expertise with best practices from the agricultural, pharmaceutical, and consumer-packaged goods industries. As of March 14, 2025, Cresco owns and/or operates cultivation, manufacturing, and retail dispensary businesses across eight (8) highly regulated markets: Illinois, Pennsylvania, Ohio, California, New York, Massachusetts, Michigan, and Florida. These markets, where supply and demand can be reasonably predicted and forecasted, create the foundation upon which Cresco has created the opportunity for sustainable growth.

Cresco plans to leverage the success in our current markets to expand into legalized cannabis markets in other states, while focusing on compliance, control, efficiency, and product performance in the medicinal or adult-use cannabis industry.

This ownership of wholesale and retail businesses supports Cresco’s strategy of distributing brands at scale by enabling Cresco to capture market share, generate brand awareness, and earn customer loyalty in its operating markets by guaranteeing share-of-shelf in its own retail stores and its ability to foster mutually beneficial relationships with its third-party dispensary customers as a large supplier of a portfolio of distinct and trusted cannabis brands.

Acquisitions and Dispositions

Keystone Integrated Care, LLC (“Keystone”)

On April 24, 2024, the Company successfully finalized its acquisition of Keystone for aggregate consideration of $8.5 million which includes a mix of $3.4 million in cash consideration, $2.8 million of equity, and $2.3 million in deferred consideration. Prior to the acquisition, Keystone operated two (2) dispensaries in Pittsburgh, PA and Greensburg, PA and held a third dispensary license. With the additional license, the Company has the opportunity to open one (1) more dispensary within the Commonwealth, further expanding our presence and reach and bringing the total number of dispensaries added to three (3).

No acquisitions were completed in fiscal years 2022 or 2023. The Keystone acquisition did not meet the definition of a “significant acquisition” as defined in Canadian securities law.

AFS Maryland, LLC

On June 22, 2023, the Company completed a divestiture of its AFS Maryland, LLC production facility. The Company received cash proceeds of $3.3 million for the sale of property, equipment, and intangible assets and recorded a gain of $1.4 million from the completed divestiture.

Encanto Green Cross Dispensary (“Encanto”)

On October 18, 2023, the Company closed on the sale of the assets of Encanto. The sale of the assets generated cash proceeds of $6.5 million and resulted in a net loss of $1.0 million.

No dispositions were completed in fiscal years 2022 or 2024.

Equity Financing Activities

Shelf Prospectus

On August 16, 2023, the Company filed a short form base shelf prospectus (the “Shelf Prospectus”) with the securities commissions in each of the provinces of Canada, except Québec. On August 17, 2023, the Company received a receipt for the Shelf Prospectus and filed a corresponding shelf registration statement on Form F-10 (the “Registration Statement”) with the U.S. Securities and Exchange Commission (“SEC”) under the U.S./Canada Multijurisdictional Disclosure System (“MJDS”). The Shelf Prospectus and Registration Statement allow the Company to offer SVS, debt securities, subscription receipts, warrants, and units, or any combination thereof, from time to time during the 25-month period that the Shelf Prospectus is effective (subject to MJDS eligibility). The Shelf Prospectus replaced a shelf prospectus that had been filed in 2021 and expired during 2023.

At-the-Market Offering

In April 2021, the Company entered into an equity distribution agreement with Canaccord Genuity Corp. Pursuant to this agreement, the Company was able, from time to time, to sell up to 100.0 million of its SVS in Canada (the “ATM Program”). The ATM Program was made pursuant to the 2021 Shelf Prospectus and a prospectus supplement dated April 23, 2021. The ATM Program expired in May 2023, and no shares were sold under the program.

Debt Financing Activities

Senior Loan

On August 12, 2021, the Company closed on an agreement for a senior secured term loan with an undiscounted principal balance of $400.0 million (as amended, the “Senior Loan”) and an original issue discount of $13.0 million. A portion of proceeds from the Senior Loan were used to retire a pre-existing term loan that was entered into on February 2, 2020, with the remainder to fund capital expenditures and pursue other targeted growth initiatives within the U.S. cannabis sector. Under the agreement, the Company is subject to certain financial and non-financial covenants.

On September 22, 2023, the Company amended the Senior Loan to modify certain terms of the original Senior Loan, and consent was provided for the Company to enter into the Mortgage Loans further discussed below.

On August 29, 2024, the Company entered into a second amendment the Senior Secured Term Loan Agreement (the “Amended Loan Agreement”). Pursuant to the terms of the Amended Loan Agreement, the Company may from time-to-time purchase, by assignment, all or a portion of the lender’s loans, plus applicable accrued and unpaid interest, on the terms and conditions set forth in the Amended Loan Agreement.

The Company may prepay in whole, or in part, the Senior Loan at any time prior to the stated maturity date, subject to certain conditions. Any prepayment of the outstanding principal amount may be subject to a prepayment premium as defined in the Amended Loan Agreement, and would include all accrued and unpaid interest and fees.

Mortgage Loans

On September 26, 2023, JDRC Ellenville, LLC (“Ellenville”), an indirect subsidiary of the Company, entered into a loan agreement to borrow an undiscounted principal amount of $25.3 million (the “Mortgage Loans”). Borrowings under the terms of the Mortgage Loans bear an initial interest rate of 8.4% per annum, which is equal to the Federal Home Loan Bank’s Five Year Classic Regular Advance Rate, plus a 375 basis point spread. The Mortgage Loans have an effective interest rate of 10.2%. The Mortgage Loans are secured by real estate in Ellenville, New York and improvements thereto, and converts to a permanent term loan on the conversion date of November 1, 2028. The Mortgage Loans contains certain affirmative and negative covenants which restrict the actions of Ellenville during the term of the loan.

U.S. Industry Background and Trends

The emergence of the legal cannabis sector in the U.S., both for medical and adult-use, has been rapid as more states adopt regulations for its production and sale. Today more than 50% of Americans live in a state where cannabis is fully legalized for adult-use.2

The use of cannabis and cannabis derivatives to treat or alleviate the symptoms of a wide variety of chronic conditions has been generally accepted by a majority of citizens with a growing acceptance by the medical community as well. A review of the research, published in 2015 in the Journal of the American Medical Association, found strong evidence that cannabis can treat pain and muscle spasms.3 The pain component is particularly important because other studies have suggested that cannabis can replace pain patients’ use of highly addictive, potentially deadly opiates — meaning marijuana legalization has the potential to save lives.4

Polls throughout the U.S. consistently show overwhelming support for the legalization of medical cannabis, together with strong majority support for the full legalization of recreational adult-use cannabis. It is estimated that 88% of the U.S. voters support legalizing cannabis for medical and/or adult-use.5 These represent large increases in public support over the past 40 years in favor of legal cannabis use.

More than 80% of the U.S. states have now legalized adult-use and/or medical marijuana, marijuana remains illegal under U.S. federal law with marijuana listed as a Schedule I drug under the U.S. Controlled Substances Act (the “CSA”). On April 30, 2024, the U.S. Drug Enforcement Administration (“DEA”) publicly recommended that cannabis be rescheduled from a Schedule I controlled substance to a Schedule III controlled substance. The DEA recommendation was reviewed by the White House Office of Management and Budget (“OMB”). Subsequent to OMB’s review, the DEA proposal was published in the federal register and the formal rule making process began during which the DEA received public comment on its rescheduling plan. After the close of the public comment period, the DEA scheduled a hearing before an administrative law judge, which began in December 2024 and will continue into 2025, to consider differing expert opinions on the rescheduling of cannabis. Following the hearing, the DEA is expected to publish its final rule. See “Description of the Business” and “Risk Factors” below. The U.S. Department of Justice (“DOJ”) defines Schedule I drugs, substances, or chemicals as “drugs with no currently accepted medical use and a high potential for abuse.” The U.S. Food and Drug Administration (“FDA”) has not approved marijuana as a safe and effective drug for any indication.

Unlike in Canada, which has federal legislation uniformly governing the cultivation, distribution, sale, and possession of medical marijuana under the Cannabis Act (Canada), marijuana is largely regulated at the state level in the U.S.

2 https://worldpopulationreview.com/states

3 Grant, Igor MD (2015). Medical Use of Cannabinoids. Journal of American Medical Association, 314: 16, 1750-1751. doi: 10.1001/jama.2015.11429.

4 Bachhuber, MA, Saloner B, Cunningham CO, Barry CL. (2014). Medical Cannabis Laws and Opioid Analgesic Overdose Mortality in the U.S., 1999-2010. JAMA Intern Med. 174(10):1668-1673. doi: 10.1001/jamainternmed.2014.4005.

5 https://www.pewresearch.org/politics/2024/03/26/most-americans-favor-legalizing-marijuana-for-medical-recreational-use/

State laws regulating cannabis are in direct conflict with the CSA, which makes cannabis use and possession federally illegal in the U.S. Although certain states and territories of the U.S. authorize medical or recreational cannabis production and distribution by licensed or registered entities, under U.S. federal law, the possession, use, cultivation, and transfer of cannabis and any related drug paraphernalia is illegal, and any such acts are criminal acts under U.S. federal law under any and all circumstances under the CSA. Although Cresco and its subsidiaries’ activities are compliant with applicable U.S. state and local law, strict compliance with state and local laws with respect to cannabis may neither absolve Cresco and its subsidiaries of liability under U.S. federal law, nor provide a defense to any U.S. federal proceeding which may be brought against Cresco or its subsidiaries.

Current U.S. Cannabis Market

Source: https://mjbizdaily.com/map-of-us-marijuana-legalization-by-state/

Going forward, the Company expects that the U.S. cannabis industry will continue to be subject to state legislation, with additional states regulating the medical and recreational use of cannabis.

The Company has current operations in the states of Illinois, Pennsylvania, Ohio, California, New York, Massachusetts, Michigan, and Florida. It intends to expand into other states within the U.S. that have legalized cannabis use either medicinally or recreationally.

On December 20, 2018, the 2018 Farm Bill (the “Farm Bill”) became law in the U.S. Under the Farm Bill, industrial and commercial hemp is no longer to be classified as a Schedule I controlled substance in the U.S. Hemp includes the plant cannabis sativa L and any part of that plant, including seeds, derivatives, extracts, cannabinoids, and isomers. To qualify under the Farm Bill, hemp must contain no more than 0.3% of Delta-9-tetrahydrocannabinol (“THC”). The Farm Bill explicitly allows interstate commerce of hemp which will enable the transportation and shipment of hemp.

DESCRIPTION OF THE BUSINESS

General

Cresco is one of the largest vertically-integrated multi-state cannabis operators in the U.S. The company is licensed to cultivate, manufacture, and sell retail and medical cannabis products both through Sunnyside*®, Cresco Labs’ national dispensary brand, and wholesaling to third-party retail stores. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint, its industry-leading brands, highly productive retail, and one of the leading distribution platforms in North America.

The Company operates in one (1) segment, the cultivation, manufacturing, distribution, and sale of cannabis. The Chief Executive Officer, President, and Chief Financial Officer of the Company have been identified as the Chief Operating Decision Makers (“CODMs”) and manage the Company’s operations as a whole. For the purpose of evaluating financial performance and allocating resources, the CODMs review certain financial information presented on a consolidated basis accompanied by information disaggregated by wholesale and retail customers and geographic region.

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; Sunnyside’s competitive advantage is reinforced through its proprietary e-commerce platform, best-in-class assortment strategy, and an operating model that delivers unparalleled efficiency and in-store experience.

Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has the industry’s first national comprehensive Social Equity and Educational Development (“SEEDTM”) initiative designed to ensure that all members of society have the skills, knowledge, and opportunity to work in and own businesses in the cannabis industry.

Rooted in the fundamentals of CPG brand building, Cresco has implemented a strategy to create and distribute a differentiated portfolio of brands that are aligned to distinct audiences, states of need, and occasions.

Cresco operates the following family of brands:

•Cresco® – Elevating everyday cannabis. Cresco® offers award-winning flower, liquid live resin vapes, and concentrates in the most popular and consistent strains, available at dispensaries and retail locations nationwide.

•High Supply® (or Supply®) – High Supply® is quality cannabis, available in bulk and at great prices, to provide the best value. High Supply® buds are expertly grown; lab-tested; and available in vape carts, vape pens, flower, popcorn, shake, pre-rolls, shorties, and concentrates.

•Good News® – Good News® is a line of cannabis products that removes the complexity of understanding terpenes and strains by creating easy-to-understand formulations each designed to enhance life’s favorite moments. Good News® products are easy to use, benefit forward, and come in easy-to share product forms, such as, vapes, gummies, and pre-rolls.

•Wonder Wellness Co.® – Wonder Wellness Co.® products are designed to allow consumers the ability to control their high across a variety of effects. The Wonder Wellness Co.® line is built around manageable, micro-dose forms, with a range of ratios, and botanicals across products.

•FloraCal® Farms (or FloraCal®) – Firmly rooted in Sonoma County, FloraCal® Farms is California’s premier purveyor of premium cannabis flower. Our team of master cultivators hand select the finest

genetics and tailor our small-batch, sustainable farming techniques to each cultivar’s unique needs. We utilize 100% renewable energy to help produce sophisticated, terpene-rich products that invoke robust, one-of-a-kind experiences for our friends and community.

•RemediTM – RemediTM products provide a consistent and trusted alternative to traditional pharmaceuticals like opioids. With familiar formats and user-friendly delivery systems, RemediTM is designed to help patients and consumers feel comfortable with cannabis.

•Mindy’sTM – Deliciously-dosed edibles created by James Beard Award-Winning Pastry Chef, Mindy Segal. Infused with the best-quality cannabis oils, a wide variety of uniquely delicious bites are available at multiple potency levels.

With a portfolio consisting of over 500 unique products and over 5,800 unique stock-keeping-units (“SKUs”), Cresco’s products are sold in nearly 1,400 dispensaries across the country. Cresco has consistently demonstrated the ability to place its branded products on the shelves of the most important dispensaries in a targeted state, driving best-in-class sell-through and menu assortment. This CPG-focused wholesale strategy enables Cresco to maximize its points of distribution and drive revenue growth independent of the expansion of its retail presence.

Cresco owned 72 dispensaries, as of December 31, 2024, which gives it the ability to not only sell its own products but focus on educating and building trust within the surrounding communities. These dispensaries serve as a critical platform for innovation and powerful consumer insights as it shapes the future of cannabis. Further, they are the leading point of interaction of Cresco’s House of Brands within each addressable market.

On December 3, 2018, the Company began trading on the Canadian Securities Exchange (the “CSE”) under the ticker symbol “CL.”

On March 6, 2019, the Company’s shares were approved to be quoted on the Over-the-Counter-Market and trade under the ticker symbol “CRLBF.”

On August 13, 2019, the Company began trading on the Frankfurt Stock Exchange under the symbol “6CQ.”

Significant Events or Milestones

The principal milestones that must occur during the next 12-month period for the business objectives described herein to be accomplished are as follows: hire key personnel, obtain necessary regulatory approvals, implement marketing plans, and commence production and sales in Cresco’s new markets, including retail stores for recreational and medical cannabis where legislation permits.

The Company has put in place a team of executives, board of advisors, and consultants with various areas of expertise and experience in multiple industries including commercial agriculture, pharmaceutical, manufacturing, CPG, and traditional healthcare. In the interest of progressing a professional medical dialogue and educating as many physicians as possible on the use of medical cannabis as a therapeutic treatment for patients, Cresco has organized a team of physicians to educate, train, and inform medical professionals on all aspects of cannabis as medicine.

During the year ended December 31, 2024, the Company acquired two (2) dispensaries in the Keystone acquisition, opened one (1) Sunnyside*® dispensary in Pennsylvania, and closed one (1) Sunnyside*® dispensary in New York. The Company opened no additional dispensaries through March 14, 2025.

On February 1, 2024, the Company announced the promotion of Greg Bulter to the position of President.

On February 9, 2024, the Company announced that as part of a transfer of MVS by both a current and former director of the Company: (a) Thomas J. Manning acquired from Dominic Sergi 100,000 MVS and from Charles Bachtell 33,760 MVS; and (b) Robert M. Sampson acquired from Charles Bachtell 33,308 MVS. Each purchase and sale of MVS was completed for aggregate consideration of $1.00, which were effected in accordance with the

Company’s articles. MVS carry enhanced voting power but have no economic rights. After giving effect to the transactions described above, as of December 31, 2024:

•Mr. Bachtell owns or controls, directly or indirectly, (a) 132,932 MVS (representing approximately 26.59% of the outstanding MVS) and (b) voting securities of the Company representing approximately 19.85% of the votes attaching to all classes of outstanding shares of the Company.

•Mr. Manning owns or controls, directly or indirectly, (a) 133,760 MVS (representing approximately 26.75% of the outstanding MVS) and (b) voting securities of the Company representing approximately 19.84% of the votes attaching to all classes of outstanding shares of the Company; and

•Mr. Sampson owns or controls, directly or indirectly, (a) 133,308 MVS (representing approximately 26.66% of the outstanding MVS) and (b) voting securities of the Company representing approximately 19.79% of the votes attaching to all classes of outstanding shares of the Company.

On April 24, 2024, the Company finalized its acquisition of Keystone. See the “General Development of the Business – Acquisitions and Dispositions” section, above, for a description of the Company’s significant acquisitions and dispositions activity.

On July 10, 2024, the Company announced the voting results of its annual general and special meeting of shareholders (the “Meeting”). At the Meeting:

•The number of directors on the board of directors of the Company for the ensuing year was fixed at eight (8) by the shareholders and the nominees for election as directors of the Company were elected by a majority of votes cast by the shareholders virtually present or represented by proxy at the Meeting.

•Marcum LLP was reappointed as the Company’s auditor for the ensuing year.

•The shareholders passed an ordinary resolution to approve the Amended and Restated Cresco Labs Inc. 2018 Long-Term Incentive Plan.

•Shareholders of Cresco Labs voted to approve an option exchange program.

On August 6, 2024, the Company announced the launch of adult-use distribution and retail sales in the Ohio market. The Company’s Yellow Springs cultivation/processing facility and all five of their Sunnyside*® Dispensaries have been approved to service both medical and adult-use customers in the state.

On August 29, 2024, the Company entered into a second Amended Loan Agreement. Additionally, on October 25, 2024, the Company repurchased a portion of the principal amount of our Senior Loan. See the “General Development of the Business – Debt Financing Activities” sections, above, for a description of the Company’s significant financing activities.

On September 12, 2024, the Company announced that Dennis Olis, Chief Financial Officer, would retire from Cresco Labs after a planned transition to Sharon Schuler, an experienced financial and strategy executive. Schuler joined Cresco Labs while preparing to take the role of Chief Financial Officer upon Olis’s departure.

On September 27, 2024, the Company announced that Tarik Brooks has resigned from the Company’s Board of Directors to devote his time to other interests.

On March 10, 2025, the Company announced its management services agreement with a tier 3 cultivation license in Kentucky. The agreement entitles the Company to manage and operate a cultivation facility with up to 25,000 square feet of canopy, establishing the Company as one of only two operators of Kentucky’s coveted Tier 3 cultivation licenses.

Growth Strategy

Cannabis legalization continues to expand throughout the United States, with an ever-increasing number of states approving medical and recreational sales. The U.S. market for legal cannabis sales (including both medical and adult-use) is projected to grow to $45 billion by 2028.6 To date, twenty-four (24) states and the District of Columbia have passed laws approving the sale of recreational cannabis, with Ohio commencing sales in August 2024.7 Since the start of the decade, recreational sales have helped to generate over $1 billion in sales in retail markets per year since their respective launches.8 The legal markets will continue to grow as existing cannabis consumption shifts from illicit channels, alcohol consumption shifts to cannabis, communities gain better access to dispensaries and a new cohort of cannabis consumers engages with the category for the first time.

Cresco plans to capitalize on the significant increase in cannabis consumption in current and future recreational markets, driving both access to new markets and building the depth of its production and retail footprints. The Company’s historical focus on prioritizing the most strategic markets – those offering both appropriate regulations and sizable populations – remains a key priority in 2025. Cresco’s readiness to address adult-use conversions (e.g. Ohio) while optimizing its asset base in mature markets, provides a holistic approach to responsibly growing amid an ever-changing industry landscape. As in the past, Cresco considers both organic and inorganic opportunities to expand its wholesale market leadership and best-in-class retail productivity, enabling the company to drive meaningful market positions in the markets that matter most.

While the majority of long-term growth will be fueled by recreational consumption, there are also ample opportunities to drive growth within today’s medical markets. As more research centers study and support the effects of cannabis-based products in addressing therapeutic needs, management believes that the size of the U.S. medical cannabis market will also continue to grow as more states approve legal medical programs and more patients join programs. Given Cresco’s existing operations in several strong medical markets (e.g., Florida and Pennsylvania), Cresco is well-versed in operating within a diverse medical-market landscape, leveraging its experience as regulations evolve in disparate manners. Further, this expertise in medical channels also builds the foundations necessary to accelerate market growth upon the approval of recreational legalization, including the development of a portfolio geared to address the needs of all cannabis consumers, and a retail model built to support substantive increases in consumer traffic.

Regardless of each state’s regulations, Cresco actively leverages its successes in its most developed markets (e.g., Illinois, Pennsylvania, and Massachusetts) to create expansion strategies across its geographic footprint. Cresco looks to other burgeoning markets to complement the growth in its core, including Florida and Michigan, while poising itself to unlock growth in new markets as adult-use regulations continue to develop. At the same time, Cresco will maintain its historical focus on compliance, control, efficiency, and product quality to cement itself as the most important multi-state operator within the cannabis industry. To support these ambitions, Cresco will:

(i)Pursue licenses, partnerships, or acquisition of cannabis operations to expand and deepen its position within the most important cannabis markets.

(ii)Complete application processes for states beginning or expanding their medical cannabis programs.

(iii)Invest in canopy expansion, automation, and facility design necessary to support demand across its footprint.

(iv)Complement its leading wholesale positions with tactical expansion of its retail footprint (e.g., store capacity, and new stores).

(v)Build the best portfolio of brands within the cannabis industry, supporting both today and tomorrow’s cannabis consumers.

6 BDSA, USA Market Forecast Summary, October 2024. Retrieved from https://bdsa.com/cannabis-industry-intelligence

7 https://mjbizdaily.com/map-of-us-marijuana-legalization-by-state/; BDSA, USA Market Forecast Summary, December 2023. Retrieved from https://bdsa.com/cannabis-industry-intelligence

8 See, e.g., https://www.cannabisbusinesstimes.com/us-states/arizona/news/15686436/11-states-projected-to-be-billiondollar-cannabis-markets-in-2024

Cresco has proven its ability to become operational in new markets and establish material positions throughout its geographic footprint and plans to continue this trend.

Cultivation

We currently operate or plan to operate thirteen (13) separate cultivation facilities, totaling approximately 0.5 million in current or planned cultivation square feet, across eight (8) states (Illinois, Pennsylvania, Ohio, California, New York, Massachusetts, Michigan, and Florida). We operate indoor grow facilities, traditional green houses, and hybrid green houses. Our multiple cultivation and extraction facilities allow us to produce cannabis products across several product categories.

Cresco currently has the following approximate cultivation square footage in each respective state of operation:


State	Current Cultivation Space (sq ft) 9	Planned Cultivation Space (sq ft)10	Total
Illinois	154,000	—	154,000
Pennsylvania	75,200	—	75,200
Ohio	23,900	—	23,900
California	29,100	—	29,100
Massachusetts	69,700	—	69,700
New York	—	50,000	50,000
Michigan	39,900	—	39,900
Florida	51,000	—	51,000
Total	442,800	50,000	492,800

Designed to provide consistency of product, increase yields, and minimize the possibility of crop failure, each of Cresco’s cultivation facilities is equipped with traditional commercial agriculture components, automated environmental control systems, and watering and feed fertigation systems. Developed over years of research, its proprietary nutritional regimen is utilized to ensure crop quality. Using organic and soluble-based plant nutritional supplements, secondary metabolites (cannabinoids/terpenes) are maximized resulting in superior flower quality, yield, and consistency. Cresco has made significant investments in cultivation and processing facilities and plans to continue doing so.

Manufacturing

Cresco’s laboratory instrumentation gives it the ability to formulate and develop a variety of products based on traditional pharmaceutical delivery systems – inhalation devices (vape cartridges and pens), capsules, tablets, tinctures, topical salves, and edible forms with a variety of cannabinoid profiles. Cresco’s food and beverage manufacturing facilities are outfitted with equipment that allows it to produce shelf-stable quality confections with consistency. It is expected that 40-50% of the raw cannabis produced at Cresco’s cultivation facilities will be used at Cresco’s food & beverage manufacturing facilities and laboratories to make the vaporizable, oral, topical, and edible products sold under the Cresco®, High Supply® or Supply®, Good News®, RemediTM, Wonder Wellness Co.®, FloraCal® Farms or FloraCal®, and Mindy’sTM brands.

9 These figures are approximate measurements of “canopy” square footage, or square footage dedicated to live plant production.

10 Cresco’s expansion, production, and cultivation plans are subject to a number of risks and uncertainties, including the need for new licenses or amendments to existing licenses, additional regulatory or municipal approvals, including zoning and other risks associated with construction and cultivation generally, See “Risk Factors.” No assurances are given as to the precise cost or timing.

Dispensaries

Wholesale

Cresco collaborates with its retail partners on strategic in-store promotions, customer events, and shelf space tactics to ensure maximum sell throughput. The Company takes a data-driven approach in its efforts to create an optimized sale process.

Retail

As of March 14, 2025, Cresco has an ownership interest in the following:


State			Number of Dispensaries
Florida			33
Illinois			10
Massachusetts			4
New York			3
Ohio			5
Pennsylvania			17
Total			72

Seasonality

The Company’s business and operations do not experience marked seasonality.

Real Estate Strategy

Within its core markets, Cresco spends time and resources in selecting real estate in premium locations with significant traffic and proximity to popular attractions (restaurants, malls, sports arenas, hotels, etc.). Cresco targets retail spaces based on the market and available real estate.

Cresco utilizes both its internal real estate and legal teams as well as a network of real estate brokers to negotiate leases, acquisitions, dispositions and sales, and leaseback transactions on behalf of the Company. Cresco typically prefers five-to-ten year leases for its retail operations.

When leasing real estate is not possible, Cresco is willing to enter into purchasing arrangements.

Banking and Processing

Cresco deposits funds from its dispensary operations into its banking partners in each respective market. These state-chartered financial institutions are fully aware of the nature of Cresco’s business and continue to remain supportive of Cresco’s growth plans. Cresco’s dispensaries currently accept only cash and debit cards and do not process credit card payments. It is anticipated that over time all forms of payment will be accepted by each of the dispensaries subject to changes in federal banking laws currently prohibiting such use.

Product Selection and Offerings

Product selection for the Company’s retail operations is comprised of both Cresco manufactured and third-party brands and products in an effort to maximize demand and business performance across all relevant categories. Decisions related to product selection are made by retail and wholesale leaders from operations, finance, planning, buying, sales, and analytics teams. Product selection is based on historical demand and anticipated opportunity, product quality, margin potential, consumer feedback, and the ability for respective brands to scale.

Cresco’s manufactured products are sold through Company-owned and managed dispensaries as well as third-party dispensaries. In the future, as production capacity increases, Cresco expects to sell bulk product, as well as new branded products to other dispensaries through both Company-owned and third-party distributors. The full extent of this will depend upon the ultimate extent of the Cresco-owned and managed retail footprint, as well as the ultimate expanded production capacity of Cresco’s cultivation and production facilities.

Cresco offers the following products in the following states:


State			Offering
Illinois (Currently manufactures)			Cannabis dry flower, vaporizers, concentrates, cannabis oil in oral and sublingual solutions, edibles, and topicals. Product lines include THC-focused products available in flower, vapes, and concentrates under the Cresco® brand; “High Supply®” products that include flower, vapes, and concentrates; “Good News®” products that include flower, vapes, and edibles; “FloraCal®” products that include flower, vapes, concentrates, and edibles; “Wonder Wellness Co.®” edibles; and “RemediTM” products including concentrates, tinctures, and capsules. Cresco licenses the “KIVA” brand and produces edibles. Cresco also sells edibles through its partnership with James Beard Award-winning Chef Mindy Segal under the brand “Mindy’sTM”. Retail locations in Illinois sell a variety of these brands and their corresponding products.
Pennsylvania (Currently manufactures)			Cannabis dry flower, vaporizers, concentrates, cannabis oil in oral and sublingual solutions, topicals, and ingestible products. The product lines include THC-focused products available in flower, vapes and concentrates under the “Cresco®” brand; flower, vapes, and concentrates under the “High Supply®” or “Supply®” brand; “FloraCal®” products that include flower, vapes, ingestible troches, and concentrates; “Good News®” and “Wonder Wellness Co.®” branded ingestible troches; and “RemediTM” products including concentrates, tinctures, vaporizers, capsules, and lotions. Retail locations in Pennsylvania sell a variety of these brands and their corresponding products.
Ohio (Currently manufactures)			Cannabis dry flower, vaporizers, concentrates, and edibles. Product lines include THC-focused products available in flower, vapes, and concentrates under the “Cresco®” brand; “High Supply®” or “Supply®” products that include flower, vapes, and concentrates; “Good News®” products that include vapes and edibles; and “Wonder Wellness Co.®” edibles. Cresco also sells edibles through its partnership with Chef Mindy Segal under the brand “Mindy’sTM”.
California (Currently manufactures)			Cannabis dry flower, vaporizers, and edibles. The product lines include THC-focused products available in vapes under the “Cresco®” brand; flower under the “FloraCal® Farms” or “FloraCal®” brand; and flower under the “High Supply®” brand. Cresco also licenses the “Khalifa Kush” brand and produces flower and vaporizers. All brands are distributed by Humble Distributing and sold in licensed retail dispensaries in California.
New York (Currently manufactures)			Cannabis vapes and cannabis oil in oral solutions. The product line includes “RemediTM” products which include vapes and capsules. Sunnyside*® retail locations in New York sell these brands and corresponding products.
Massachusetts (Currently manufactures)			Cannabis dry flower, vaporizers, concentrates, edibles, and topicals. The product lines include THC-focused products available in flower, vapes, and concentrates under the “Cresco®” brand; flower, vapes, and concentrates under the “High Supply®” brand; “FloraCal®” products that include flower, vapes, concentrates, and edibles; “Good News®” products that include flower, vapes, and edibles; and “RemediTM” products including concentrates. Cresco licenses the “Khalifa Kush” brand and produces flower and vaporizers. Cresco also sells edibles through its partnership with Chef Mindy Segal under the “Mindy’sTM” brand. Cresco produces topicals under the “Cultivate” brand through the acquisition of Cultivate. Retail locations in Massachusetts sell a variety of these brands and their corresponding products.


State			Offering
Michigan (Currently manufactures)			Cannabis dry flower, vaporizers, concentrates, and edibles. Product lines include THC-focused products available in flower, vapes, and concentrates under the “Cresco®” brand; “High Supply®” products that include flower & vapes; “Good News®” products that include vape and edibles; “Wonder Wellness Co.®” edibles; and “FloraCal®” products including flower, vapes, concentrates, and edibles.
Florida (Currently manufactures)			Cannabis dry flower, vaporizers, concentrates, edibles, and cannabis oil in sublingual solutions. Product lines include THC-focused products available in flower, vapes, and concentrates under the “Cresco®” brand; “High Supply®” or “Supply®” products that include flower, vapes, and concentrates; “FloraCal®” products including flower, edibles, vapes and concentrates; “Good News®” products such as vapes; “RemediTM” products including vapes, concentrates, and tinctures; and edibles under the “Sunnyside*®” brand. Cresco also licenses the “Bloom” brand and produces vaporizers.

Product Pricing

Cresco’s prices vary based on the market conditions and product pricing of vendor partners. Cannabis and cannabis product pricing is based on operating costs, materials costs, growth time, and other applicable variables. Additionally, product pricing reflects existing pricing regulations in Cresco’s markets where applicable.

Inventory Management

Cresco has comprehensive inventory management procedures, which are compliant with the rules set forth by the applicable state and local laws, regulations, ordinances, and other requirements. These procedures ensure strict control over Cresco’s cannabis and cannabis product inventory from delivery by a licensed distributor to sale or delivery to a consumer, or disposal as cannabis waste. Such inventory management procedures also include measures to prevent contamination and maintain the safety and quality of the products dispensed at Cresco’s retail locations. Cresco understands its responsibility to the greater community and the environment and is committed to providing consumers with a safe, consistent, and high-quality supply of cannabis.

Employees

As of December 31, 2024, Cresco had approximately 2,900 employees across its operating jurisdictions, primarily employed in Cresco’s cultivation, manufacturing, and processing operations and support thereof. Other significant departments include retail and other operations, logistics and supply chain, sales and marketing, legal and compliance, and other administrative and support functions. Cresco recruits, hires, and promotes individuals that are best qualified for each position, priding itself on using a selection process that recruits people who are trainable, cooperative, and share its core values as a company. In addition, the safety of employees is a priority and Cresco is committed to the prevention of illness and injury through the provision and maintenance of a healthy workplace. Cresco takes all reasonable steps to ensure staff are appropriately informed and trained to ensure the safety of themselves as well as others around them.

Specialized Skill and Knowledge of Employees

To remain a leader in its field, Cresco relies on a motivated and experienced team, focused on offering the highest-quality product, in accordance with the regulations in force. The Company employs a diverse group of people for their particular administrative, operational, and financial expertise. In addition, the Company employs individuals with experience in cultivation and growing of wellness and medical marijuana.

Competition

With respect to retail operations, Cresco expects to compete with other retail license holders across the markets in which it operates. Many of Cresco’s competitors in those markets are small local operators as well as our peer group

of publicly traded companies. In most markets there are also a large number of illegally operating dispensaries and fraudulent websites which serve as competition. However, legal, compliance, and law enforcement entities are expected to continue the reduction of these illicit operations. In addition to physical dispensaries, Cresco also expects to compete with third-party delivery services, which provide direct-to-consumer delivery services.

In terms of cultivation and production, Cresco expects to compete with other licensed cultivators and operators in the states in which it operates. Similar to retail, there are a number of illegally operating cultivators in certain markets which will serve as competition in the near-term. It is expected that compliance and law enforcement entities will continue the reduction of these illicit operations.

Intellectual Property

Cresco has developed numerous proprietary technologies and processes. These proprietary technologies and processes include its cultivation and extraction techniques, and certain cultivation equipment and irrigation systems. While exploring the patentability of these techniques and processes, Cresco relies on non-disclosure and confidentiality arrangements and trade secret protection.

Cresco has invested significant resources towards developing recognizable and unique brands and is in the process of seeking registration of trademarks with the U.S. Patent and Trademark Office and the states in which it operates. Cresco owns or operates numerous website domains (including but not limited to www.crescolabs.com, www.chooseremedi.com, www.crescocannabis.com, www.highsupplyofficial.com, www.mindysedibles.com, and www.sunnyside.shop), numerous social media accounts across all major platforms and various phone and web application platforms.

Cresco’s legal counsel monitors and proactively addresses potential intellectual property infringement. Additionally, Cresco maintains strict standards and operating procedures regarding its intellectual property, including the standard use of non-disclosure, confidentiality, and intellectual property assignment agreements.

Trademarks

Below is a list that includes, but is not limited to, brands for which Cresco is in the process of registering or has registered trademarks at the Canadian federal level, U.S. federal level and/or in the states in which the brands are offered. For additional details on the risks associated with the lack of trademark protection please see “Risk Factors – Intellectual Property”:


Description	Stylized Design	Rebranded Stylized Design (as applicable)
The text and stylized logo for “Cresco”
The text and stylized logo for “Cresco Labs”
The stylized logo for “Cresco Sun”
The text and stylized logo for “Remedi”


Description	Stylized Design	Rebranded Stylized Design (as applicable)
The stylized logo “r”
The text and stylized logo for “Mindy’s Kitchen”
The text and stylized logo for “Mindy’s Artisanal Edibles”
The text and stylized logo for “Mindy’s Chef Led Artisanal Edibles”
The text and stylized logo for “CY+”
The text and stylized logo for “Sunnyside*”
The stylized logo for “*”
The text and stylized logo for “Sunnyside” stacked with “*”
The text and stylized logo for “Wonder Wellness Co.” and “Wonder Wellness”
The text and stylized logo for “Good News”


Description	Stylized Design	Rebranded Stylized Design (as applicable)
The text and stylized logo for “High Supply”
The text and stylized logo for “Alta Supply”
The text and stylized logo for “Continuum”
The stylized logo for “Continuum”
The text and stylized logo for “FloraCal Farms” and “FloraCal”
The stylized logo for “FloraCal”
The text and stylized logo for “FloraCal Farms” and “FloraCal”
The text and stylized logo for “Origin House”
The text for “Nurture”	NURTURE
The text for “Hey, High, Hello!”	HEY, HIGH, HELLO!
The text and stylized logo for "Upside*”

Cresco has successfully registered thirty-four (34) trademarks at the U.S. federal level. Additionally, Cresco has successfully registered one hundred eleven (111) trademarks across ten (10) states including Illinois, Pennsylvania,

Ohio, California, New York, Massachusetts, Michigan, Florida, Maryland, and Arizona for the brands offered within each state.

Ongoing application review is occurring at the Canadian and U.S. Federal level. Cresco anticipates feedback on the remaining submitted applications to be seen on a rolling basis. As such, Cresco will continue to rely on common law protection for these brands during the trademark registration process. Moreover, Cresco will proactively seek intellectual property protection for brand expansions in current markets as well as any new market expansion. For additional details on the risks associated with the lack of trademark protection, please see “Risk Factors - Intellectual Property.”

Patents

Cresco is in the process of registering one (1) patent for the proprietary technologies and processes specifically in the extraction process for producing liquid live resin. Cresco successfully registered one (1) patent in the aforementioned proprietary technologies and processes in the third quarter of 2020, one (1) patent in the second quarter of 2021, and one (1) patent in the third quarter of 2024. Cresco anticipates communication from the United States Patent and Trademark Office (“USPTO”) on the patent-pending application in the first half of 2025. For additional details on the risks associated with the lack of patent protection, please see “Risk Factors – Intellectual Property.”

United States Regulatory Environment

For an overview of the United States regulatory environment and how it affects Cresco’s business, please refer to the section titled “Federal Regulatory Environment” in the MD&A, which section is incorporated by reference herein.

While Cresco’s operations are in full compliance with all applicable state laws, regulations, and licensing requirements, for the reasons described above and the risks further described in the “Risk Factors” section below, there are significant risks associated with the business of Cresco. Readers are strongly encouraged to carefully read all of the risk factors contained in the “Risk Factors” section below.

State Regulatory Environment

For an overview of the regulatory landscape, licensing requirements, and details of licenses for each state where the Company operates, and how it affects Cresco’s business, please refer to the section titled “The States we Operate in, Their Legal Framework and How it Affects our Business” in the MD&A, which section is incorporated by reference herein.

RISK FACTORS

CANNABIS IS ILLEGAL UNDER U.S. FEDERAL LAW AND ENFORCEMENT OF RELEVANT LAWS IS A SIGNIFICANT RISK.

READERS ARE STRONGLY ENCOURAGED TO CAREFULLY READ ALL RISK FACTORS CONTAINED IN THIS SECTION.

The following are certain factors relating to the business of the Company. These risks and uncertainties are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Company or currently deemed immaterial by the Company may also impair the operations of the Company. If any such risks occur, shareholders of the Company could lose all or part of their investment and the business, financial condition, operating results, and growth plans of the Company could be materially adversely affected.

The acquisition of any of the securities of the Company is speculative, involving a high degree of risk and should be undertaken only by persons whose financial resources are sufficient to enable them to assume such risks for an indefinite period of time and who have no need for immediate liquidity in their investment. An investment in the

securities of the Company should not constitute a major portion of an individual’s investment portfolio and should only be made by persons who can afford a total loss of their investment. Company shareholders should carefully evaluate the following risk factors associated with the Company’s securities, along with the risk factors described elsewhere in this AIF.

The following table is intended to assist readers in identifying those parts of this AIF that address the disclosure expectations outlined in the Canadian Securities Administrators Staff Notice 51-352 – Issuers with U.S. Marijuana-Related Activities (“Staff Notice 51-352”) for issuers that currently have cannabis-related activities in U.S. states where such activity has been authorized within a state regulatory framework.


Industry Involvement	Specific Disclosure Necessary to Fairly Present all Material Facts, Risks, and Uncertainties	AIF Cross Reference
All Issuers with U.S. Marijuana-Related Activities	Describe the nature of the issuer’s involvement in the U.S. cannabis industry and include the disclosures indicated for at least one of the direct, indirect, and ancillary industry involvement types noted in this table.	General Development of the Business MD&A – The States in Which We Operate, Their Legal Framework and How it Affects Our Business
	Prominently state that cannabis is illegal under U.S. federal law and that enforcement of relevant laws is a significant risk.	Risk Factors
	Discuss any statements and other available guidance made by federal authorities or prosecutors regarding the risk of enforcement action in any jurisdiction where the issuer conducts U.S. cannabis-related activities. Outline related risks including, among others, the risk that third-party service providers could suspend or withdraw services and the risk that regulatory bodies could impose certain restrictions on the issuer’s ability to operate in the U.S.	Risk Factors – U.S. Federal Regulation Risk Factors – FDA or Bureau of Alcohol, Tobacco, Firearms, and Explosives regulation Risk Factors – Variation in State Regulations Risk Factors – Anti-money Laundering Laws and Regulations Risk Factors – Access to Banks Risk Factors – Investments in the United States May be Subject to Heightened Scrutiny Risk Factors – Constraints on Marketing Products Risk Factors – Intellectual Property Risk Factors – Lack of Access to U.S. Bankruptcy Protections Risk Factors – Legality of Contracts Risk Factors – Risk of Civil Asset Forfeiture
	Given the illegality of cannabis under U.S. federal law, discuss the issuer’s ability to access both public and private capital and indicate what financing options are / are not available in order to support continuing operations.	Risk Factors – Risks of Legal, Regulatory, or Political Change Risk Factors – Access to Banks Risk Factors – Liquidity and Capital Resources
	Quantify the issuer’s balance sheet and operating statement exposure to U.S. cannabis-related activities.	Note: The major operations of the Company are only in the United States.
	Disclose if legal advice has not been obtained, either in the form of a legal opinion or otherwise, regarding (a) compliance with applicable state regulatory frameworks and (b) potential exposure and implications arising from U.S. federal law.	Legal advice has been obtained.


Industry Involvement	Specific Disclosure Necessary to Fairly Present all Material Facts, Risks, and Uncertainties	AIF Cross Reference
U.S. Marijuana Issuers with direct involvement in cultivation or distribution	Outline the regulations for U.S. states in which the issuer operates and confirm how the issuer complies with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state.	MD&A – The States in Which We Operate, Their Legal Framework and How it Affects Our Business
	Discuss the issuer’s program for monitoring compliance with U.S. state law on an ongoing basis, outline internal compliance procedures and provide a positive statement indicating that the issuer is in compliance with U.S. state law and the related licensing framework. Promptly disclose any non-compliance, citations or notices of violation which may have an impact on the issuer’s license, business activities or operations.	General Development of the Business – United States Industry Background and Trends MD&A – The States in Which We Operate, Their Legal Framework and How it Affects Our Business Risk Factors – U.S. State Regulatory Uncertainty
U.S. Marijuana Issuers with indirect involvement in cultivation or distribution	Outline the regulations for U.S. states in which the issuer’s investee(s) operate.	Not applicable.
	Provide reasonable assurance through either positive or negative statements, that the investee’s business is in compliance with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state.	Cresco is not aware of any non-compliance. MD&A – The States in Which We Operate, Their Legal Framework and How it Affects Our Business
U.S. Marijuana Issuers with material ancillary involvement	Provide reasonable assurance, through either positive or negative statements, that the applicable customer’s or investee’s business is in compliance with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state.	Not applicable.

In accordance with Staff Notice 51-352, Cresco’s subsidiaries are directly engaged in the manufacture, possession, use, sale, or distribution of cannabis in the adult-use and/or medicinal cannabis marketplace in the states of Illinois, Pennsylvania, Ohio, New York, Massachusetts, California, Michigan, and Florida. In accordance with Staff Notice 51-352, Cresco will evaluate, monitor, and reassess this disclosure, and any related risks, on an ongoing basis and the same will be supplemented and amended to investors in public filings, including in the event of government policy changes or the introduction of new or amended guidance, laws or regulations regarding cannabis regulation. Any non-compliance, citations, or notices of violation which may have an impact on any license, business activities, or operations will be promptly disclosed by the Company.

RISKS ASSOCIATED WITH THE BUSINESS OF THE COMPANY

U.S. Federal Regulation

CANNABIS IS ILLEGAL UNDER U.S. FEDERAL LAW AND ENFORCEMENT OF RELEVANT LAWS IS A SIGNIFICANT RISK.

The Company could be found to be violating laws related to cannabis. For an overview of the U.S. cannabis regulatory environment, refer to the “Federal Regulatory Environment” section in the MD&A. Below is a summary of the potential risks related to federal and state-level laws related to the operations of the Company.

Risk of U.S. Federal Law Proceedings Against the Company

Potential proceedings under U.S. federal law could involve significant restrictions being imposed upon the Company or third parties, while diverting the attention of key executives. Such proceedings could have a material adverse effect on the Company’s business and operating results, as well as the Company’s reputation, even if such proceedings were concluded successfully in favor of the Company. In the extreme case, such proceedings could ultimately involve the prosecution of key executives of the Company or the seizure of corporate assets.

The Company continues to look to the guidelines of the DOJ Memorandum drafted by former Deputy Attorney General James Michael Cole in 2013 (the “Cole Memo”) as an industry best practice and continues to do the following to ensure compliance with the Cole Memo:

(i)ensuring the operations of its subsidiaries are compliant with all licensing requirements that are set forth with regards to cannabis operation by the applicable state, county, municipality, town, township, borough, and other political/administrative divisions;

(ii)the activities relating to the cannabis business adhere to the scope of the licensing obtained. Accordingly, in the states where only medical cannabis is permitted, the products are only sold to patients who hold the necessary documentation to permit the possession of the cannabis; and in the states where cannabis is permitted for adult-use, the products are only sold to individuals who meet the requisite age requirements;

(iii)the Company only works through licensed operators, which must pass a range of requirements, adhere to business practice standards, and are subjected to strict regulatory oversight whereby sufficient checks and balances to prevent revenue from being distributed to criminal enterprises, gangs, and cartels; and

(iv)the Company conducts reviews of products and product packaging to ensure that the products comply with applicable regulations and contain necessary disclaimers about the contents of the products to prevent adverse public health consequences from cannabis use and prevent impaired driving.

On January 4, 2018, then U.S. Attorney General Jeff Sessions formally rescinded the Cole Memo. Despite its rescission, as of December 21, 2021, federal prosecutors appear to continue to use the Cole Memo’s priorities as an enforcement guide. Merrick Garland, who became Attorney General on March 10, 2021, has indicated that he would deprioritize enforcement of low-level cannabis crimes such as possession, and during his congressional testimony in February 2021, Garland stated that the Justice Department would not pursue cases against Americans complying with laws of the states that have legalized and are regulating cannabis. President Joseph R. Biden, who assumed office in January 2021, stated a policy goal of federal cannabis decriminalization, but has not publicly supported the legalization of cannabis. As of December 31, 2024, there were more than a dozen proposed congressional bills addressing myriad issues regarding the cannabis industry, from banking and tax reform to full legalization. However, none have passed into law.

The Company maintains a compliance program and standard operating procedures to help ensure compliance with the Cole Memo. However, the Company’s operations remain illegal under U.S. federal law and consequently there are significant risks associated with the business of the Company.

FDA or Bureau of Alcohol, Tobacco, Firearms and Explosives (“BATFE”) Regulation

Cannabis remains a Schedule I controlled substance under U.S. federal law. If the federal government reclassifies cannabis to a Schedule II or Schedule III controlled substance, it is possible that the FDA would seek to regulate cannabis under the Food, Drug, and Cosmetics Act of 1938. Additionally, the FDA may issue rules and regulations, including good manufacturing practices, related to the growth, cultivation, harvesting, processing, and labeling of medical cannabis. Clinical trials may be needed to verify the efficacy and safety of cannabis. It is also possible that the FDA would require facilities where medical-use cannabis is grown to register with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, the impact they would have on the cannabis industry is unknown, including the costs, requirements and possible prohibitions that may be enforced. If the Company is unable to comply with the potential regulations or registration requirements prescribed by the FDA, it may have a material adverse effect on the Company’s business, financial condition, and operating results.

It is also possible that the federal government could seek to regulate cannabis under the U.S. BATFE. The BATFE may issue rules and regulations related to the use, transporting, sale, and advertising of cannabis or cannabis products, including smokeless cannabis products.

Change of Cannabis Laws

It is possible that U.S. federal or state legislation could be enacted in the future that would prohibit the Company from selling cannabis and cannabis products or impose new restrictions on the Company’s ability to operate in the U.S., which would materially adversely affect its business, financial condition, and operating results.

Risk of Legal, Regulatory or Political Change

Delays in the enactments of new state or U.S. federal regulations could restrict the ability of the Company to reach strategic growth targets and lower return on investor capital. The strategic growth strategy of the Company is reliant upon certain federal and state regulations being enacted to facilitate the legalization of medical and adult-use cannabis. If such regulations are not enacted, or enacted but subsequently repealed or amended or enacted with prolonged phase-in periods, the growth targets of the Company, and thus, the effect on the return of investor capital, could be detrimental. The Company is unable to predict with certainty when and how the outcome of these complex regulatory and legislative proceedings will affect its business and growth.

The Company’s business activities will rely on newly established and/or developing laws and regulations in the states in which it operates. These laws and regulations are rapidly evolving and subject to change with minimal notice. Regulatory changes may adversely affect the Company’s profitability or cause it to cease operations entirely. The cannabis industry may come under the scrutiny, or further scrutiny, by the FDA, SEC, the DOJ, the Financial Industry Regulatory Advisory or other U.S. federal or applicable state or nongovernmental regulatory authorities or self-regulatory organizations that supervise or regulate the production, distribution, sale, or use of cannabis for medical or nonmedical purposes in the United States. Further, there is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. If the U.S. federal government begins to enforce federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing applicable state laws are repealed or curtailed, the Company’s business, financial condition, and operating results would be materially adversely affected. It is also important to note that local and city ordinances may strictly limit and/or restrict disbursement of cannabis in a manner that will make it extremely difficult or impossible to transact business that is necessary for the continued operation of the cannabis industry. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any proposals will become law. The regulatory uncertainty surrounding the industry may adversely affect the business and operations of the Company, including without limitation, the costs to remain compliant with applicable laws and the impairment of its business or the ability to raise additional capital.

The Company is aware that multiple states are considering special taxes or fees on businesses in the cannabis industry. It is a potential yet unknown risk at this time that other states are in the process of reviewing such additional fees and taxation. This could have a material adverse effect upon the Company’s business, financial condition, and operating results.

The commercial medical and adult-use cannabis industry is immature and the Company anticipates that such regulations will be subject to change as the jurisdictions in which the Company does business matures. The Company has in place a detailed compliance program with dedicated staff who oversee, maintain, and implement the compliance program and personnel. In addition to the Company’s robust legal and compliance departments, the Company also has local regulatory/compliance counsel engaged in every jurisdiction in which it operates. The Company’s compliance program emphasizes security and inventory control to ensure strict monitoring of cannabis and inventory from delivery by a licensed distributor to sale or disposal. Additionally, the Company has created comprehensive standard operating procedures that include detailed descriptions and instructions for monitoring inventory at all stages of development and distribution. The Company will continue to monitor compliance on an ongoing basis in accordance with its compliance program, standard operating procedures, and any changes to regulation in the cannabis industry.

Overall, the medical and adult-use cannabis industry is subject to significant regulatory change at both the state and federal level. The inability of the Company to respond to the changing regulatory landscape may cause it to not be successful in capturing significant market share and could otherwise harm its business, financial condition, and operating results.

WARNING TO CANADIAN INVESTORS - Canadian Investors May be Barred from Entering the U.S.

Todd Owen, former executive assistant commissioner for the Office of Field Operations of the U.S. Customs and Border Protection Agency (“CBP”) has stated that Canadians who work in the cannabis industry and those who invest in the cannabis sector risk a lifetime ban on travel to the U.S. The CBP will continue to apply long-standing U.S. federal laws and regulations that treat cannabis as a banned substance and participants in the cannabis industry as drug traffickers who are inadmissible into the U.S. Although some U.S. states have eased cannabis laws, the U.S. continues to maintain a federal prohibition that applies at the border. CBP officials are not planning to go out of their way to interrogate every Canadian traveler about cannabis use. However, other factors may cause them to raise the topic. In July 2018, a venture capitalist from Vancouver, British Columbia who had invested more than $100,000 into legal American cannabis companies, was denied entry to the U.S. and barred from future entry as his investments were deemed to be assisting and abetting in the illicit trafficking of drugs.

On September 21, 2018, CBP released a statement outlining its current position with respect to enforcement of the laws of the United States. It stated that Canada’s legalization of cannabis will not change CBP enforcement of United States laws regarding controlled substances and because cannabis continues to be a controlled substance under United States law, working in or facilitating the proliferation of the legal cannabis industry in U.S. states where it is deemed legal, or Canada may affect admissibility to the United States. As a result, CBP has affirmed that, employees, directors, officers, managers, and investors of companies involved in business activities related to cannabis in the United States or Canada (such as the Company), who are not United States citizens face the risk of being barred from entry into the United States for life. As described above, on October 9, 2018, CBP released an additional statement regarding the admissibility of Canadian citizens working in the legal cannabis industry. CBP stated that a Canadian citizen working in or facilitating the proliferation of the legal cannabis industry in Canada coming into the United States for reasons unrelated to the cannabis industry will generally be admissible to the United States; however, if such person is found to be coming into the United States for reasons related to the cannabis industry, such person may be deemed inadmissible.

Risk of Civil Asset Forfeiture

Because the cannabis industry remains illegal under U.S. federal law, any property owned by participants in the cannabis industry which are either used in the course of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture. Even if the owner of

the property was never charged with a crime, the property in question could still be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject to forfeiture.

U.S. State Regulatory Uncertainty

The rule-making process for cannabis operators at the state level, in any state, will be ongoing and result in frequent changes. If the Company is unable to maintain a compliance program to manage regulatory risk, its ability to operate its business could be materially adversely affected. Notwithstanding the Company’s efforts, regulatory compliance, and the process of obtaining regulatory approvals can be costly and time-consuming. No assurance can be given that the Company will receive the requisite licenses, permits, or cards to operate its businesses.

In addition, local laws and ordinances could limit, restrict, and ban cannabis businesses like the Company’s from operating within their jurisdiction even if such activities are legal at the state level. Land use, zoning, local ordinances, and similar laws could be adopted or changed impairing the Company’s ability to operate its business and have a material adverse effect on the Company’s business.

The Company is aware that some states are considering special taxes or fees on businesses in the cannabis industry. Illinois has, for example, imposed a license transfer surtax. The additional fees and taxation on the cannabis industry by states could have a material adverse effect upon the Company’s business and operating results.

The Company is required to obtain or renew government permits and licenses for its current and contemplated operations. Obtaining, amending, or renewing the necessary governmental permits and licenses can be a time-consuming process potentially involving numerous regulatory agencies, involving public hearings and costly undertakings on the Company’s part. The duration and success of the Company’s efforts to obtain, amend, and renew permits and licenses are contingent upon many variables not within its control, including the interpretation of applicable requirements implemented by the relevant permitting or licensing authority. The Company may not be able to obtain, amend, or renew permits or licenses that are necessary to its operations. Any unexpected delays or costs associated with the permitting and licensing process could impede the ongoing or proposed operations of the Company. To the extent necessary permits or licenses are not obtained, amended, or renewed, or are subsequently suspended or revoked, the Company may be curtailed or prohibited from proceeding with its ongoing operations or planned development and commercialization activities. Such curtailment or prohibition may result in a material adverse effect on the Company’s business, financial condition, and operating results.

The Company may become involved in a number of government or agency proceedings, investigations, and audits. The outcome of any regulatory or agency proceedings, investigations, audits, and other contingencies could harm the Company’s reputation, require the Company to take, or refrain from taking, actions that could harm its operations or require the Company to pay substantial amounts of funds, harming its financial condition. There can be no assurance that any pending or future regulatory or agency proceedings, investigations, and audits will not result in substantial costs or a diversion of management’s attention and resources or have a material adverse impact on the Company’s business, financial condition, and operating results.

Variation in State Regulations

Variations in state and local regulation, and enforcement in states that have legalized cannabis, may restrict cannabis-related activities, including activities related to state-regulated medical and adult-use cannabis, which may negatively impact the Company’s revenues and prospective profits.

The cannabis laws of each state are not necessarily consistent with those of other states. A number of states have decriminalized cannabis to varying degrees, other states have created exemptions specifically for medical cannabis, and several have decriminalization, adult-use, and medical cannabis laws. Despite the current state of the federal law and the CSA, the states of Alaska, Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Maine, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia, have legalized adult-use of cannabis. Adult-use sales have not yet begun in Minnesota, Delaware, or Virginia. Additionally, although the

District of Columbia voters passed a ballot initiative in November 2014, no adult-use operations exist yet because of a prohibition on using funds for regulation within a federal appropriations amendment to local District spending powers.

There is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local government authorities will not limit the applicability of state laws within their respective jurisdictions. In most states, the cultivation of cannabis for personal use continues to be prohibited except for those states that allow small-scale cultivation by a medical cannabis card holder or that person’s caregiver. Active enforcement of state laws that prohibit personal cultivation of cannabis may indirectly and adversely affect the Company’s business, financial condition, and operating results.

Permits and Authorizations

The Company may not be able to obtain or maintain the necessary licenses, permits, authorizations, or accreditations, or may only be able to do so at great cost, to operate its business. In addition, the Company may not be able to comply fully with the wide variety of laws and regulations applicable to the cannabis industry. Failure to comply with, or to obtain or maintain, the necessary licenses, permits, authorizations, or accreditations could result in restrictions on the Company’s ability to operate its business, which could have a material adverse effect on the Company’s business, financial condition, and results of operations.

Reliance on Licenses

The Company’s ability to cultivate, store, produce, and distribute medical and adult-use cannabis products in Illinois, Pennsylvania, Ohio, California, New York, Massachusetts, Michigan, and Florida is dependent on maintaining its licenses in good standing with each applicable State regulator. Failure to comply with the requirements of any of its licenses or any failure to maintain any of the licenses would have a material adverse impact on the business, financial condition, and operating results of the Company. The Company’s (or its subsidiaries) licenses related to its ability to cultivate, store, produce, and distribute medical and adult-use cannabis products (as applicable) in Illinois, Florida, Pennsylvania, Ohio, Massachusetts, Michigan, California, and New York are currently in good standing.

Information Technology Systems and Cyber-Attacks

The Company is increasingly dependent on digital technology, including information systems and related infrastructure, to process and record financial and operating data, and communicate with its employees and business partners. The Company’s operations depend, in part, on how well it and its suppliers protect networks, equipment, IT systems, and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, intentional damage, and destruction, fire, power loss, hacking, computer viruses, vandalism, and theft. The Company’s operations also depend on the timely maintenance, upgrade, and replacement of networks, equipment, IT systems, and software, as well as preemptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company’s reputation and results of operations.

Cyber incidents, including deliberate attacks or unintentional events, have increased. A cyberattack could include gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption, or result in denial of service on websites. The Company’s technologies, systems, and networks (and those of Company suppliers) have been the target of cyber-attacks and/or information security incidents that have resulted in the unauthorized release, misuse, loss, or destruction of proprietary, personal, and other information, or other disruption of the Company’s business operations. While the Company has not experienced any material losses to date relating to cyber-attacks or other information security breaches, there can be no assurance that the Company will not incur such losses in the future as a result of attacks of a similar nature or otherwise. Any such incident could result in widespread negative publicity, damage to the Company’s reputation, a loss of patients and customers, and disruption of the Company’s business and legal

liabilities. In addition, if any of the Company’s critical suppliers is the subject of a cyber or ransomware attack, the Company could experience a significant disruption in its supply chain and possibly shortages of key resources. While the Company has a formal Cyber Security Program led by Zach Marburger, Chief Information Officer, the Company’s risk and exposure to these matters cannot be fully mitigated. As cyber threats continue to evolve, the Company will need to expend additional resources to continue to modify or enhance protective measures, or to investigate and remediate any security vulnerabilities.

Additionally, the Company may store and collect personal information about patients and customers and are responsible for protecting that information from privacy breaches that may occur through procedural or process failure, IT malfunction, or deliberate unauthorized intrusions. Any such theft or privacy breach, or one that involved competitively sensitive or other protected information, may have a material adverse effect on the Company’s business, financial condition, and operating results. The Company is subject to laws, rules, and regulations in the United States (such as the California Consumer Privacy Act, which became effective on January 1, 2020) and other jurisdictions relating to the collection, processing, storage, transfer, and use of personal data. The Company’s ability to execute transactions and to possess and use personal information and data in conducting its business subjects the Company to legislative and regulatory burdens that may require the Company to notify regulators and customers, employees and other individuals of a data security breach. Evolving compliance and operational requirements under the California Consumer Privacy Act and the privacy laws, rules, and regulations of other jurisdictions in which the Company operates impose significant costs that are likely to increase over time. In addition, non-compliance could result in proceedings against the Company by governmental entities and/or significant fines, could negatively impact the Company’s reputation and may otherwise adversely impact the Company’s business, financial condition, and operating results.

Reliance on Management

The success of the Company is dependent upon the ability, expertise, judgment, discretion, and good faith of its senior management. While equity awards, employment agreements, or management agreements are customarily used as a primary method of retaining the services of key employees, these awards and agreements cannot assure the continued services of such employees. Any loss of the services of such individuals could have a material adverse effect on the Company’s business, financial condition, and operating results.

Difficulty in Recruiting and Retaining Management and Key Personnel

The Company’s future success depends on its key executive officers and its ability to attract, retain, and motivate qualified personnel.

Future success largely depends upon the continued services of the Company’s executive officers and management team. If one or more of the executive officers are unable or unwilling to continue in their present positions, replacements may not be readily available, if at all. Additionally, the Company may incur additional expenses to recruit and retain new executive officers. If any of the executive officers joins a competitor or forms a competing corporation, the Company’s results may decline as a result. Finally, the Company does not maintain “key person” life insurance on any of its executive officers. Because of these factors, the loss of the services of any of these key persons could adversely affect the Company’s business, financial condition, and operating results.

The continuing ability to attract and retain highly qualified personnel is critical to the Company’s success because it will need to hire and retain additional personnel as the business grows. There can be no assurance that qualified personnel will be retained or available. Due to the increasing competition for skilled personnel in the U.S. cannabis industry and the U.S., in general, it is difficult and expensive to attract, hire, and retain qualified managers and employees. Because of these factors, the Company may not be able to effectively manage or grow its business, which could adversely affect its financial condition and operating results.

Internal Controls

The Company has incurred and will continue to incur expenses and, to a lesser extent, diversion of its management’s time in its efforts to implement and maintain internal controls over financial reporting, including compliance with Section 404 of the Sarbanes-Oxley Act. Effective internal controls over financial reporting are necessary for the Company to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause the Company to fail to meet its reporting obligations. Any testing by the Company conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by the Company’s independent registered public accounting firm, may reveal deficiencies in its internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to the Company’s consolidated financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in the Company’s reported financial information, which could have a negative effect on the trading price of the SVS.

Material weaknesses related to information technology general controls, information produced by the entity controls, and controls over account reconciliation were identified, as existing as of December 31, 2024, and 2023. Remediation efforts have placed, and will continue to place, a significant burden on management and add increased pressure on our financial reporting resources and processes. The accuracy of our financial reporting may in the future be, adversely impacted if we are unable to successfully remediate material weaknesses in a timely manner, or if any additional material weaknesses in our internal control over financial reporting are identified. In addition, if our remedial efforts are insufficient, or if additional material weaknesses or significant deficiencies in our internal control occur in the future, we could be required to restate our financial statements, which could materially and adversely affect our business, results of operations, and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weaknesses or deficiencies, subject us to regulatory investigations and penalties, harm our reputation, cause a decline in investor confidence, or otherwise cause a decline in our stock price.

The Company does not expect that its internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Industry Immaturity

As a relatively new industry with an unusual regulatory landscape, there are not many established operators in the cannabis industry whose business models we can follow or build upon. Similarly, there is limited information about comparable companies available to industry participants and potential investors to review in making business and investment decisions. Shareholders and investors should consider, among other factors, our prospects for success considering the risks and uncertainties encountered by companies, like us, that are in their early stages. For example, unanticipated expenses and problems or technical difficulties may occur, which may result in material delays in the expansion or operation of our business. We may fail to successfully address these risks and uncertainties or successfully implement our operating strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of the SVS to the extent that investors may lose their entire investment.

Limited Operating History

With its high-growth strategy, Cresco does not have a history of profitability. The Company is therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with

respect to personnel, financial and other resources, and lack of revenues. There is no assurance that the Company will be successful in achieving a return on shareholders’ investment and the likelihood of success must be considered in light of the early stage of operations.

Unreliability of Forecasts

Any forecasts made by the Company about its operations and the cannabis industry in general may prove to be inaccurate. Due to ongoing regulatory and policy changes in the medical and adult-use cannabis industries and unreliable levels of market supply, the market data available is limited and unreliable. The Company must rely largely on its own market research to forecast sales, as detailed forecasts are not generally obtainable from other sources in the states in which its business operates. Additionally, any market research and Company projections of estimated total retail sales, demographics, demand, and similar consumer research, are based on assumptions from limited and unreliable market data. The Company’s failure to achieve its projections could materially adversely affect the price of the SVS.

Goodwill and Intangible Valuation

We test goodwill for impairment at least annually. We review our goodwill and intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable, including declines in stock price, market capitalization or reduced future cash flow estimates and slower growth rates in our industry. Depending on the results of our review, we may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or intangible assets was determined, negatively impacting our results of operations.

During the year ended December 31, 2024, the Company determined it is more likely than not that the carrying value of the intangible assets in California exceeded their fair value due to updated forecasts and projections, resulting in impairment charges of $2.3 million. During the year ended December 31, 2023, the Company determined it is more likely than not that the carrying value of the intangible assets and goodwill in Florida, New York, Massachusetts, California, and Arizona exceeded their fair value due to updated forecasts and projections, resulting in impairment charges of $151.0 million. For further discussion on impairment, refer to the “Selected Financial Information” section in the MD&A.

Access to Banks

The Company has had, and in the future expects to continue to have, difficulty accessing the service of banks, which may make it difficult for it to operate.

Since the use of cannabis is illegal under U.S. federal law, and in light of concerns in the banking industry regarding money laundering and other federal financial crime related to cannabis, U.S. banks have been reluctant to accept deposit funds from businesses involved with the cannabis industry. Consequently, businesses involved in the cannabis industry often have difficulty finding a bank willing to accept their business. Likewise, cannabis businesses have limited, if any, access to credit card processing services. As a result, cannabis businesses in the U.S. are largely cash-based. This complicates the implementation of financial controls and increases security issues. The inability to open or maintain bank accounts or take credit cards may make it difficult for the Company to operate its businesses.

Liquidity and Capital Resources

The Company may have liquidity and access to capital risks due to its limited access to banking institutions (See “Risk Factors – Access to Banks”) and the economic state of the cannabis industry. The lack of access to banks impairs its ability to deal with larger banks who may have easier access to more affordable capital and who have the ability to provide same day revolver accounts. This higher cost of capital and lack of flexibility negatively impacts the Company’s liquidity, especially due to its cash retention requirements associated with its senior debt facility.

Additionally, with the lack of federal changes in legislation, markets are wary of the future outlook and growth of the Company. This reduces the number of investors willing to invest in the Company as they may not want to take on the risks related to a company that transacts in a federally illegal substance and other investors willing to take the risk may not have the amount of capital needed by the Company.

Legality of Contracts

Because the Company’s contracts involve cannabis and other activities that are not legal under U.S. federal law and in some jurisdictions, the Company may face difficulties in enforcing its contracts in U.S. federal and certain state courts.

Difficulty in Enforcing Judgments and Effecting Service of Process on Directors and Officers

Most of the directors and officers of the Company reside outside of Canada. Some or all of the assets of such persons may be located outside of Canada. Therefore, it may not be possible for Company shareholders to collect or to enforce judgments obtained in Canadian courts predicated upon the civil liability provisions of applicable Canadian securities laws against such persons. Moreover, it may not be possible for Company shareholders to effect service of process within Canada upon such persons.

Intellectual Property

If the Company fails to protect its intellectual property, its business could be adversely affected. Viability will depend, in part, on the Company’s ability to develop and maintain the proprietary aspects of its technology to distinguish its products from its competitors’ products. The Company relies on copyrights, trademarks, trade secrets, and confidentiality provisions to establish and protect its intellectual property.

The Company will not be able to register any United States federal trademarks for its cannabis products due to producing, manufacturing, processing, possessing, distributing, selling, and using cannabis being a crime under the CSA. The Company intends to reevaluate how it approaches intellectual property protection in the event cannabis becomes descheduled federally. As it stands, the USPTO will not permit the registration of any trademark that identifies cannabis products. As a result, the Company likely will be unable to protect its cannabis product trademarks beyond the common law and geographic areas in which it conducts business. The use of its trademarks outside the states in which it operates by one or more other persons could have a material adverse effect on the value of such trademarks.

The Company may face future challenges and risks in registering patents, although the risk level is unclear due to the USPTO’s acceptance of patents with cannabis oil and cannabinoids within the underlying processes or novel art. If the Company’s patents expire, are invalidated or found to be unenforceable, or if its patent applications cannot be prosecuted fully, the Company may be subject to competition from third parties with products in the same class as its own products or devices. Further, patent protection is unavailable at the state level.

Any infringement or misappropriation of the Company’s intellectual property could damage its value and limit its ability to compete. The Company may have to engage in litigation to protect the rights to its intellectual property, which could result in significant litigation costs and require a significant amount of its time. In addition, the Company’s ability to enforce and protect its intellectual property rights may be limited in certain countries outside the U.S., which could make it easier for competitors to capture market position in such countries by utilizing technologies that are similar to those developed or licensed by the Company.

Competitors may also harm the Company’s sales by designing products that mirror the capabilities of its products or technology without infringing on its intellectual property rights. If the Company does not obtain sufficient protection for its intellectual property, or if it is unable to effectively enforce its intellectual property rights, its competitiveness could be impaired, which would limit its growth and future revenue.

The Company may also find it necessary to bring infringement or other actions against third parties to seek to protect its intellectual property rights. Litigation of this nature, even if successful, is often expensive and time-consuming to prosecute and there can be no assurance that the Company will have the financial or other resources to enforce its rights or be able to enforce its rights or prevent other parties from developing similar technology or designing around its intellectual property.

Although the Company believes that its technology does not and will not infringe upon the patents or violate the proprietary rights of others, it is possible such infringement or violation has occurred, or may occur, which could have a material adverse effect on the business. Because of laws disfavoring the patenting and publication of cannabis-related technologies, prior art relevant to the Company’s or its competitors’ patents and patent applications may not be readily identified during normal patent examination processes, resulting in the issuance of claims that might not have otherwise issues in a field with more known prior art. In addition, because patent applications take months to publish and patent applications can take years to issue, there may be currently pending applications, unknown to the Company, which may later result in issued patents that cover the Company’s invention.

The Company is not aware of any infringement by it of any person’s or entity’s intellectual property rights. In the event that products sold by the Company are deemed to infringe upon the patents or proprietary rights of others, the Company could be required to modify its products or obtain a license for the manufacture and/or sale of such products and pay royalties or cease selling such products. In such event, there can be no assurance that the Company would be able to do so in a timely manner, upon acceptable terms and conditions, or at all and the failure to do any of the foregoing could have a material adverse effect upon the Company’s business.

There can be no assurance that the Company will have the financial or other resources necessary to enforce or defend a patent infringement or proprietary rights violation action. If the Company’s products or proposed products are deemed to infringe or likely to infringe upon the patents or proprietary rights of others, the Company could be subject to injunctive relief and, under certain circumstances, become liable for damages, which could also have a material adverse effect on the Company’s business and its operating results.

Trade Secrets

The Company’s trade secrets may be difficult to protect as it depends upon the skills, knowledge, and experience of its scientific and technical personnel, consultants, and advisors, as well as licensors and contractors. Because of the highly competitive nature of the U.S. cannabis industry, the Company relies in part on trade secrets to protect its proprietary technology and processes. However, trade secrets are difficult to protect. The Company enters into confidentiality or non-disclosure agreements with its corporate partners, employees, consultants, outside scientific collaborators, developers, and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third parties’ confidential information developed by the receiving party or made known to the receiving party by the Company during the course of the receiving party’s relationship with the Company. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to the Company will be the Company’s exclusive property and the Company enters into assignment agreements to perfect its rights.

These confidentiality, inventions, and assignment agreements may be breached and may not effectively assign intellectual property rights to the Company. Trade secrets also could be independently discovered by competitors, in which case the Company would not be able to prevent the use of such trade secrets by competitors. The enforcement of a claim alleging that a party illegally obtained and was using the Company’s trade secrets could be difficult, expensive, and time-consuming and the outcome would be unpredictable. In addition, courts outside the U.S. may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect the Company’s competitive position.

Website

Prospective customers may be deterred from doing business with the Company with a significant nationwide online presence because of fears of U.S. federal or state enforcement of laws prohibiting possession and sale of medical or commercial use cannabis.

The Company’s website is visible in jurisdictions where medicinal and/or adult-use of cannabis is not permitted and, as a result, the Company may be found to be violating the laws of those jurisdictions. The Company could lose potential customers as they could fear federal prosecution for buying its cannabis, reducing its revenue.

Competition

The Company faces intense competition from other companies, some of which have longer operating histories and more financial resources and experience than the Company. Increased competition by larger and better-financed competitors could materially and adversely affect the business, financial condition, and operating results.

Because of the early stage of the industry in which the Company operates, the Company expects to face additional competition from new entrants. If the number of consumers of cannabis in the states in which the Company operates its business increases, the demand for products and qualified talent will increase and the Company expects that competition will become more intense, as current and future competitors begin to offer an increasing number of diversified products. To become and remain competitive, the Company will require research and development, marketing, sales, and support. The Company may not have sufficient resources to maintain research and development, marketing, sales, and support efforts on a competitive basis which could materially and adversely affect its business, financial condition, and operating results.

Managing Growth

The Company may not be able to effectively manage its growth or improve its operational, financial, and management information systems, which would impair its business and operating results.

In addition, the Company intends to expand the scope of its operations and activities. If it is successful in executing its business plan, it will experience growth that could place a significant strain on its business operations, finances, management, and other resources.

Factors that may place strain on the Company’s resources include, but are not limited to, the following:

•the need for continued development of financial and information management systems;

•the need to manage strategic relationships and agreements with manufacturers, customers, and partners; and

•difficulties in hiring and retaining skilled management, technical, and other personnel necessary to support and manage the business.

Additionally, any growth may impose a significant burden on its administrative and operational resources. The need to effectively manage growth will require the Company to expand the capabilities of its administrative and operational resources and to attract, train, manage, and retain qualified management and other personnel. There can be no assurance that the Company will be successful in recruiting and retaining new employees or retaining existing employees.

The Company cannot provide assurances that its management will be able to manage this growth effectively and the failure to successfully manage growth could materially adversely affect the business, financial condition, and operating results.

Inability to Innovate

If the Company is unable to continually innovate, the Company’s ability to maintain its existing customers and attract new customers may be adversely affected. In the area of innovation, the Company must be able to develop new products that appeal to its customers. This depends, in part, on the technological and creative skills of the Company’s personnel and on its ability to protect its intellectual property rights. The Company may not be successful in the development, introduction, marketing, and sourcing of new products or innovations, that satisfy customer needs, achieve market acceptance, or generate satisfactory financial returns.

The Inability to Integrate Acquisitions

Material acquisitions, dispositions, and other strategic transactions involve a number of risks for the Company, including: (i) potential disruption of the Company’s business; (ii) distraction of management; (iii) increased financial leverage; (iv) the anticipated benefits and cost savings of those transactions may not be realized or may take longer to realize than anticipated; (v) increased scope and complexity of our operations; and (vi) loss or reduction of control over certain assets. Multiple non-material acquisitions, dispositions or strategic transactions that occur on or about the same time, even though not individually material, may present similar risks to the Company.

Additionally, the Company has in the past and may issue in the future SVS in connection with such transactions, which would dilute a shareholder’s holdings in the Company.

The presence of one or more material liabilities of an acquired company that are known, but believed to be immaterial, or unknown to the Company at the time of acquisition could have a material adverse effect on the Company’s business, financial condition, and operating results. A strategic transaction may result in a significant change in the nature of the Company’s business, operations, and strategy. In addition, the Company may encounter unforeseen obstacles or costs in implementing a strategic transaction, or integrating any acquired business into the Company’s operations.

Failure to Complete Acquisitions or Realize Benefits Therefrom

The Company expects to complete acquisitions in the future. These acquisitions are subject to a number of customary closing conditions including in certain instances, regulatory approval and may not close for a variety of reasons including if the closing conditions are not satisfied or waived, some of which may not be within the control of the Company. In addition, even if these transactions were to be completed, they may not close on terms or within the timing currently expected and there can be no assurance that the Company’s business will ultimately benefit from these transactions. The Company’s acquisition strategy may result in the Company failing to realize the growth opportunities and synergies currently anticipated due to, among other things, challenges associated with integration of the operations and personnel of the Company with potential acquisition targets and the ability of the combined company to attract capital.

If one or more of these transactions do not close or are completed pursuant to terms or timelines different than expected, it could have an adverse effect on the Company’s future capital plans and require the Company to reallocate funds. Failure to complete the Company’s proposed or contemplated acquisitions could have a material adverse effect on the Company’s business, financial condition, and operating results.

Acquisitions

The Company may acquire companies with no significant sources of operating cash flow and no revenue from operations, that are in early stages of development or that have high-risk profiles. These acquisitions will be subject to risks and uncertainties that new companies with no or limited operating history may face. In particular, there is a risk that these acquisitions will not be able to meet anticipated development targets or will not generate revenue at all. If these companies underperform or fail to continue to develop, their businesses may fail, which could have a material adverse effect on our business, financial condition, and operating results.

Reliance on Third-Party Suppliers, Manufacturers, and Contractors; Reliance on Key Inputs

The Company’s business is dependent on a number of key inputs from third parties including raw materials, primarily packaging materials, and supplies related to its cultivation and production operations, as well as electricity, water, and other local utilities. Due to the uncertain regulatory landscape for regulating cannabis in the U.S., the Company’s third-party suppliers, manufacturers, and contractors may elect, at any time, to decline or withdraw services necessary for the Company’s operations. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs from third parties could materially impact the business and operating results of the Company. Some of these inputs may only be available from a single supplier or a limited group of suppliers in the future. If the Company becomes reliant upon a sole source supplier and it was to go out of business or suspend services, the Company might be unable to find a replacement for such source in a timely manner, on terms acceptable to the Company or at all. Similarly, if any future sole source supplier were to be acquired by a competitor, that competitor may elect not to sell to the Company in the future. Any inability to secure required supplies and services on appropriate terms and on a timely basis could have a materially adverse impact on the Company’s business, financial condition, and operating results.

Lack of Access to U.S. Bankruptcy Protections

Because the use of cannabis is illegal under U.S. federal law, many courts have denied cannabis businesses bankruptcy protections, thus making it very difficult for lenders to recoup their investments in the cannabis industry in the event of a bankruptcy. If the Company were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available to the Company, which would have a material adverse effect on the Company.

Operational Risk

The Company will be affected by a number of operational risks, and it may not be adequately insured for certain risks, including labor disputes; catastrophic accidents; fires; blockades or other acts of social activism; changes in the regulatory environment; impact of non-compliance with laws and regulations; natural phenomena, such as inclement weather conditions, floods, wildfires, earthquakes, and ground movements. There is no assurance that the foregoing risks and hazards will not result in damage to, or destruction of, the Company’s properties, grow facilities, and extraction facilities, personal injury, or death, environmental damage, adverse impacts on the Company’s operations, costs, monetary losses, potential legal liability, and adverse governmental action, any of which could have an adverse impact on the Company’s business, financial condition, and operating results. Also, the Company may be subject to or affected by liability or sustain loss for certain risks and hazards against which the Company cannot insure or which the Company may elect not to insure because of the cost. Moreover, while the Company has obtained insurance coverage to cover certain aspects of its business operations, because the Company is engaged in and operates within the cannabis industry, there are exclusions and additional difficulties and complexities associated with its insurance coverage that could cause the Company to suffer uninsured losses, which could adversely affect the Company’s business, results of operations, and profitability. There is no assurance that the Company will be able to obtain insurance coverage at a reasonable cost or fully utilize such insurance coverage, if necessary. This lack of insurance coverage could have an adverse impact on the Company’s business, financial condition, and operating results.

Insurance Coverage

There is a risk that a greater number of state regulatory agencies will begin requiring entities engaged in certain aspects of the business or industry of legal cannabis to post a bond or significant fees when applying, for example, for a dispensary license or renewal as a guarantee of payment of sales and franchise tax. Cresco is not able to quantify at this time the potential scope for such bonds or fees in the states in which it currently, or may in the future, operate. Any bonds or fees of material amounts could have a negative impact on the ultimate success of the Company’s business.

The Company’s business is subject to a number of risks and hazards generally, including adverse environmental conditions, accidents, labor disputes, and changes in the regulatory environment. Such occurrences could result in damage to assets, personal injury or death, environmental damage, delays in operations, monetary losses, and possible legal liability.

The Company’s insurance coverage may be inadequate to cover all significant risk exposures as it will be exposed to liabilities that are unique to the products the Company offers. While the Company intends to maintain insurance for certain risks, the amount of its insurance coverage may not be adequate to cover all claims or liabilities, and it may be forced to bear substantial costs resulting from risks and uncertainties of its business. It is also not possible to obtain insurance to protect against all operational risks and liabilities. The failure to obtain adequate insurance coverage on terms favorable to the Company, or at all, could have a material adverse effect on its business, financial condition, and operating results. The Company has business interruption insurance. However, a significant business disruption or natural disaster could result in substantial costs and diversion of resources.

Investments in the United States May be Subject to Heightened Scrutiny in Canada

For the reasons set forth above, the Company’s existing operations in the U.S., and any future operations or investments, may become the subject of heightened scrutiny by regulators, stock exchanges, and other authorities in Canada. As a result, the Company may be subject to significant direct and indirect interaction with public officials. There can be no assurance that this heightened scrutiny will not, in turn, lead to the imposition of certain restrictions on the Company’s ability to operate or invest in the U.S. or any other jurisdiction, in addition to those described herein.

Government policy changes or public opinion may also result in a significant influence over the regulation of the cannabis industry in Canada, the U.S., or elsewhere. A negative shift in the public’s perception of medical and adult-use cannabis in the U.S., or any other applicable jurisdiction, could affect future legislation or regulation. Among other things, such a shift could cause state jurisdictions to abandon initiatives or proposals to legalize medical or adult-use cannabis, thereby limiting the number of new state jurisdictions into which the Company could expand. Any inability to fully implement the Company’s expansion strategy may have a material adverse effect on the Company’s business and operating results.

Settlements of Trades

On February 8, 2018, following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group announced the signing of a Memorandum of Understanding (“MOU”) with Aequitas NEO Exchange Inc., the CSE, the Toronto Stock Exchange, and the TSX Venture Exchange. The MOU outlines the parties’ understanding of Canada’s regulatory framework applicable to the rules, procedures, and regulatory oversight of the exchanges and the Clearing and Depository Services Inc. (“CDS Clearing”), an operating subsidiary of the Canadian Depository for Securities Ltd., as it relates to issuers with cannabis-related activities in the United States. The MOU confirms, with respect to the clearing of listed securities, that CDS Clearing relies on the exchanges to review the conduct of listed issuers. As a result, there is no CDS Clearing ban on the clearing of securities of issuers with cannabis-related activities in the United States. However, there can be no guarantee that this approach to regulation will continue in the future. If such a ban were to be implemented at a time when the SVS is listed on a stock exchange, it would have a material adverse effect on the ability of holders of common shares to make and settle trades. In particular, the SVS would become highly illiquid until an alternative was implemented, investors would have no ability to effect a trade of the common shares through the facilities of the applicable stock exchange.

Constraints on Marketing Products

The development of the Company’s business, financial condition, and operating results may be hindered by applicable restrictions on sales and marketing activities imposed by government regulatory bodies. The regulatory environment in the United States limits the Company’s ability to compete for market share in a manner similar to other industries. If the Company is unable to effectively market its products and compete for market share, or if the

costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for its products, the Company’s sales and operating results could be adversely affected.

Environmental Risk and Regulation

The Company’s operations are subject to environmental regulation in the various jurisdictions in which it operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors (or the equivalent thereof) and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations.

Government approvals and permits are currently, and may in the future, be required in connection with the Company’s operations. To the extent such approvals are required and not obtained, the Company may be curtailed or prohibited from its current or proposed production, manufacturing or sale of cannabis or cannabis products, or from proceeding with the development of its operations as currently proposed.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. The Company may be required to compensate those suffering loss or damage by reason of its operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations, and permits governing the production, manufacturing, or sale of cannabis or cannabis products, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in expenses, capital expenditures, production costs, manufacturing costs, or reduction in levels of production, manufacturing, sales, or require abandonment or delays in development.

Holding Company

The Company is a holding company and essentially all of its assets are the capital stock of its material subsidiaries. As a result, investors in the Company are subject to the risks attributable to its subsidiaries. Consequently, the Company’s cash flows and ability to complete current or desirable future opportunities are dependent on the earnings of its subsidiaries. The ability of these entities to pay dividends and other distributions will depend on their operating results and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained by such entities and contractual restrictions contained in the instruments governing their debt. In the event of a bankruptcy, liquidation, or reorganization of any of the Company’s material subsidiaries, holders of indebtedness, and trade creditors may be entitled to payment of their claims from the assets of those subsidiaries before the Company.

Anti-money Laundering Laws and Regulations

The Company is subject to a variety of laws and regulations domestically and in the U.S. that involve money laundering, financial recordkeeping, and proceeds of crime, including the Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the Bank Secrecy Act), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S. and Canada.

In February 2014, the Department of the Treasury Financial Crimes Enforcement Network issued a memorandum (the “FinCEN Memo”) providing instructions to banks seeking to provide services to cannabis-related businesses.

The FinCEN Memo states that in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of U.S. federal money laundering laws. It refers to supplementary guidance that then Deputy Attorney General Cole issued to U.S. federal prosecutors relating to the prosecution of money laundering offenses predicated on cannabis-related violations of the CSA. It is unclear at this time whether the current administration will follow the guidelines of the FinCEN Memo. In addition, the House of Representatives has passed the Secure and Fair Enforcement Banking Act of 2019 (the “SAFE Banking Act”), which would protect banks and their employees from punishment for providing services to cannabis businesses that are legal on a state level. Despite approval by the House of Representatives in the past, it is unclear if the SAFE Banking Act will continue to be approved by the House after the change in control of the House or be passed by the Senate and signed into law.

In the event that any of the Company’s operations, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such operations in the U.S. were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could restrict or otherwise jeopardize the ability of the Company to declare or pay dividends, affect other distributions or subsequently repatriate such funds back to Canada.

Challenging Global Economic Conditions

The Company’s business, financial condition, and operating results may be negatively impacted by challenging global economic conditions. A global economic slowdown would cause disruptions and extreme volatility in global financial markets, increased rates of default, and bankruptcy and declining consumer and business confidence, which can lead to decreased levels of consumer spending. These macroeconomic developments could negatively impact the Company’s business, which depends on the general economic environment and levels of consumer spending. As a result, the Company may not be able to maintain its existing customers or attract new customers, or the Company may be forced to reduce the price of its products. The Company is unable to predict the likelihood of the occurrence, duration or severity of such disruptions in the credit and financial markets or adverse global economic conditions. Any general or market-specific economic downturn could have a material adverse effect on our business, financial condition, and operating results.

Additionally, the U.S. has imposed and may impose additional quotas, duties, tariffs, retaliatory or trade protection measures or other restrictions or regulations and may adversely adjust prevailing quota, duty or tariff levels, which can affect both the materials that the Company uses to package its products and the sale of finished products. For example, the tariffs imposed by the U.S. on materials from China are impacting materials that the Company imports for use in packaging in the U.S. Measures to reduce the impact of tariff increases or trade restrictions, including geographical diversification of the Company’s sources of supply, adjustments in packaging design and fabrication, or increased prices, could increase its costs, delay its time to market and/or decrease sales. Other governmental action related to tariffs or international trade agreements has the potential to adversely impact demand for the Company’s products and its costs, customers, suppliers and global economic conditions and cause higher volatility in financial markets. While the Company actively reviews existing and proposed measures to seek to assess the impact of them on the Company’s business, changes in tariff rates, import duties, and other new or augmented trade restrictions could have a number of negative impacts on the Company’s business, including higher consumer prices and reduced demand for the Company’s products and higher input costs.

Impact of Inflation

The U.S. economy is experiencing a period of high rates of inflation. The Company’s ability to raise its selling prices depends on market conditions and there may be periods during which the Company may be unable to fully recover increases in its costs, which could have a material adverse effect on the Company’s business, financial condition, and operating results.

Health Epidemics and Diseases, such as COVID-19

A local, regional, national, or international outbreak of a contagious disease, such as COVID-19, or the fear of a potential outbreak, could decrease the willingness of the general population to travel, cause staff shortages, reduced customer traffic, supply shortages, and increased government regulation all of which may negatively impact the business, financial condition, and results of operations of the Company. The risk of a pandemic, or public perception of the risk, could cause customers to avoid public places, including retail properties, and could cause temporary or long-term disruptions in our supply chains and/or delays in the delivery of our inventory. Further, such risks could also adversely affect the financial condition of the Company’s customers, resulting in reduced spending for the products we sell. Moreover, an epidemic, pandemic, outbreak, or other public health crisis, such as COVID-19, could cause employees to avoid Company properties, which could adversely affect the Company’s ability to adequately staff and manage its businesses. “Shelter-in-place” or other such orders by governmental entities could also disrupt our operations, if employees who cannot perform their responsibilities from home, are not able to report to work. Risks related to an epidemic, pandemic, or other health crisis could also lead to the complete or partial closure of one or more of our stores, facilities, or operations of the Company’s sourcing partners. The ultimate extent of the impact of any epidemic, pandemic or other health crisis on our business, financial condition, and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic, or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of an epidemic, pandemic or other health crisis, such as COVID-19, could therefore materially and adversely affect Cresco’s business, financial condition, and results of operations.

Unfavorable Tax Treatment of Cannabis Businesses; Risk of Tax Position

Under Section 280E of the U.S. Tax Code (“Section 280E”),“no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.” This provision has been applied by the U.S. Internal Revenue Service (“IRS”) to cannabis operations, prohibiting them from deducting business expenses other than those directly related to sales of cannabis product. Section 280E, therefore, has a lesser impact on cultivation and manufacturing operation but a significant impact as to retail operations and organizational expenses. It results in permanent differences between ordinary and necessary business expenses deemed non-allowable under Section 280E and a higher effective tax rate than most industries and that an otherwise profitable business may, in fact, operate at a loss, after taking into account its U.S. income tax expenses. Therefore, the effective tax rate can be highly variable and may not necessarily correlate to pre-tax income or loss. Operating in compliance with state laws, Cresco has taken the position that Section 280E does not apply to its business and therefore has recorded a corresponding uncertain tax position starting with tax year 2023. There is a risk that the IRS could challenge the Company’s position which could result in significant tax and other liabilities.

United States Tax Classification of the Company

The Company is a Canadian corporation but is classified for U.S. federal income tax purposes as a United States corporation under Section 7874 of the Internal Revenue Code of 1986 as amended (the “U.S. Tax Code”). Section 7874 of the U.S. Tax Code contains rules that can cause a non-United States corporation to be taxed as a United States corporation for U.S. federal income tax purposes. Under Section 7874 of the U.S. Tax Code, a corporation created or organized outside the United States. (i.e., a non-United States corporation) will nevertheless be treated as a United States corporation for U.S. federal income tax purposes (such treatment is referred to as an inversion) if each of the following three (3) conditions are met: (i) the non-United States corporation acquires, directly or indirectly, or is treated as acquiring under applicable U.S. Treasury Regulations issued by the IRS (“Treasury Regulations”), substantially all of the assets held, directly or indirectly, by a United States corporation or United States trade or business, (ii) after the acquisition, the former stockholders of the acquired United States corporation hold at least 80% (by vote or value) of the shares of the non-United States corporation by reason of holding shares of the United States acquired corporation, trade or business, and (iii) after the acquisition, the non-United States

corporation’s expanded affiliated group does not have substantial business activities in the non-United States corporation’s country of organization or incorporation when compared to the expanded affiliated group’s total business activities.

The Company intends to be treated as a United States corporation for U.S. federal income tax purposes under Section 7874 of the U.S. Tax Code and is expected to be subject to U.S. federal income tax on its worldwide income. However, for Canadian tax purposes, the Company is expected, regardless of any application of Section 7874 of the U.S. Tax Code, to be treated as a Canadian resident company (as defined in the ITA) for Canadian income tax purposes. As a result, the Company will be subject to taxation both in Canada and the United States which could have a material adverse effect on its business, financial condition, and operating results. The Company may not qualify for certain U.S.-Canada income tax treaty benefits, which could have a material adverse effect on its financial condition and results of operations.

It is unlikely that the Company will pay any dividends on the SVS in the foreseeable future. However, dividends received by shareholders who are residents of Canada for purpose of the ITA will be subject to U.S. withholding tax. Any such dividends may not qualify for a reduced rate of withholding tax under the U.S.-Canada tax treaty. In addition, a foreign tax credit or a deduction in respect of foreign taxes may not be available.

Dividends received by U.S. shareholders will not be subject to U.S. withholding tax but will be subject to Canadian withholding tax. Dividends paid by the Company will be characterized as U.S. source income for purposes of the foreign tax credit rules under the U.S. Tax Code. Accordingly, U.S. shareholders generally will not be able to claim a credit for any Canadian tax withheld unless, depending on the circumstances, they have an excess foreign tax credit limitation due to other foreign source income that is subject to a low or zero rate of foreign tax.

Dividends received by shareholders that are neither Canadian nor U.S. shareholders will be subject to U.S. withholding tax and will also be subject to Canadian withholding tax. These dividends may not qualify for a reduced rate of U.S. withholding tax under any income tax treaty otherwise applicable to a shareholder of the Company, subject to examination of the relevant treaty.

Because the SVS will be treated as shares of a U.S. domestic corporation, the U.S. gift, estate, and generation-skipping transfer tax rules generally apply to a non-U.S. shareholder of common shares.

EACH SHAREHOLDER SHOULD SEEK TAX ADVICE, BASED ON SUCH SHAREHOLDER’S PARTICULAR CIRCUMSTANCES, FROM AN INDEPENDENT TAX ADVISOR.

Fluctuations in Currency Exchange Rates

Fluctuations in currency rates may significantly and adversely impact the Company’s financial position and operating results. The Company does not have in place a policy for managing or controlling foreign currency risks since, to date, its primary activities have not resulted in material exposure to foreign currency risk.

Consumer Acceptance of Cannabis

The Company’s ability to generate revenue and be successful in the implementation of the Company’s business plan is dependent on consumer acceptance and demand of Cresco products. Acceptance of Cresco products will depend on several factors, including availability, cost, ease of use, familiarity of use, convenience, effectiveness, safety, and reliability. If these customers do not accept Cresco products, or if such products fail to meet customers’ needs and expectations adequately, the Company’s ability to continue generating revenues could be reduced. A drop in the retail price of medical cannabis products may negatively impact the Company’s business, financial condition, and operating results.

The demand for Cresco products depends in part on the price of commercially-grown cannabis. Fluctuations in economic and market conditions that impact the prices of commercially-grown cannabis, such as increases in the supply of such cannabis and the decrease in the price of products using commercially-grown cannabis, could cause

the demand for cannabis products to decline, which would have a negative impact on the Company’s business, financial condition, and operating results.

Unfavorable publicity or consumer perception

Management believes the medical and adult-use cannabis industry is highly dependent upon consumer perception regarding the safety, efficacy, and quality of the cannabis produced. Consumer perception of the Company’s products may be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention, and other publicity regarding the consumption of cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the cannabis market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention, or other publicity that is perceived as less favorable than, or questions earlier research reports, findings or publicity could have a material adverse effect on the demand for the Company’s products. The Company’s dependence upon consumer perceptions means that such adverse reports, whether or not accurate or with merit, could ultimately have a material adverse effect on the Company’s business, financial condition, and results of operation. Further, adverse publicity reports or other media attention regarding the safety, efficacy, and quality of cannabis in general, or the Company’s products specifically, or associating the consumption of cannabis with illness or other negative effects or events, could also have such a material adverse effect. Although the Company uses quality control processes and procedures to ensure its consumer-packaged goods meet its standards, a failure or alleged failure of such processes and procedures could result in negative consumer perception of the Company’s products or legal claims against the Company. Adverse publicity reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed.

Certain of the Company’s products are e-vapor or “vape” products. The use of vape products and vaping may pose health risks. According to the Centers for Disease Control (“CDC”), vape products may contain ingredients that are known to be toxic to humans and may contain other ingredients that may not be safe. Because clinical studies about the safety and efficacy of vape products have not been submitted to the FDA, consumers currently have no way of knowing whether they are safe for their intended use or what types or concentrations of potentially harmful chemicals or by-products are found in these products. It is also uncertain what implications the use of vape or other inhaled products, such as flower that is smoked, may have on respiratory illnesses such as that caused by the COVID-19 pandemic. Adverse findings, regulatory investigations, litigation, media attention, and other publicity regarding the consumption of vape or other inhaled products, including adverse publicity regarding underage use of vape or other inhaled products, may adversely affect the Company.

Security Risks

As cash businesses, the premises of the cannabis dispensaries are a target for theft. While the Company has implemented security measures and continues to monitor and improve its security measures, its cultivation, processing, and dispensary facilities could be subject to break-ins, robberies, and other breaches in security. In the event of robbery or theft, the loss of cannabis plants, cannabis oils, cannabis flowers, and cultivation and processing equipment could have a material adverse impact on the business, financial condition, and results of operation of the Company.

As the Company’s business involves the movement and transfer of cash which is collected from dispensaries and used to purchase trim, accessories, etc. or deposited into its bank, there is a risk of theft or robbery during the transport of cash. The Company has engaged security firms to provide armed guards and security in the transport and movement of large amounts of cash. While the Company has taken robust steps to prevent theft or robbery of cash during transport, there can be no assurance that there will not be a security breach during the transport and the movement of cash involving the theft of product or cash.

Risk of Litigation

From time to time in the normal course of business operations, the Company may become subject to litigation that may result in liabilities material to its financial statements as a whole or may negatively affect its operating results if changes to its business operations are required. The cost to defend such litigation may be significant and may require a diversion of resources. There also may be adverse publicity associated with litigation that could negatively affect customer perception of the business, regardless of whether the allegations are valid or whether the Company is ultimately found liable. Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters. A judgment or other liability in excess of the Company’s insurance coverage for any claims could adversely affect its business and the results of operations.

The Company’s participation in the medical and adult-use cannabis industry may lead to litigation, formal or informal complaints, enforcement actions, and inquiries by various U.S. federal, state, or local governmental authorities against the Company or its subsidiaries. Litigation, complaints, and enforcement actions involving the Company, or its subsidiaries could consume considerable amounts of financial and other corporate resources, which could have a negative impact on the Company’s business, financial condition, and operating results.

Risks Inherent in an Agricultural Business

The Company’s business involves the growing of medical and adult-use cannabis, an agricultural product. Such business will be subject to the risks inherent in the agricultural business, such as insects, plant diseases, and similar agricultural risks. Although the Company expects that cannabis cultivation will be completed indoors under climate- controlled conditions, there can be no assurance that natural elements will not have a material adverse effect on any such future production.

Vulnerability to Rising Energy Costs

Adult-use and medical cannabis growing operations consume considerable energy, making the Company potentially vulnerable to rising energy costs. Rising or volatile energy costs may adversely impact the business, financial condition, and operating results of the Company.

Product Liability

As a distributor of products designed to be ingested by humans, the Company faces an inherent risk of exposure to product liability claims, regulatory action, and litigation if its products are alleged to have caused significant loss or injury. In addition, the sale of the Company’s products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human consumption of the Company’s products alone or in combination with other medications or substances could occur. The Company may be subject to various product liability claims, including, among others, that Cresco’s products caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances.

A product liability claim or regulatory action against the Company could result in increased costs, could adversely affect the Company’s reputation with its clients and consumers generally, and could have a material adverse effect on the Company’s business, results of operations, and financial condition. A product liability claim or regulatory action against the Company could prevent or inhibit the commercialization of the Company’s potential products, result in materially increased costs, adversely affect the Company’s reputation with its clients and consumers generally, and have a material adverse effect on its results of operations and financial condition. Although the Company has secured product liability insurance, there can be no assurances that the Company will be able to maintain its product liability insurance on acceptable terms or with adequate coverage against potential liabilities.

Product Recalls

Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety, and inadequate or inaccurate labeling disclosure. If any of the Company’s products are recalled due to an alleged product defect or for any other reason, the Company could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. The Company may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Although the Company has detailed procedures in place for testing finished products, there can be no assurance that any quality, potency, or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action, or lawsuits. Additionally, if one of the Company’s significant brands were subject to recall, the image of that brand and the Company as its owner could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for the Company’s products and could have a material adverse effect on the results of operations and financial condition of the Company. Additionally, product recalls may lead to increased scrutiny of the Company’s operations by the FDA or other regulatory agencies, requiring further management attention and potential legal fees and other expenses.

Increased Costs Due to Being a Listed Public Company in Canada and Registered with the SEC

As a listed public company in Canada and a company registered with the SEC, the Company is subject to the reporting requirements, rules, and regulations under the applicable Canadian and U.S. securities laws and the CSE. The requirements of existing and potential future rules and regulations will increase the Company’s legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming or costly and may place undue strain on the Company’s personnel, systems, and resources, which could adversely affect the Company’s business, financial condition, and results of operations.

As a public company, there are costs associated with legal, accounting, and other expenses related to regulatory compliance. Securities legislation and the rules and policies of the CSE require listed companies to, among other things, adopt corporate governance and related practices, and to continuously prepare and disclose material information, all of which add to a company’s legal and financial compliance costs. The Company may also elect to devote greater resources than it otherwise would have on communication and other activities typically considered important by publicly traded companies.

Newly Established Legal Regime

The Company’s business activities rely and will continue to rely on newly established and developing laws and regulations in the states in which it operates. These laws and regulations are rapidly evolving and subject to change with minimal notice. Regulatory changes may adversely affect the Company’s profitability or cause it to cease operations entirely. The cannabis industry may come under the scrutiny or further scrutiny by the FDA, the SEC, the DOJ, the Financial Industry Regulatory Advisory or other U.S. federal or applicable state or nongovernmental regulatory authorities or self-regulatory organizations that supervise or regulate the production, distribution, sale or use of cannabis for medical or nonmedical purposes in the United States. It is impossible to determine the extent of the impact of any new laws, regulations, or initiatives that may be proposed or whether any proposals will become law. The regulatory uncertainty surrounding the industry may adversely affect the business and operations of the Company, including without limitation, the costs to remain compliant with applicable laws and the impairment of its business or the ability to raise additional capital.

RISKS ASSOCIATED WITH THE COMPANY’S INDEBTEDNESS

Substantial Indebtedness

As of December 31, 2024, the Company had $351.7 million outstanding on its Senior Loan, net of unamortized debt issuance costs, which matures on or prior to August 12, 2026, and $17.9 million outstanding on its Mortgage Loans, net of debt issuance costs, which converts to a term loan on November 1, 2028.

The Company’s substantial indebtedness could have important consequences. For example, it could, among other things:

•require the Company to dedicate a substantial portion of available cash flow to pay interest on its outstanding debt, which will reduce the funds available for working capital, capital expenditures, acquisitions, and other general corporate purposes;

•limit flexibility in planning for and reacting to changes in the Company’s business and in the industry in which it operates;

•increase the Company’s vulnerability to general adverse economic and industry conditions and to deterioration in operating results;

•limit the Company’s ability to engage in strategic transactions or implement its business strategies;

•limit the Company’s ability to borrow additional funds, or to refinance, repay, or restructure its indebtedness on terms favorable to the Company, or at all; and

•place the Company at a disadvantage compared to any competitors that have less debt.

Any of the factors listed above could materially and adversely affect the Company’s business and results of operations.

If the Company does not have sufficient cash flow to service its debt, the Company may be required to refinance all or part of its existing debt, sell assets, borrow more money, or sell securities, none of which the Company can guarantee it will be able to do.

The Company expects to require substantial additional capital in the future, which may be in the form of debt. The Senior Loan contains restrictions on the ability to incur additional indebtedness. The Company’s inability to generate sufficient cash flow to satisfy its debt obligations, incur additional indebtedness, or to refinance its existing indebtedness on commercially reasonable terms, or at all, may materially and adversely affect its business, financial condition, and operating results.

Ability to Service Indebtedness

The Company’s ability to satisfy its debt obligations will depend principally upon its future operating performance. As a result, prevailing economic conditions and financial, business, regulatory, and other factors, many of which are beyond the Company’s control, will affect its ability to make payments on its indebtedness.

The required repayment of the Senior Loan may be accelerated if, among other things, any governmental authority enforces a prohibition or ban on the Company’s business or if certain cannabis-related licenses are revoked, suspended, or canceled without replacement.

If the Company does not generate sufficient cash flow from operations to satisfy its debt service obligations, it may have to pursue alternative financing plans, such as refinancing or restructuring its indebtedness, selling assets, reducing or delaying capital investments or seeking to raise additional capital. The Company’s ability to refinance or restructure its debt will depend on the capital markets, the prevailing regulatory environment, and the Company’s financial condition at such time. In addition, the terms of the Senior Loan may restrict the Company from adopting some of these alternatives. The Company’s inability to generate sufficient cash flow to satisfy its debt service

obligations, or to refinance its obligations on commercially reasonable terms, would have an adverse effect, which could be material, on the Company’s business, financial position, results of operations, and cash flows.

Restrictive Covenants

The Senior Loan contains a number of restrictive covenants imposing significant operating and financial restrictions on the Company and some or all of its subsidiaries, including restrictions that may limit the Company’s ability to engage in acts that may be in its long-term best interests.

The Senior Loan includes covenants restricting, among other things, the ability of the Company and its subsidiaries to:

(i)incur or guarantee additional debt;

(ii)pay dividends or make redemptions, repurchases or distributions, with respect to equity interests;

(iii)create or incur liens;

(iv)make loans or investments;

(v)engage in mergers, acquisitions, amalgamations, asset sales, and sale and leaseback transactions; and

(vi)engage in transactions with affiliates.

The Mortgage Loans include covenants restricting, among other things, the ability of the Company and its subsidiaries to:

(i)make investments;

(ii)dispose of assets; and

(iii)incur additional debt.

In addition, the Company must maintain cash and cash equivalents held on a consolidated basis by the obligors under the Senior Loan of at least $50 million.

The operating and financial restrictions and covenants in the Senior Loan, Mortgage Loans and any future financing agreements may adversely affect the Company’s ability to finance future operations or capital needs or to engage in other business activities. If a default occurs under the Senior Loan or the Mortgage Loans, the lenders may, subject to certain cure periods, elect to declare all outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable and enforce their security interest over certain of the Company’s assets. If the Company was unable to repay outstanding borrowings when due, the lenders would have the right to proceed against the collateral granted to them to secure the loans.

RISKS ASSOCIATED WITH THE SECURITIES OF THE COMPANY

MVS Voting Control

The Company’s SVS are entitled to one vote per share, the PVS are entitled to 200 votes per share (subject to adjustment in accordance with the terms thereof) and the MVS are entitled to 2,000 votes per share. Due to their ownership of the MVS, along with their PVS and SVS holdings, Charles Bachtell, Robert Sampson, Thomas J. Manning, and the Brian McCormack Trust (the “MVS Holders”) exercise approximately 74% of the voting power in respect of the Company’s outstanding shares as of March 14, 2025. Each MVS may be transferred by a MVS

Holder only to the MVS Holder’s immediate family members and certain related entities of the MVS Holder or, with the prior written consent of the Company, to a current member of the Company’s board of directors.

Accordingly, the MVS Holders (or their permitted transferees) potentially have the ability to control the outcome of matters submitted to the Company’s shareholders for approval, including the election and removal of directors and any arrangement or sale of all, or substantially all, of the assets of the Company.

This concentrated control of the Company could delay, defer, or prevent a change of control of the Company, an arrangement involving the Company, or a sale of all, or substantially all, of the assets of the Company. Conversely, this concentrated control could allow the MVS Holders to consummate a transaction that the Company’s other shareholders do not support. In addition, the MVS Holders may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm the Company’s business, financial condition, and operating results.

Charles Bachtell, Robert Sampson, and Thomas J. Manning each owe a fiduciary duty to the Company’s shareholders, due to their positions as directors, and in the case of Charles Bachtell as Chief Executive Officer of the Company, and are obligated to act honestly and in good faith with a view to the best interests of the Company, when serving in such positions. However, as shareholders, Charles Bachtell, Robert Sampson, and Thomas J. Manning are entitled to vote the shares over which they have voting control, in their own interests, which may not always be in the interests of the other shareholders of the Company.

Potential for Conflict of Interest

All decisions to be made by such directors and officers involving the Company are required to be made in accordance with their duties and obligations to act honestly and in good faith with a view to the best interests of the Company. In addition, such directors and officers are required to declare their interests in, and such directors are required to refrain from voting on any matter in which they may have a material conflict of interest. For a description of certain risks associated with the Company’s multi-voting share class structure, see “MVS Voting Control.”

Certain of the Company’s directors and officers are, and may continue to be, or may become, involved in other business ventures through their direct and indirect participation in, among other things, corporations, partnerships, and joint ventures, that are or may become competitors of the products and services the Company provides or intends to provide. Situations may arise in connection with potential acquisitions or opportunities where the other interests of these directors’ and officers’ conflict with or diverge from the Company’s interests. In accordance with applicable corporate law, directors who have a material interest in a contract or transaction or a proposed contract or transaction with the Company that is material to the Company are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the transaction. This does not impact the directors’ and officers’ obligation to act honestly and in good faith with a view to the Company’s best interests. However, in conflict-of-interest situations, the Company’s directors and officers may owe the same duty to another company and will need to balance their competing interests with their duties to the Company. Circumstances (including with respect to future corporate opportunities) may arise that may be resolved in a manner that is unfavorable to the Company.

Unpredictability Caused by the Capital Structure and MVS Voting Control; Tax Receivable Agreement

Although other Canadian-based companies have multi-class or multiple voting share structures, the MVS Holders’ voting control over the Company and the Company’s capital structure, including its Up-C structure, a newly formed parent company, organized as a corporation, and it subsidiary, the pre-public offering operating entity, structured as an LLC, and the significant amount of outstanding equity securities of Cresco LLC, which are redeemable from time to time for SVS, could result in a lower trading price for, or greater fluctuations in, the trading price of the SVS or result in adverse publicity to the Company or other adverse consequences.

In addition, in connection with the Business Combination, the Company’s subsidiary, Cresco U.S. Corp (“Cresco Corp”), entered into a tax receivable agreement (the “Tax Receivable Agreement”) with Cresco LLC and certain other holders of Cresco LLC Common Units11 (the “TRA Parties”), which confers certain benefits to the TRA Parties that will not be received by the holders of SVS. Under the Tax Receivable Agreement, the TRA Parties will receive a payment from Cresco Corp that reflects a portion of the tax benefit that Cresco Corp realizes as a result of its increased share of the tax basis of the assets of Cresco LLC when a TRA Party redeems or exchanges its Cresco LLC Common Units for SVS or cash (such basis increase is referred to as the “Basis Adjustments”). The Tax Receivable Agreement generally requires Cresco Corp to pay 85% of the tax benefits to a TRA Party when those benefits are treated as realized under the terms of the Tax Receivable Agreement.

The payment obligations of Cresco Corp under the Tax Receivable Agreement are expected to be significant. The amount of existing tax basis and anticipated tax basis adjustments and utilization of tax attributes, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of redemptions or exchanges by the TRA Parties, the price of the SVS at the time of the redemptions or exchanges, the extent to which such redemptions or exchanges are taxable, the amount of deductions able to be realized by Cresco Corp especially due to the application of Section 280E, the amount and timing of the taxable income allocated to Cresco Corp or otherwise generated by Cresco Corp in the future, the portion of the payments under the Tax Receivable Agreement constituting imputed interest and the federal and state tax rates then applicable. While the payments under the Tax Receivable Agreement are meant to be 85% of the tax benefits received by Cresco Corp, there can be no assurance that Cresco Corp will be able to finance its obligations under the Tax Receivable Agreement when they become due. Any payments made to TRA Parties under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to Cresco Corp (or to the Company or Cresco LLC) and, to the extent that Cresco Corp is unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by Cresco Corp. There can be no assurance that Cresco Corp will be able to fund or finance its obligations under the Tax Receivable Agreement and the failure to do could have a material adverse effect on the Company’s business, financial condition, and operating results. In addition, the Company will not be reimbursed for any payments made to the TRA Parties under the Tax Receivable Agreement in the event that any tax benefits to the Company are subsequently disallowed by tax authorities. As a result, it is possible that Cresco Corp could make cash payments under the Tax Receivable Agreement that are substantially greater than its actual cash tax savings.

In addition, Cresco Corp’s future obligations to make payments under the Tax Receivable Agreement could make the Company a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the Tax Receivable Agreement. Although the Company will retain 15% of the amount of the tax benefits, this and other aspects of the Company’s organizational structure may adversely impact the future trading market for the SVS. In certain cases, including upon a change of control of the Company, payments under the Tax Receivable Agreement may be accelerated or significantly exceed any actual benefits that the Company realizes in respect of the tax attributes subject to the Tax Receivable Agreement, which could have a substantial negative impact on the Company’s liquidity and could have the effect of delaying, deferring, or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control.

Dilution due to Additional Issuances of SVS or Subsidiary Securities

The Company may issue additional securities in the future, which may dilute a shareholder’s holdings in the Company. The Company’s articles permit the issuance of an unlimited number of SVS and existing shareholders will have no preemptive rights in connection with such further issuance. The Company’s Board has discretion to determine the price and the terms of further issuances. Moreover, additional SVS will be issued by the Company on the conversion of the PVS in accordance with their terms. The Company may also issue SVS to finance future acquisitions. The Company cannot predict the size of future issuances of SVS or the effect that future issuances and sales of SVS will have on the market price of the SVS. Issuances of a substantial number of additional SVS, or the

11 Common Units means those units designated by Cresco LLC after Cresco LLC effected a recapitalization of its outstanding unit capital in connection with the Business Combination, whereby under such recapitalization all previously issued Cresco LLC Units were combined into a single class of non-voting units of Cresco LLC.

perception that such issuances could occur, may adversely affect prevailing market prices for the SVS. With any additional issuance of SVS, investors will suffer dilution to their voting power and the Company may experience dilution in its revenue per share.

Additionally, the subsidiaries of the Company, such as Cresco Corp and Cresco LLC, may issue additional securities, including non-voting common shares in the capital of Cresco (“Cresco Redeemable Shares”), Cresco Redeemable Units and Appreciation Only LTIP Units12 (“AO LTIP Units”), Full Value LTIP Units13 (“FV LTIP Units”), or other classes or series of membership units issued in accordance with Exhibit A of the A&R LLC Agreement (“LTIP Units”) to new or existing shareholders, members or security holders, including in exchange for services performed or to be performed on behalf of such entities or to finance future acquisitions. Any such issuances could result in substantial dilution to the indirect equity interest of the holders of SVS in the Company and materially adversely impact the market price of the SVS. Further, the sale of a substantial number of such securities, or the perception in the market that holders of a large number of securities intend to sell securities, could reduce the market price of the SVS and could impair the Company’s ability to raise capital through the sale of additional equity securities.

Additional Financing

The Company expects to require substantial additional capital in the future to fund its existing operations, expand its product lines, develop its intellectual property base, increase production capabilities, and expand its operations in states where it currently operates and states where it currently does not have operations. The Company may not be able to obtain additional financing on terms acceptable to it, or at all. If the Company fails to raise additional capital, as needed, its ability to continue its operations and to implement its business model and strategy could be materially adversely affected.

Even if the Company obtains financing for its near-term operations, it expects that it will require additional capital thereafter. The capital needs of the Company will depend on numerous factors including: (i) the Company’s profitability; (ii) the release of competitive products by peers; (iii) the level of investment in research and development; and (iv) the amount of capital expenditures and acquisitions. There can be no assurance that the Company will be able to obtain capital in the future to meet its needs or on terms which are acceptable.

Although the Company has accessed private financing in the past, there is neither a broad nor deep pool of institutional capital that is available to companies in the U.S. cannabis industry. Due to the current laws and regulations governing financial institutions in the U.S., banks often refuse to provide services to businesses involved in the cannabis industry, U.S. multistate operators are currently not permitted to list securities on the U.S. exchanges and U.S. investors and banks are reluctant to provide financing to U.S. multistate operators such as the Company. Consequently, it may be difficult for the Company to obtain additional financing in the U.S. There can be no assurance that additional financing, if raised privately, will be available to the Company when needed or on terms which are acceptable.

12 Appreciation Only LTIP Units means a unit of Cresco LLC which is designated in the applicable vesting agreement or other documentation pursuant to which such AO LTIP Unit is granted or issued, having the rights, powers, privileges, restrictions, qualifications, and limitations set forth in Exhibit A to the A&R LLC Agreement in respect of the holder thereof, as well as any applicable vesting agreement or other documentation pursuant to which such AO LTIP Unit is granted or issued.

13 Full Value LTIP Units means a unit of Cresco LLC which is designated in the applicable vesting agreement or other documentation pursuant to which such FV LTIP Unit is granted or issued, having the rights, powers, privileges, restrictions, qualifications, and limitations set forth in Exhibit A to the A&R LLC Agreement in respect of the holder thereof, as well as any applicable vesting agreement or other documentation pursuant to which such FV LTIP Unit is granted or issued.

No Guaranteed Return

There is no guarantee that an investment in the SVS will earn any positive return in the short, medium, or long term. There is no assurance that holders of the SVS will receive cash distributions or any rate of return on, or repayment of, their investment in the SVS. In fact, an investor could lose its entire investment in the SVS.

Volatile Market Price of the SVS and Other Listed Securities

The market price of the SVS and other listed securities of the Company has been, and is likely to continue to be, highly volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company’s control. This volatility may affect the ability of holders of SVS or such other securities to sell their securities at an advantageous price. Market price fluctuations in the SVS or such other securities may be due to, among other factors: (i) the Company’s operating results failing to meet expectations of securities analysts or investors in any period; (ii) downward revision in securities analysts’ estimates; (iii) adverse changes in general market conditions or competitive, regulatory, or economic trends; (iv) regulatory changes affecting the Company’s industry generally and its business and operations; (v) adverse changes in the economic performance or market valuations of companies in the industry in which the Company operates; (vi) acquisitions, dispositions, strategic partnerships, joint ventures, or capital commitments; (vii) public announcements by the Company or its competitors or government and regulatory authorities of material events; (viii) operating and share price performance of the companies that investors deem comparable to the Company; (ix) and, the addition or departure of the Company’s executive officers and other key personnel. These broad market fluctuations may adversely affect the market price of the SVS or such other securities.

Financial markets have, at times, historically experienced significant price and volume fluctuations that have particularly affected the market prices of equity and convertible securities of companies and that have often been unrelated to the operating performance, underlying asset values, or prospects of such companies. Accordingly, the market price of the SVS and other listed securities of the Company from time to time, may decline even if the Company’s operating results, underlying asset values, or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue or arise, the Company’s operations and its ability to obtain additional financing may be adversely impacted, and the trading price of the SVS and such other securities may be materially adversely affected.

Negative Cash Flow from Operating Activities

The Company sustained a net loss during the fiscal years ended December 31, 2024 and 2023. The Company may not be able to achieve or maintain profitability and may continue to incur significant losses in the future, which could lead to negative cash flows from operating activities. The Company has implemented cost cutting measures in order to maintain positive cash flows from operating activities, however, the Company’s operating expenses could increase as it implements initiatives to continue to grow its business or pursue acquisitions. If the Company is unsuccessful at managing its operating expenses, it may have a material adverse effect upon the Company’s business, financial condition, and operating results.

Dividends

The Company has no cash dividend record and does not anticipate paying any cash dividends on the SVS in the foreseeable future. Dividends paid by the Company would be subject to tax and, potentially, withholding. The Senior Loan restricts the Company’s ability to pay dividends on the SVS.

Tax

Canadian federal and provincial and U.S. federal and state tax issues should be taken into consideration prior to investing in the SVS. The Company is a holding company with most of its operations being conducted in the U.S.

through U.S. subsidiaries. The return on an investor’s investment is subject to taxes and to changes in Canadian and U.S. tax laws. There can be no assurance that tax laws, regulations, or judicial or administrative interpretations of these laws and regulations will change in a manner that fundamentally alters the tax consequences to investors holding or disposing of the SVS.

Investors should consult their own tax advisor for advice regarding the tax issues with respect to holding the SVS for your local jurisdiction.

DIVIDENDS AND DISTRIBUTIONS

It is contemplated by the Company that it will reinvest all future earnings in order to finance the development and growth of its business. As a result, it is not contemplated that dividends will be paid on the SVS in the foreseeable future. Any future determination to pay distributions will be at the discretion of the Company’s Board and will be made in accordance with applicable law and will depend on the financial condition, business environment, operating results, capital requirements, any contractual restrictions on the payment of distributions, and any other factors that the Company’s Board deems relevant. The Senior Loan restricts the Company’s ability to pay dividends on the SVS. See “Risk Factors.”

DESCRIPTION OF CAPITAL STRUCTURE

The Company is authorized to issue an unlimited number of SVS, PVS, MVS, and SSVS. As of December 31, 2024, the outstanding share capital of the Company consists of: (i) 331,490,358 SVS; (ii) 85,534 PVS (which are convertible on a 1:200 basis into 17,106,732 SVS); (iii) 500,000 MVS; and 1,589 SSVS (as-converted to SVS).

Summary of Share Provisions

Subordinate Voting Shares


Right to Notice and Vote			Holders of SVS will be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class, or series of shares, of the Company will have the right to vote. At each such meeting, holders of SVS will be entitled to one vote in respect of each SVS held.
Class Rights & Right of First Refusal			As long as any SVS remain outstanding, the Company will not, without the consent of the holders of the SVS by separate special resolution, prejudice, or interfere with any right attached to the SVS. Holders of SVS will not be entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of SVS, or bonds, debentures or other securities of the Company now or in the future.
Dividends			Holders of SVS will be entitled to receive as and when declared by the directors of the Company, dividends in cash or property of the Company.
Participation			In the event of the liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of SVS shall, subject to the prior rights of the holders of any shares of the Company ranking in priority to the SVS (including, without restriction, the MVS) be entitled to participate ratably along with all other holders of SVS, SSVS (on an as-converted to SVS basis), and the PVS (on an as-converted to SVS basis).
Changes			No subdivision or consolidation of the SVS shall occur unless, simultaneously, the SVS, the SSVS, the PVS, and the MVS are subdivided or consolidated in the same manner, or such other adjustment is made so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.
Conversion			In the event that an offer is made to purchase PVS and the offer is one which is required, pursuant to applicable securities legislation, or the rules or conditions of listing of a stock exchange on which the PVS are then listed, to be made to all or substantially all the holders of PVS in a given province or territory of Canada to which these requirements apply, each SVS shall become convertible at the option of the holder into PVS at the inverse of the Conversion Ratio then in effect at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of SVS for the purpose of depositing the resulting PVS pursuant to the offer and for no other reason. In such event, the Company’s transfer agent shall deposit the resulting PVS on behalf of the holder. Should the PVS issued upon conversion and tendered in response to the offer be withdrawn by shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the PVS resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Company or on the part of the holder, into SVS at the Conversion Ratio then in effect.

Proportionate Voting Shares


Right to Vote			Holders of PVS will be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company will have the right to vote. At each such meeting, holders of PVS will be entitled to one vote in respect of each SVS into which such PVS could ultimately then be converted, which for greater certainty, shall initially be equal to 200 votes per PVS (subject to adjustment at the discretion of the board of directors of the Company (“Company Board”), depending upon the ratios necessary to preserve foreign private issuer status).
Class Rights			As long as any PVS remain outstanding, the Company will not, without the consent of the holders of the PVS and MVS by separate special resolution, prejudice or interfere with any right or special right attached to the PVS. Consent of the holders of a majority of the outstanding PVS and MVS shall be required for any action that authorizes or creates shares of any class having preferences superior to or on a parity with the PVS. In connection with the exercise of the voting rights for the foregoing only, each holder of PVS will have one vote in respect of each PVS held.
Rights to Subscribe; Pre-Emptive Rights			The holders of PVS are not entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of SVS, or bonds, debentures or other securities of the Company.
Dividends			The holder of PVS shall have the right to receive dividends, out of any cash or other assets legally available therefore, pari passu (on an as-converted basis, assuming conversion of all PVS into SVS) as to dividends and any declaration or payment of any dividend on the SVS. No dividend will be declared or paid on the PVS unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to SVS basis) on the SVS.
Participation			In the event of the liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of PVS will, subject to the prior rights of the holders of any shares of the Company ranking in priority to the PVS (including, without restriction, the MVS), be entitled to participate ratably along with all other holders of PVS (on an as-converted to SVS basis) and the SVS.
Changes			No subdivision or consolidation of the PVS shall occur unless, simultaneously, the SVS, the PVS and the MVS are subdivided or consolidated in the same manner, or such other adjustment is made so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.
Conversion			The PVS each have a restricted right to convert into 200 SVS (the “Conversion Ratio”), subject to adjustments for certain customary corporate changes and foreign private issuer considerations. The ability to convert the PVS is subject to a restriction that the aggregate number of SVS, PVS, and MVS held of record, directly or indirectly, by residents of the United States (as determined in accordance with Rules 3b-4 and 12g3-2(a) under the Securities Exchange Act of 1934, as amended), may not exceed forty percent (40%) (subject to adjustment) of the aggregate number of SVS, PVS, and MVS issued and outstanding after giving effect to such conversions and to a restriction on beneficial ownership of SVS exceeding certain levels. In addition, the Company has the right to convert the PVS into SVS in certain circumstances, including upon the registration of the SVS under the United States Securities Act of 1933, as amended.

Super Voting Shares


Right to Vote			Holders of MVS shall be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. At each such meeting holders of MVS shall be entitled to 2,000 votes in respect of each MVS held provided that, if at any time the aggregate number of issued and outstanding (i) Cresco Redeemable Shares in the capital of Cresco (if applicable) and (ii) Cresco Redeemable Units in the capital of Cresco (or such securities of any successor to Cresco Corp or Cresco as may exist from time to time) beneficially owned, directly or indirectly by a holder of the MVS (the “Holder”) and the Holder’s predecessor or transferor, permitted transferees and permitted successors and any prior transferor’s transferor and any prior permitted transferee’s permitted transferee (the “Holder’s Group”), divided by the aggregate number of (i) Cresco Redeemable Shares (if applicable) and (ii) Cresco Redeemable Units beneficially owned, directly or indirectly by the Holders and the Holder’s Group as at the date of completion of the Business Combination transaction involving, among others, the Company, Cresco Corp and Cresco be less than 50% (the “Triggering Event”), the Holder shall from that time forward be entitled to 50 votes in respect of each MVS held. The holders of MVS shall, from time to time upon the request of the Company, provide to the Company evidence as to such holders’ direct and indirect beneficial ownership (and that of its permitted transferees and permitted successors) of Cresco Redeemable Shares (if applicable) and Cresco Redeemable Units to enable the Company to determine the voting entitlement of the MVS. For the purposes of these calculations, a Holder shall be deemed to beneficially own Cresco Redeemable Shares (if applicable) held by an intermediate company or fund in proportion to their equity ownership of such company or fund.
Class Rights			As long as any MVS remain outstanding, the Company will not, without the consent of the holders of the MVS by separate special resolution, prejudice or interfere with any right or special right attached to the MVS. Consent of the holders of a majority of the outstanding MVS shall be required for any action that authorizes or creates shares of any class having preferences superior to or on a parity with the Super Voting Shares. In connection with the exercise of these voting rights, each holder of MVS will have one vote in respect of each MVS held.
Rights to Subscribe; Pre-Emptive Rights			The holders of MVS are not entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of SVS, or bonds, debentures, or other securities of the Company not convertible into MVS, now or in the future.
Dividends			The holders of the MVS shall not be entitled to receive dividends.
Participation			In the event of the liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the Company will distribute its assets firstly and in priority to the rights of holders of any other class of shares of the Company (including the holders of SVS and the PVS) to return the issue price of the MVS to the holders, thereof and if there are insufficient assets to fully return the issue price to the holders of the MVS, such holders will receive an amount equal to their pro-rata share in proportion to the issue price of their MVS along with all other holders of MVS. The holders of MVS shall not be entitled to receive directly or indirectly as holders of MVS any other assets or property of the Company and their sole rights will be to the return of the issue price of such MVS in accordance with this paragraph.
Changes			No subdivision or consolidation of the MVS shall occur unless, simultaneously, the MVS, PVS, and the SVS are subdivided or consolidated in the same manner, so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.
Conversion			The holders of the MVS shall have no right of conversion.


Redemption Rights			Upon the occurrence of a Triggering Event, the Company has the right to redeem all or some of the MVS from the Holder and Holder’s Group who caused the Triggering Event to occur, by providing two days prior written notice to the Holder and Holder’s Group of such MVS, for an amount equal to the issue price for each MVS, payable in cash to the holders of the MVS so redeemed. The Company need not redeem MVS on a pro-rata basis among the Holders or Holder’s Group. Holders of MVS to be redeemed by the Company shall surrender the certificate or certificates representing such MVS to the Company at its records office duly assigned or endorsed for transfer to the Company (or accompanied by duly executed share transfers relating thereto). Each surrendered certificate shall be canceled, and the Company shall thereafter make payment of the applicable redemption amount by certified cheque, bank draft, or wire transfer to the registered holder of such certificate; provided that, if less than all the MVS represented by a surrendered certificate are redeemed then a new share certificate representing the unredeemed balance of MVS represented by such certificate shall be issued in the name of the applicable registered holder of the canceled share certificate. If on the applicable redemption date the redemption price is paid (or tendered for payment) for any of the MVS to be redeemed then on such date all rights of the holder in the MVS so redeemed and paid or tendered shall cease and such redeemed MVS shall no longer be deemed issued and outstanding, regardless of whether or not the holder of such MVS has delivered the certificate(s) representing such securities to the Company, and from and after such date the certificate formerly representing the retracted MVS shall evidence only the right of the former holder of such MVS to receive the redemption price to which such holder is entitled.
Transfer			No MVS may be transferred by the holder thereof unless such transfer is to an immediate family member or a transfer for the purposes of estate or tax planning to a company or person that is wholly beneficially owned by such holder or immediate family members of such holder or which such holder or immediate family members of such holder are the sole beneficiaries thereof, or as otherwise provided in the investment agreement referred to below. In order to be effective, any transfer shall require the prior written consent of the Company.
Investment Agreement			To supplement the rights, privileges, restrictions, and conditions attached to the MVS, the Company and the initial holders of MVS, entered into an investment agreement effective as of the completion of the Business Combination, as amended on June 3, 2022, which, among other things, provides that (i) each MVS will be transferable only to the holder’s immediate family members or an affiliated entity or a transfer to another MVS Holder or an entity affiliated with the other MVS Holder, (ii) upon any sale of MVS to a third-party purchaser not listed in clause (i), such MVS will immediately be redeemed by the Company for their issue price and (iii) the Company will repurchase all of the MVS not later than the first business day after the first annual meeting of shareholders of the Company following any future listing of the SVS on a United States national securities exchange.
Sunset			After a listing of the SVS on a United States national securities exchange, the Company shall not issue any additional MVS and any MVS repurchased by the Company shall be cancelled and may not be reissued as shares of such class or any other class or series.

Take-Over Bid Protection

In the event that a take-over bid is made for the MVS, the holders of SVS will not be entitled to participate in such offer and may not tender their shares into any such offer, whether under the terms of the SVS or under any coattail trust or similar agreement.

The MVS Holders have entered into an investment agreement with the Company whereby, upon any sale of MVS to a third-party purchaser that is not the holder’s immediate family members or an affiliated entity, a transfer to another MVS Holder or an entity affiliated with the other MVS Holder, or a current member of the Company’s board of directors, such MVS will immediately be redeemed by the Company for their issue price. See “Super Voting Shares – Investment Agreement” below. Additionally, as noted above, the Company’s articles entitle the holders of SVS to convert to PVS and tender to any take-over bid made solely to the holders of PVS.

Special Subordinate Voting Shares


Right to Vote			Holders of SSVS shall be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. At each such meeting, holders of SSVS will be entitled to one vote in respect of each SVS into which such SSVS could ultimately then be converted, which for greater certainty, shall initially be equal to 0.00001 of a vote per SSVS.
Class Rights			As long as any SSVS remain outstanding, the Company will not, without the consent of the holders of the SSVS by separate special resolution, prejudice or interfere with any right or special right attached to the SSVS. In connection with the exercise of these voting rights, each holder of SSVS will have one vote in respect of each SSVS.
Rights to Subscribe; Pre-Emptive Rights			The holders of SSVS are not entitled to a right of first refusal to subscribe for, purchase, or receive any part of any issue of SVS, or bonds, debentures, or other securities of the Company now or in the future.
Dividends			The holders of SSVS shall have the right to receive dividends, out of any cash or other assets legally available therefore, pari passu (on an as-converted basis, assuming conversion of all SSVS into SVS at the conversion rate of 0.00001 SVS per SSVS (“Special Conversion Ratio”)) as to dividends and any declaration or payment of any dividend on the SVS. No dividend will be declared or paid on the SSVS unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to SVS basis) on the SVS and the PVS.
Participation			In the event of the liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of SSVS will, subject to the prior rights of the holders of any shares of the Company ranking in priority to the SSVS (including, without restriction, the MVS), be entitled to participate ratably along with all other holders of SVS (on an as-converted to SVS basis), the PVS (on an as-converted to SVS basis) and the SVS.
Changes			The SSVS may be subdivided or consolidated by resolution of the directors (or a committee thereof) without the simultaneous subdivision or consolidation of the SVS, the PVS, and the MVS in the same manner, provided that the Special Conversion Ratio is correspondingly adjusted and the voting rights of the SSVS are correspondingly adjusted such that the aggregate number of votes held by all holders of SSVS prior to subdivision or consolidation is equal to the aggregate number of votes held by all holders of SSVS following the subdivision or consolidation.
Ownership Restrictions			The SSVS may only be beneficially owned or controlled, directly or indirectly, by a person or persons who are not specified U.S. persons.
Transfer Restrictions			No SSVS or any rights or interests therein may be transferred legally, beneficially or in any other manner by the holder thereof without the prior written consent of the Company Board (or a committee thereof), which may be withheld in its sole discretion.


Redemption Rights			The Company has the right to redeem all or some of the SSVS from any holder thereof at any time by providing two days prior written notice (the “Redemption Notice”) to such holder for either: (i) cash, at a price per SSVS equal to the Special Conversion Ratio (as may be adjusted in accordance with its terms) multiplied by the average volume-weighted average trading price of the SVS on the CSE (or such other stock exchange or quotation system the SVS are then principally listed or quoted) for the 10 trading days immediately prior to the date of the Redemption Notice; or (ii) SVS at the Special Conversion Ratio, as may be adjusted in accordance with its terms. The Company need not redeem SSVS on a pro-rata basis among the holders of SSVS.
Conversion			Holders of SSVS have a restricted right to convert into 0.00001 SVS per SSVS, subject to customary adjustments for certain corporate changes. The ability to convert the SSVS is subject to the prior written consent of the Company Board or a committee thereof. The Company may require each holder of SSVS to convert all, and not less than all, of the SSVS at the applicable Special Conversion Ratio, if at any time all the following conditions are satisfied (or otherwise waived by special resolution of holders of SSVS): (i) the Company is no longer a “foreign private issuer” (as determined in accordance with Rule 3b-4 of the U.S. Exchange Act); or (ii) the Company Board (or a committee thereof) determine that the SSVS are no longer necessary or required.

DESCRIPTION OF SHARE CAPITAL OF CRESCO

The share capital of Cresco consists of the voting common shares in the capital of Cresco (“Cresco Voting Shares”) and Cresco Redeemable Shares.

Holders of Cresco Voting Shares are entitled to receive notice of, attend, and vote at meetings of the security holders of Cresco Corp (other than meetings at which only holders of another class or series of shares are entitled to vote separately as a class or series). Each Cresco Voting Share entitles the holder thereof to one vote on all matters upon which holders of Cresco Voting Shares are entitled to vote.

Holders of Cresco Redeemable Shares are entitled to exchange or redeem their Cresco Redeemable Shares for PVS pursuant to the terms specified in the articles of incorporation of Cresco Corp. Cresco Redeemable Shares do not entitle the holders thereof to receive notice of, attend, or vote at meetings of the security holders.

A holder of Cresco Redeemable Shares (other than the Company) has the right to cause Cresco Corp to redeem its Cresco Redeemable Shares. If a holder of Cresco Redeemable Shares (other than the Company) exercises its redemption or exchange right, Cresco Corp will repurchase for cancellation each such Cresco Redeemable Share submitted for redemption or exchange in consideration for either PVS (currently, at a ratio of 1 PVS for every 200 Cresco Redeemable Shares exchanged) or a cash amount equal to the cash settlement amount applicable to such Cresco Redeemable Share, as determined by Cresco Corp; provided that Cresco Corp may assign to the Company its rights and obligations to effect a redemption or exchange directly with the redeeming holder. For further details on the rights attached to PVS, please see “Proportionate Voting Shares” above. For greater certainty, Cresco Corp or Cresco may elect to deliver SVS (currently, on a 1:1 basis) in lieu of the PVS for the Cresco Redeemable Shares exchanged.

DESCRIPTION OF UNIT CAPITAL OF CRESCO

Management of Cresco

Following consummation of the Business Combination, Cresco Corp became the sole manager of Cresco LLC and has the exclusive right, power and authority to manage, control, administer, and operate the business and affairs, and to make decisions regarding the undertaking and business of Cresco LLC, subject to the terms of the A&R LLC Agreement and applicable laws.

A&R LLC Agreement

The following is a summary of the material provisions set forth in the A&R LLC Agreement to be entered into between Cresco LLC and each of the holders of Cresco LLC Units (the Class A units, Class B units, Class C units, Class D units, Class E units and Class F units in the capital of Cresco LLC existing prior to the recapitalization of Cresco LLC) (“Cresco Members”).

Duration

Cresco LLC has perpetual existence and will continue as a limited liability company until and unless Cresco LLC is terminated or dissolved in accordance with the A&R LLC Agreement and the Illinois Limited Liability Company Act, as amended (“ILLCA”).

Purpose of Cresco LLC

The principal purpose and business of Cresco LLC shall be to engage in any lawful act or activity for which a limited liability company may be organized under the ILLCA and to conduct such other activities as may be necessary, advisable, convenient, or appropriate to promote or conduct the business of Cresco LLC as set forth herein, including, but not limited to, entering into partnership agreements in the capacity of a general or limited partner, becoming a member of a joint venture or a limited liability company, participating in forms of syndication for investment, owning stock in corporations and the incurring of indebtedness and the granting of liens and security interests on the real and personal property of Cresco LLC.

Management: The Manager

Cresco Corp is the sole manager of Cresco LLC and manages all of Cresco LLC’s operations and activities in accordance with the A&R LLC Agreement. Cresco Corp has the capacity and authority to act as the manager of Cresco LLC.

Subject to the terms of the A&R LLC Agreement and the ILLCA, Cresco Corp has the full and exclusive right, power, and authority to manage, control, administer, and operate the business and affairs and to make decisions regarding the undertaking and business of Cresco LLC. Among other things, Cresco Corp is empowered to negotiate, execute, and perform all agreements, conveyances, or other instruments on behalf of Cresco LLC, and to mortgage, charge, or otherwise create a security interest over any or all of the property of Cresco LLC or its subsidiaries and to sell property subject to such a security interest.

The A&R LLC Agreement provides that, where Cresco Corp is permitted or required to take any action or to make a decision in its “sole discretion,” “discretion,” with “complete discretion” or any other grant of similar authority and latitude under the A&R LLC Agreement in managing Cresco’s operations and activities, Cresco Corp entitled to consider only such interests and factors as it desires, including its own interests, and shall, to the fullest extent permitted by the ILLCA, have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of, or factors affecting, Cresco or the other Cresco Members.

Despite the foregoing, Cresco Corp is only able to take certain types of actions (as set forth in the A&R LLC Agreement) if the same are approved, consented to or directed by a majority of the Cresco Members.

Capital Structure of Cresco LLC, Cresco Corp and Cresco

Upon the closing of the Business Combination, the capital of Cresco LLC initially consisted of three (3) classes of units: the interest of Cresco Corp is to be represented by Common Units14 with the number of issued Common Units immediate

14 Common Unit means those units designated by Cresco LLC after Cresco LLC effected a recapitalization of its outstanding unit capital in connection with the Business Combination, whereby under such recapitalization all previously issued Cresco LLC Units were combined into a single class of non-voting units of Cresco LLC.

ly following the Business Combination to be equal to the respective number of SVS issued and outstanding, provided that such Common Units held by Cresco Corp shall not entitle Cresco Corp to any exchange or redemption rights with respect to such Common Units. The interests of other Cresco Members are represented by Common Units, pursuant to which all such other Cresco Members are entitled to certain exchange rights and redemption rights, as provided in the A&R LLC Agreement. Such Common Units held by such other Cresco Members are referred to herein as “Cresco Redeemable Units.” The A&R LLC Agreement shall also authorize the issuance of LTIP Units to persons who provide services for or on behalf of Cresco LLC, which such LTIP Units shall entitle the holder to certain rights and privileges, including the right to convert such LTIP Units to Common Units, subject to certain restrictions, qualifications and limitations, each as provided in the A&R LLC Agreement.

When the Company issues SVS, it may contribute all or a portion of the net proceeds to Cresco Corp in exchange for additional shares of Cresco Corp stock. Upon receipt of any such net proceeds from the Company, Cresco Corp will generally contribute such net proceeds to Cresco LLC as a capital contribution on account of its Common Units. In the event that a new class of shares in the capital of the Company is created, Cresco Corp may create a corresponding new class of Cresco LLC Units that has corresponding distribution rights to such new class of Company shares and will cause Cresco LLC to issue new units of such class to Cresco Corp. The Company may contribute all or a portion of the net proceeds from the issuance of any such shares to Cresco Corp and Cresco Corp, upon receipt of such proceeds, will generally contribute such net proceeds to Cresco LLC in exchange for units of Cresco LLC.

If the Company proposes to redeem, repurchase, or otherwise acquire any SVS for cash, the A&R LLC Agreement requires that Cresco Corp cause Cresco LLC to redeem a corresponding number of Common Units held by Cresco Corp at an aggregate redemption price equal to the aggregate purchase or redemption price of the SVS being repurchased or redeemed by the Company (plus any expenses related thereto) and upon such other terms as are the same for the redemption by the Company, and the A&R LLC Agreement further requires that Cresco Corp, immediately prior to such redemption, repurchase, or acquisition by the Company, but immediately following the redemption by Cresco, to redeem a corresponding number of shares of Cresco Corp stock held by the Company at an aggregate redemption price equal to the aggregate purchase or redemption price of the SVS being repurchased or redeemed by the Company (plus any expenses related thereto) and upon such other terms as are the same for the redemption by the Company.

In the event that any change is effected in the share capital of the Company, Cresco LLC shall undertake all actions requested by Cresco Corp, including a reclassification, distribution, division, or recapitalization of the Common Units to maintain at all times the same ratios between the number of SVS, the number of Cresco Corp shares and the number of Common Units issued and outstanding immediately prior to any such reclassification, consolidation, split, dividend of securities, or other recapitalization including, without limitation, also effecting a reclassification, consolidation, split, dividend of securities or other recapitalization with respect to, as applicable, the SVS, Cresco Corp shares, and Common Units.

Exchange Mechanism

A holder of Common Units (other than Cresco Corp) has the right to cause Cresco LLC to redeem its Common Units. If a holder of Common Units (other than Cresco Corp) exercises its exchange right, Cresco LLC will repurchase for cancellation each such Common Unit submitted for exchange in consideration for either PVS (at a ratio of 1 PVS for every 200 Common Units exchanged) or a cash amount equal to the cash settlement amount applicable to such Common Unit, as determined by Cresco Corp, provided that Cresco Corp shall have the right to complete such exchange directly with the redeeming holder or may assign to the Company its rights and obligations to effect an exchange directly with the redeeming holder. For greater certainty, Cresco LLC may elect to deliver SVS (currently, on a 1:1 basis) in lieu of the PVS for the Common Units exchanged.

Any holder that causes Cresco LLC to redeem its Common Units pursuant to the terms of the A&R LLC Agreement and otherwise fails to comply with the documentation requirements of U.S. Tax Code Section 1446, including the requirement that such holder provides to Cresco a properly completed IRS Form W-9 or satisfy another exception as permitted within U.S. Tax Code Section 1446, prior to the effective time of any such redemption or exchange, will

generally be subject to U.S. withholding tax equal to ten percent (10%) of the fair market value of the PVS or the cash, as applicable, to be delivered to such holder pursuant to such redemption or exchange.

Additional Common Units; No Preemptive Rights

Except as described above, the A&R LLC Agreement authorizes Cresco Corp to cause Cresco LLC to issue additional Common Units and securities convertible or exchangeable into Common Units on any terms and conditions of offering and sale as Cresco Corp in its discretion may determine, including with respect to acquisitions by Cresco LLC of additional assets or equity interests in corporations, partnerships, limited liability companies, and other entities and with respect to executive compensation. Unless otherwise determined by Cresco Corp, no person or entity shall have preemptive, preferential or any other similar right with respect to the issuances of any interest in Cresco LLC.

LTIP Units

Cresco may issue LTIP Units to new or existing Cresco Members in exchange for services performed or to be performed on behalf of Cresco. LTIP Units are intended to qualify as “profits interests” for U.S. federal income tax purposes in Cresco. Two initial series of LTIP Units designated as AO LTIP Units and FV LTIP Units, respectively, will be established. The number of LTIP Units, AO LTIP Units and FV LTIP Units that may be issued by Cresco shall not be limited.

LTIP Units may, in the sole discretion of Cresco Corp, be issued subject to vesting, forfeiture, and additional restrictions on transfer pursuant to the terms of an award, vesting, or other similar agreement. The terms of any such award, vesting, or similar agreement may be modified by Cresco Corp from time to time in its sole discretion, subject to any restrictions on amendment imposed by the relevant award, vesting, or similar agreement or by the terms of any plan pursuant to which the LTIP Units are issued, if applicable.

Unless otherwise specified in the relevant award, vesting, or similar agreement, upon the occurrence of any event specified in such an agreement resulting in either the forfeiture of any LTIP Units or the repurchase thereof by Cresco at a specified purchase price, then, upon the occurrence of the circumstances resulting in such forfeiture or repurchase by Cresco, the relevant LTIP Units shall immediately and without any further action be treated as canceled and no longer outstanding for any purpose or as transferred to Cresco.

Upon the occurrence of certain events, including (i) Cresco making a distribution on all outstanding Common Units in Units; (ii) Cresco subdividing the outstanding Common Units into a greater number of Units or combining the outstanding Common Units into a smaller number of Units; or (iii) Cresco issuing any Units in exchange for its outstanding Common Units by way of reclassification or recapitalization, then Cresco shall make a corresponding adjustment to the LTIP Units to maintain the same correspondence between the Common Units and LTIP Units as existed prior to the occurrence of any such actions.

A holder of LTIP Units shall have the right, at his or her option, at any time to convert all or a portion of his or her vested LTIP Units as follows:

(i)an AO LTIP Unit that has become a vested LTIP Unit shall be converted into a number (or fraction thereof) of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to terms of the A&R LLC Agreement equal to the applicable conversion factor as provided in the A&R LLC Agreement; and

(ii)a FV LTIP Unit that has become a vested LTIP Unit shall be converted into a number (or fraction thereof) of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to the terms of the A&R LLC Agreement equal to the applicable conversion factor as provided in the A&R LLC Agreement.

If Cresco LLC or Cresco Corp is a party to any transaction (including without limitation a merger, consolidation, unit exchange, self-tender offer for all or substantially all Common Units or other business combination or

reorganization, or sale of all or substantially all of Cresco’s assets, but excluding any transaction which constitutes an event requiring an adjustment to the LTIP Units to maintain the same correspondence between the Common Units and the LTIP Units, as described above) as a result of which Common Units shall be exchanged for or converted into the right, or the holders of Common Units shall otherwise be entitled to receive cash, securities, or other property or any combination thereof, then Cresco Corp shall, immediately prior to such transaction, insure the conversion of the maximum number of LTIP Units then eligible for conversion, taking into account any allocations that occur in connection with such transaction or that would occur in connection with such transaction if the assets of Cresco were sold at the applicable price of such transaction or, if applicable, at a value determined by Cresco Corp in good faith using the value attributed to the Common Units in the context of the such transaction (in which case the date of the forced LTIP Unit conversion shall be the effective date of such transaction and the conversion shall occur immediately prior to the effectiveness of such transaction).

LTIP Units are not redeemable at the option of Cresco LLC; provided, however, that the foregoing shall not prohibit Cresco from repurchasing LTIP Units from the holder thereof if and to the extent that such holder agrees to sell such LTIP Units.

Except as otherwise set forth in the relevant award, vesting, or similar agreement or other separate agreement, and subject to the terms and conditions set forth in the A&R LLC Agreement, on or at any time after an applicable LTIP Unit conversion date each LTIP Unitholder has the right to require Cresco to redeem all or a portion of the Common Units into which such LTIP Unit holder’s LTIP Units were converted in exchange for cash, unless the terms of the A&R LLC Agreement, the relevant award, vesting, or similar agreement or other separate agreement entered into between Cresco and the LTIP Unit holder expressly provide that such Common Units are not entitled to such redemption right.

Except as otherwise provided in the A&R LLC Agreement, holders of LTIP Units shall not have the right to vote on any matters submitted to a vote of the Cresco Members.

Subject to the terms of the relevant award, vesting, or similar agreement or other documentation pursuant to which LTIP Units are granted, except in connection with the exercise of a redemption, a holder of LTIP Units may not transfer all or any portion of his or her LTIP Units without the prior written consent of Cresco Corp, which consent may be given or withheld in Cresco Corp’s sole and absolute discretion.

Transfer of Common Units

Except as permitted by the A&R LLC Agreement, no holder of Common Units may transfer any interest in such Common Units. The A&R LLC Agreement permits a transfer of Common Units pursuant to (i) the prior written approval of Cresco Corp; (ii) certain transactions that cause a change of control of Cresco LLC; (iii) the exercise of exchange or redemption rights by any holder of Common Units; or (iv) certain other limited circumstances. Prior to transferring any Common Units (other than pursuant to certain transactions that cause a change of control of Cresco LLC) the transferring holder of Common Units will cause the transferee to execute a joinder to the A&R LLC Agreement and any other agreements required pursuant to the terms of the A&R LLC Agreement. Any transfer or attempted transfer of any Common Units in violation of any provision of the A&R LLC Agreement shall be void and Cresco LLC shall not record such transfer on its books or treat any purported transferee as the owner of such Common Units for any purpose.

In no event shall any transfer of Common Units be effective to the extent that such transfer could, in the reasonable determination of Cresco Corp:

(i) result in a violation of the United States Securities Act of 1933, as amended, or any other applicable federal, state, or foreign laws;

(ii) cause an assignment under the United States Investment Company Act of 1940, as amended;

(iii) be a violation of or a default (or an event that, with notice or the lapse of time or both, would constitute a default) under, or result in an acceleration of any indebtedness under, any promissory note, mortgage, loan agreement, indenture, or similar instrument or agreement to which Cresco LLC or Cresco Corp is a party;

provided that the payee or creditor to whom Cresco LLC or Cresco Corp owes such obligation is not an affiliate of Cresco LLC or Cresco Corp;

(iv) be a transfer to a person who is not legally competent or who has not achieved his or her majority under applicable law (excluding trusts for the benefit of minors);

(v) cause Cresco LLC to lose its status as a partnership for U.S. federal income tax purposes or, without limiting the generality of the foregoing, be affected on or through an “established securities market” or a “secondary market or the substantial equivalent thereof,” as such terms are used in Section 1.7704-1 of United States Treasury Regulations;

(vi) cause Cresco LLC or any Cresco Member or Cresco Corp to be treated as a fiduciary under the United States Employee Retirement Income Security Act of 1974, as amended;

(vii) cause Cresco LLC (as determined by Cresco Corp in its sole discretion) to be treated as a “publicly traded partnership” or to be taxed as a corporation pursuant to Section 7704 of the U.S. Tax Code or successor provision of the U.S. Tax Code; or

(viii) result in Cresco LLC having more than one hundred (100) partners, within the meaning of Treasury Regulations Section 1.7704-1(h)(1) (determined pursuant to the rules of Treasury Regulations Section 1.7704-1(h)(3)) in any taxable year that is not a “restricted taxable year” (as defined in the A&R LLC Agreement).

Any holder that transfers its Common Units pursuant to the terms of the A&R LLC Agreement and otherwise fails to comply with the documentation requirements of U.S. Tax Code Section 1446, including the requirement that such holder provides to Cresco a properly completed IRS Form W-9 or satisfy another exception as permitted within U.S. Tax Code Section 1446, prior to the effective time of any such transfer, will generally be subject to U.S. withholding tax equal to ten percent (10%) of the fair market value of the consideration to be delivered to such holder pursuant to such redemption or exchange.

Power of Attorney

Each Cresco Member who is an individual, including those persons who become Cresco Members in connection with receiving any Common Units, automatically and irrevocably will appoint Cresco Corp, with full power of substitution, as that Cresco Member’s agent to execute and file documents or instruments required for, among other things, but subject in each case to the other provisions of the A&R LLC Agreement, the A&R LLC Agreement (or a joinder thereto), all instruments that Cresco Corp deems appropriate or necessary to reflect any amendment, change, modification, or restatement of the A&R LLC Agreement, all conveyances and other instruments or documents which Cresco Corp deems appropriate or necessary to reflect the dissolution or liquidation of Cresco LLC pursuant to the terms of the A&R LLC Agreement, all instruments relating to the admission, withdrawal, or substitution of a Cresco Member pursuant to the terms of the A&R LLC Agreement, and any other ballots, consents, approvals, waivers, certificates, and other instruments appropriate or necessary, in the reasonable judgment of Cresco Corp, to evidence, confirm or ratify any vote, consent, approval, agreement or other action made or given by the Cresco Members in accordance with the terms of the A&R LLC Agreement.

Capital Contributions

Following the issuance of the Common Units to the Cresco Members pursuant to the adoption of the A&R LLC Agreement, the Cresco Members will not be required to make further contributions to Cresco LLC.

Neither Cresco LLC nor Cresco Corp is liable for the return of any capital contribution made by a Cresco Member to Cresco LLC.

Limited Liability of the Cresco Members

Subject to the provisions of the ILLCA and of similar legislation in other jurisdictions of the United States and the A&R LLC Agreement: (i) the liability of each Cresco Member for the debts, liabilities, and obligations of Cresco LLC will be limited to the Cresco Member’s capital contribution, plus the Cresco Member’s share of any undistributed income of Cresco LLC; and (ii) following payment of a Cresco Member’s capital contribution, such

Cresco Member may be required to return amounts previously distributed to such Cresco Member in accordance with the ILLCA and the laws of the State of Illinois.

Limitation on Authority of the Cresco Members and Limited Liability

The A&R LLC Agreement states that a Cresco Member (in its capacity as a Cresco Member) does not have the authority or power to do any of the following:

(i)act for or on behalf of Cresco LLC;

(ii)to do any act that would be binding upon Cresco LLC;

(iii)make any expenditure on behalf of Cresco LLC;

(iv)seek or obtain partition by court decree or operation of law of any Cresco LLC property; or

(v)own or use particular or individual assets of Cresco LLC.

The A&R LLC Agreement provides that Cresco LLC will indemnify each Cresco Member for all liabilities incurred by the Cresco Member that arises solely by reason of such Cresco Member being a member of Cresco LLC.

Tax Distributions in Accordance with Cresco Labs LLC Agreement

Subject to the provisions set forth in the A&R LLC Agreement, Cresco Corp may cause distributions to be made by Cresco LLC as follows: (i) “distributable cash” (as defined in the A&R LLC Agreement) or other funds or property legally available to the extent permitted by the ILLCA and applicable law, to the Cresco Members pro rata in accordance to each Cresco Member’s proportionate ownership interest in Cresco LLC in amounts on terms as Cresco Corp will determine; and (ii) not less than five (5) business days prior to the due date of a U.S. federal income tax return for an individual calendar year taxpayer, cash in an amount equal to the excess of each Cresco Member’s “assumed tax liability” (as defined in the A&R LLC Agreement) over distributions previously made to such Cresco Member with respect to each such taxable period.

In no case will Cresco LLC be required to make a distribution if such distribution would violate the ILLCA or any other applicable law.

Amendment of the A&R LLC Agreement

The A&R LLC Agreement may be amended or modified by Cresco Corp as determined to be necessary or advisable, in the sole discretion of Cresco Corp, in connection with the adoption, implementation, modification, or termination of certain equity plans by the Company. Subject to the right of Cresco Corp to amend the A&R LLC Agreement in connection with the adoption, implementation, modification, or termination of certain equity plans by the Company, unless otherwise specified in the A&R LLC Agreement that a specific amendment requires the approval or action of certain persons, the A&R LLC Agreement may only be amended with the consent of Cresco Corp and Cresco Members holding a majority of the outstanding Common Units.

Merger, Sale, or Other Disposition of Assets

Cresco Corp shall have the power and authority to effectuate the sale, lease, transfer, exchange, or other disposition of any, all, or substantially all of the assets of Cresco LLC (including the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by Cresco LLC) or the merger, consolidation, reorganization, or other combination of Cresco LLC with or into another entity.

Treatment of Cresco LLC as a Partnership for U.S. Federal Income Tax Purposes

The Cresco Members intend that Cresco LLC be treated as a partnership for U.S. federal and, if applicable, state or local income tax purposes. Each Cresco Member and Cresco LLC will file all tax returns and will otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

Dissolution

Cresco LLC will dissolve, and its affairs will be wound up, upon the occurrence of any of the following:

(i)the decision of Cresco Corp together with the holders of a majority of the then-outstanding Common Units entitled to vote to dissolve Cresco LLC;

(ii)a dissolution of Cresco LLC under the ILLCA; or

(iii)the entry of a decree of judicial dissolution of Cresco LLC under the ILLCA.

Except as otherwise provided in the A&R LLC Agreement, Cresco LLC is intended to have perpetual existence. The withdrawal of a Cresco Member shall not cause a dissolution of Cresco LLC and Cresco LLC shall continue in existence subject to the terms and conditions of the A&R LLC Agreement.

Procedure on Dissolution

Upon dissolution of Cresco LLC, the procedure is as follows:

(i)the liquidators shall cause a proper accounting to be made by a recognized firm of certified public accountants of Cresco LLC’s assets, liabilities, and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable;

(ii)the liquidators shall cause the notice described in the ILLCA to be mailed to each known creditor of and claimant against Cresco LLC in the manner described thereunder;

(iii)the liquidators shall pay, satisfy, or discharge from Cresco LLC funds, or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash fund for contingent liabilities in such amount and for such term as the liquidators may reasonably determine): first, all expenses incurred in liquidation; and second, all of the debts, liabilities, and obligations of Cresco LLC; and

(iv)all remaining assets of Cresco LLC shall be distributed to the Cresco Members in accordance with the terms of the A&R LLC Agreement by the end of the taxable year during which the liquidation of Cresco LLC occurs (or, if later, by ninety (90) days after the date of the liquidation), which shall constitute a complete return to the Cresco Members of their capital contributions to Cresco LLC, a complete distribution to the Cresco Members of their interest in Cresco LLC and all of Cresco LLC’s property. To the extent that a Cresco Member returns funds to Cresco LLC, it has no claim against any other Cresco Member for those funds.

Withdrawal and Removal of the Manager

Cresco Corp may resign as the sole manager of Cresco LLC at any time by giving written notice to the Cresco Members. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Cresco Members and the acceptance of the resignation shall not be necessary to make it effective. The Cresco Members have no right under the A&R LLC Agreement to remove or replace Cresco Corp as the sole manager of Cresco LLC. Vacancies in the position of manager occurring for any reason will be filled by Cresco Corp (or, if Cresco Corp has ceased to exist without any successor or assign, then by the holders of a majority in interest of the voting capital stock of Cresco Corp immediately prior to such cessation).

Indemnification

Under the A&R LLC Agreement, in most circumstances, Cresco LLC will indemnify and hold harmless any person to the fullest extent permitted under the ILLCA, as the same now exists or may hereafter be amended, substituted, or replaced (but, in the case of any such amendment, substitution, or replacement only to the extent that such amendment, substitution, or replacement permits Cresco LLC to provide broader indemnification rights than Cresco LLC is providing immediately prior to such amendment, substitution, or replacement), against all expenses, liabilities, and losses (including attorneys’ fees, judgments, fines, excise taxes, or penalties) reasonably incurred or suffered by such person (or one or more of such person’s affiliates) by reason of the fact that such person is or was a Cresco Member or is or was serving at the request of Cresco LLC as the manager, an officer, an employee, or another agent of Cresco LLC or is or was serving at the request of Cresco LLC as a manager, member, employee, or agent of another limited-liability company, corporation, partnership, joint venture, trust, or other enterprise; provided, however, that no such person shall be indemnified for actions against Cresco LLC, the Manager or Managers or any other Cresco Members, or which are not made in good faith and not or in a manner which he or she reasonably believed to be in or not opposed to the best interests of Cresco LLC, or, with respect to any criminal action or proceeding other than by or in the right of Cresco LLC, had reasonable cause to believe the conduct was unlawful, or for any present or future breaches of any representations, warranties, or covenants by such person or its affiliates as provided in the A&R LLC Agreement or other agreements to which Cresco LLC is a party.

Expenses, including attorneys’ fees, incurred by any such person in defending a proceeding shall be paid by Cresco LLC as they are incurred and in advance of the final disposition of such action, suit, or proceeding, upon receipt of an undertaking by or on behalf of such person to repay such amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by Cresco LLC.

Cresco LLC will maintain directors’ and officers’ liability insurance, or make other financial arrangements at its expense, to protect any person indemnified pursuant to the A&R LLC Agreement against certain expenses, liabilities, or losses described in the A&R LLC Agreement whether or not Cresco LLC would otherwise have the power to indemnify such person against such expenses, liabilities, or losses under the provisions of the A&R LLC Agreement. Cresco LLC shall use its commercially reasonable efforts to purchase directors’ and officers’ liability insurance (including employment practices coverage) with a carrier and in an amount determined necessary or desirable as determined in good faith by Cresco Corp.

Books and Records

Cresco LLC shall keep, or cause to be kept, appropriate books and records with respect to Cresco LLC’s business, including all books and records necessary to provide any information, lists, and copies of documents required to be provided to each person who was a Cresco Member during each fiscal year of Cresco LLC as is reasonably necessary for the preparation of such person’s U.S. federal and applicable state income tax returns.

Tax Matters

All decisions to make or refrain from making any tax elections are determined by Cresco Corp. Cresco Corp is authorized to represent Cresco LLC, at Cresco LLC’s expense, in connection with all examinations of Cresco LLC’s affairs by tax authorities, including resulting administrative and judicial proceedings. Each Cresco Member agrees to cooperate with Cresco Corp and to do or refrain from doing any or all things with regard to all things reasonably required by Cresco Corp to conduct such proceedings. Cresco Corp shall keep all Cresco Members fully advised on a current basis of any contacts by, or discussions with, the tax authorities, and the Cresco Members shall have the right to observe and participate through representatives of their own choosing (at their sole expense) in any tax proceedings.

TAX RECEIVABLE AGREEMENT

In connection with the Business Combination, Cresco Corp entered into a tax receivable agreement with Cresco LLC, the Cresco Members, and the holders of the LTIP Units (“Cresco LTIP Unitholders”). Cresco Corp expects

to obtain an increase in its share of the tax basis of the assets of Cresco LLC when a Cresco Member receives cash or SVS in connection with a redemption or exchange of such Cresco Member’s Common Units for SVS or cash.

The Tax Receivable Agreement provides for the payment by Cresco Corp to Cresco Members and Cresco LTIP Unitholders of 85% of the amount of tax benefits, if any, that Cresco Corp actually realizes, or in some circumstances is deemed to realize, as a result of the redemption and exchange transactions described above. This includes increases in the tax basis of the assets of Cresco LLC arising from such transactions, tax basis increases attributable to payments made under the Tax Receivable Agreement and deductions attributable to imputed interest and other payments of interest pursuant to the Tax Receivable Agreement. Cresco Corp expects to benefit from the remaining 15% of tax benefits, if any, that Cresco Corp may actually realize.

Cresco LLC generally treats such acquisition of Common Units as a direct purchase by Cresco Corp of Common Units from a Cresco Member for U.S. federal income and other applicable tax purposes, regardless of whether such Common Units are surrendered by a Cresco Member to Cresco Corp or the Company upon the exercise by Cresco Corp of its election to acquire such Common Units directly or the exercise by Cresco Corp to assign its rights to acquire such Common Units directly to the Company. Basis Adjustments may have the effect of reducing the amounts that Cresco Corp may otherwise owe in the future to various tax authorities. The Basis Adjustments may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. The actual Basis Adjustments, as well as any amounts paid to the Cresco Members under the Tax Receivable Agreement, will vary depending on a number of factors, including:

(i)the timing of any subsequent redemptions or exchanges—for instance, the increase in any tax deductions will vary depending on the fair value, which may fluctuate over time, of the depreciable or amortizable assets of Cresco LLC at the time of each redemption or exchange;

(ii)the price of SVS at the time of redemptions or exchanges—the Basis Adjustments, as well as any related increase in any tax deductions, is directly related to the price of SVS at the time of each redemption or exchange;

(iii)the extent to which such redemptions or exchanges are taxable—if a redemption or exchange is not taxable for any reason, increased tax deductions will not be available; and

(iv)the amount and timing of Cresco Corp’s income—the Tax Receivable Agreement generally will require Cresco Corp to pay 85% of the tax benefits as and when those benefits are treated as realized under the terms of the Tax Receivable Agreement. If Cresco Corp does not have taxable income, it generally will not be required (absent a change of control or other circumstances requiring an early termination payment) to make payments under the Tax Receivable Agreement for that taxable year because no tax benefits will have been actually realized. However, any tax benefits that do not result in realized tax benefits in a given taxable year will likely generate tax attributes that may be utilized to generate tax benefits in previous or future taxable years. The utilization of any such tax attributes will result in payments under the Tax Receivable Agreement.

Cresco LLC has, in effect, an election under Section 754 of the U.S. Tax Code effective for each taxable year in which a redemption or exchange of Common Units for SVS or cash occurs. These Tax Receivable Agreement payments are not conditioned upon any continued ownership interest in either Cresco LLC or the Company by any Cresco Member. The rights of each Member under the Tax Receivable Agreement are assignable to transferees of its Common Units (other than Cresco Corp as transferee pursuant to subsequent redemptions or exchanges of the transferred Common Units), subject to the satisfaction of certain requirements.

For purposes of the Tax Receivable Agreement, cash savings in income and franchise taxes will be computed by comparing Cresco Corp’s actual income and franchise tax liability to the amount of such taxes that Cresco Corp would have been required to pay had there been no Basis Adjustments and had the Tax Receivable Agreement not been entered into. The Tax Receivable Agreement will generally apply to each taxable year in which the Tax Receivable Agreement remains effective, beginning with the first taxable year ending after the completion of the Business Combination. There is no maximum term for the Tax Receivable Agreement; however, the Tax Receivable Agreement may be terminated by Cresco Corp pursuant to an early termination procedure that requires Cresco Corp

to pay the Cresco Members and Cresco LTIP Unitholders an agreed-upon amount equal to the estimated present value of the remaining payments to be made under the Tax Receivable Agreement (calculated based on certain assumptions, including regarding tax rates and utilization of the Basis Adjustments).

The payment obligations under the Tax Receivable Agreement are obligations of Cresco Corp and not of Cresco LLC. The actual timing and amount of any payments that may be made under the Tax Receivable Agreement will vary. Any payments made by Cresco Corp to Cresco Members and Cresco LTIP Unitholders under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to Cresco Corp (or to the Company or Cresco LLC) and, to the extent that Cresco Corp is unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by Cresco Corp.

Decisions made by Cresco Corp in the course of running its business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by a Cresco Member or Cresco LTIP Unitholder under the Tax Receivable Agreement. For example, the earlier disposition of assets following a transaction that results in a Basis Adjustment will generally accelerate payments under the Tax Receivable Agreement and increase the present value of such payments.

The Tax Receivable Agreement provides that if (i) Cresco Corp materially breaches any of its material obligations under the Tax Receivable Agreement; (ii) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur; or (iii) Cresco Corp elects an early termination of the Tax Receivable Agreement, then Cresco Corp’s (or its successor’s) obligations under the Tax Receivable Agreement would accelerate and become due and payable, based on certain assumptions, including an assumption that Cresco Corp would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement.

As a result, (i) Cresco Corp could be required to make cash payments to the Cresco Members and Cresco LTIP Unitholders that are greater than the specified percentage of the actual benefits it ultimately realizes in respect of the tax benefits that are subject to the Tax Receivable Agreement, and (ii) if Cresco Corp elects to terminate the Tax Receivable Agreement early, Cresco Corp would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits. In these situations, Cresco Corp’s obligations under the Tax Receivable Agreement could have a material adverse effect on its or the Company’s liquidity and could have the effect of delaying, deferring, or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that Cresco Corp will be able to finance its obligations under the Tax Receivable Agreement.

Payments under the Tax Receivable Agreement will be based on the tax reporting positions that Cresco Corp determines. If any such position is subject to a challenge by a taxing authority, the outcome of which would reasonably be expected to materially affect a recipient’s payments under the Tax Receivable Agreement, then Cresco Corp will not be permitted to settle or fail to contest such challenge without the consent (not to be unreasonably withheld or delayed) of each Cresco Member that directly or indirectly owns at least 10% of the outstanding Common Units and LTIP Units. Cresco Corp will not be reimbursed for any cash payments previously made to any Cresco Member pursuant to the Tax Receivable Agreement if any tax benefits initially claimed by Cresco Corp are subsequently challenged by a taxing authority and ultimately disallowed. Instead, in such circumstances, any excess cash payments made by Cresco Corp to a Cresco Member or Cresco LTIP Unitholder will be netted against any future cash payments that Cresco Corp might otherwise be required to make under the terms of the Tax Receivable Agreement. However, Cresco Corp might not determine that it has effectively made an excess cash payment to the Cresco Members or Cresco LTIP Unitholders for a number of years following the initial time of such payment and, if Cresco Corp’s tax reporting positions are challenged by a taxing authority, it will not be permitted to reduce any future cash payments under the Tax Receivable Agreement until any such challenge is finally settled or determined. As a result, it is possible that Cresco Corp could make cash payments under the Tax Receivable Agreement that are substantially greater than its actual cash tax savings.

Payments are generally due under the Tax Receivable Agreement within a specified period of time following the filing of Cresco Corp’s U.S. federal income tax return (filed as a subsidiary of Cresco Labs Inc. pursuant to Section 1501 of the U.S. Tax Code) for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 100 basis points from the due date (without extensions) of such tax return. Any late payments that may be made under the Tax Receivable Agreement will continue to accrue interest at SOFR plus 500 basis points until such payments are made, including any late payments that Cresco Corp may subsequently make because Cresco Corp did not have enough available cash to satisfy its payment obligations at the time at which they originally arose.

SUPPORT AGREEMENT

Pursuant to the support agreement entered into by and among the Company, Cresco Corp and Cresco LLC (the “Support Agreement”), the Company will agree that, so long as any Common Units not owned by Cresco Corp or its affiliates are outstanding or Common Units are issuable pursuant to the exercise, conversion or exchange of any outstanding securities of Cresco LLC, the Company shall:

(i)take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Cresco LLC, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of a redemption of Common Units by a holder thereof in respect of each issued and outstanding Common Unit upon a redemption of such Common Units by Cresco LLC and, without limiting the generality of the foregoing, take all such actions and do all such things as are necessary or desirable to enable and permit Cresco LLC to cause to be delivered PVS, SVS, and/or amounts in cash, as applicable, to the holders of Common Units in accordance with the provisions of the A&R LLC Agreement, together with an amount in cash sufficient to pay any amount to be paid in respect of unpaid distributions with respect to such Common Units (if any);

(ii)take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Cresco Corp, if it elects to effect an exchange of Common Units directly with the holder thereof, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the redemption or exchange of Common Units by a holder thereof and, without limiting the generality of the foregoing, take all such actions and do all such things as are necessary or desirable to enable and permit Cresco Corp to cause to be delivered PVS, SVS, and/or amounts in cash, as applicable, to the holders of Common Units in accordance with the provisions of the A&R LLC Agreement, together with an amount in cash sufficient to pay any amount to be paid in respect of unpaid distributions with respect to such Common Units (if any);

(iii)if Cresco Corp so elects, take all such actions and do all things as are reasonably necessary or desirable to effect the exchange of Common Units directly with the holder thereof, in accordance with applicable law, take all such actions and do all such things as are necessary or desirable to cause to be delivered directly PVS, SVS, and/or amounts in cash, as applicable, to the holders of Common Units in accordance with the provisions of the A&R LLC Agreement, together with an amount in cash sufficient to pay any amount to be paid in respect of unpaid distributions with respect to such Common Units (if any); and

(iv)ensure that Cresco Corp does not exercise its vote as the manager of Cresco LLC to initiate the voluntary liquidation, dissolution, or winding up of Cresco LLC nor take any action or omit to take any action that is designed to result in the liquidation, dissolution, or winding-up of Cresco LLC.

The Company will further agree that, so long as any Cresco Redeemable Shares (if and when issued) not owned by the Company or its affiliates which are redeemable or exchangeable for PVS (or SVS, at the election of Cresco Corp and/or Cresco) are outstanding or any Cresco Redeemable Shares are issuable pursuant to the exercise, conversion, or exchange of any outstanding securities of Cresco Corp, the Company shall:

(i)take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Cresco Corp, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of a redemption of Cresco Redeemable Shares by a holder thereof in respect of each issued and outstanding Cresco Corp Redeemable Share upon the redemption of such Cresco Redeemable

Shares by Cresco Corp and, without limiting the generality of the foregoing, take all such actions and do all such things as are necessary or desirable to enable and permit Cresco Corp to cause to be delivered PVS, SVS, and/or amounts in cash, as applicable, to the holders of Cresco Redeemable Shares in accordance with the articles of incorporation and bylaws of Cresco Corp, together with an amount in cash sufficient to pay any amount to be paid in respect of unpaid distributions with respect to such Cresco Redeemable Shares (if any);

(ii)upon the election of Cresco Corp for the Company to effect an exchange directly with a holder of Cresco Redeemable Shares, take all such actions and do all things as are reasonably necessary or desirable to effect the exchange of Cresco Redeemable Shares directly with the holder thereof, in accordance with applicable law, without limiting the generality of the foregoing, take all such actions and do all such things as are necessary or desirable to cause to be delivered directly PVS, SVS, and/or amounts in cash, as applicable, to the holders of Cresco Redeemable Shares in accordance with the provisions of the articles of incorporation of Cresco Corp, together with an amount in cash sufficient to pay any amount to be paid in respect of unpaid distributions (if any) with respect to such Cresco Redeemable Shares; and

(iii)ensure that Cresco Corp is not voluntarily liquidated, dissolved, or wound up nor take any action or omit to take any action that is designed to result in the liquidation, dissolution, or winding-up of Cresco Corp.

The Support Agreement provides that in the event that a tender offer, share exchange offer, issuer bid, take-over bid, or similar transaction with respect to PVS and/or SVS is proposed by the Company or is proposed to the Company or its shareholders and is recommended to the Company Board, or is otherwise effected or to be effected with the consent or approval of the Company Board, and the Common Units are not redeemed by Cresco LLC or purchased by Cresco Corp or the Company pursuant to the terms of the A&R LLC Agreement or the Cresco Redeemable Shares (if and when issued) are not redeemed by Cresco Corp or purchased by Cresco Corp or the Company pursuant to the terms of the articles of incorporation of Cresco Corp, the Company will use its reasonable efforts in good faith to take all such actions and do all such things as are necessary or desirable to enable and permit holders of Common Units (other than Cresco Corp and its affiliates) and Cresco Redeemable Shares (other than the Company and its affiliates) to participate in such offer to the same extent and on an economically equivalent basis as the holders of PVS and/or SVS, without discrimination. Without limiting the generality of the foregoing, the Company will use its reasonable efforts in good faith to ensure that holders of Common Units and Cresco Redeemable Shares (if and when issued) may participate in each such offer without being required to redeem Common Units as against Cresco LLC and Cresco Redeemable Shares against Cresco Corp (or, if so required, to ensure that any such retraction, shall be effective only upon, and shall be conditional upon, the closing of such offer and only to the extent necessary to tender or deposit to the offer). Nothing in the Support Agreement will limit the ability of the Company (or any of its subsidiaries including, without limitation, Cresco Corp or Cresco LLC) to make ordinary market purchases of SVS in accordance with applicable laws and regulatory and stock exchange requirements.

The Support Agreement provides that while any Common Units (or other rights pursuant to which Common Units may be acquired upon the exercise thereof) other than Common Units held by Cresco Corp or its affiliates are outstanding, and at all times while any Cresco Redeemable Shares (or other rights pursuant to which Cresco Redeemable Shares may be acquired upon the exercise thereof) other than Cresco Redeemable Shares held by the Company or its affiliates are outstanding, the Company will make available such number of PVS and/or SVS (or other shares or securities into which PVS and/or SVS may be reclassified or changed) without duplication equal to the sum of (i) the number of Common Units issued and outstanding from time to time; (ii) the number of Common Units issuable upon the exercise of all rights to acquire Common Units outstanding from time to time; (iii) the number of Cresco Redeemable Shares issued and outstanding from time to time; and (iv) the number of Cresco Redeemable Shares issuable upon the exercise of all rights to acquire Cresco Redeemable Shares outstanding from time to time in addition to any additional PVS and/or SVS as may be required to enable and permit the Company to meet its obligations under the A&R LLC Agreement, the Tax Receivable Agreement, and under any other security or commitment pursuant to which the Company may be required to deliver PVS and/or SVS to any person, to enable and permit Cresco Corp to meet its obligations under each of the A&R LLC Agreement and the Tax Receivable Agreement with respect to the delivery of PVS and/or SVS and payment of the tax benefits contemplated under the Tax Receivable Agreement and to enable and permit Cresco LLC to meet its obligations under the Support Agreement and under the A&R LLC Agreement.

With the exception of changes for the purpose of (i) adding to the covenants of any or all of the parties; (ii) making such amendments or modifications not inconsistent with the Support Agreement as may be necessary or desirable with respect to matters or questions arising thereunder; or (iii) curing or correcting any ambiguities or defect or inconsistent provision or clerical omission or mistake or manifest errors (provided, in the case of (i), (ii) or (iii) that the board of directors of each of the Company and Cresco Corp and the manager of Cresco LLC are of the good faith opinion that such amendments are not prejudicial to the rights or interests of the holders of Common Units or Cresco Redeemable Shares), the Support Agreement may not be amended except by agreement in writing executed by Cresco LLC, Cresco Corp, and the Company and approved by the holders of a majority of the Common Units in accordance with the terms of the A&R LLC Agreement and a majority of the Cresco Redeemable Shares in accordance with the terms of the articles of incorporation and the bylaws of Cresco Corp.

MARKET FOR SECURITIES

Subordinate Voting Shares - Trading Price and Volume

The issued and outstanding SVS are listed and posted for trading on the CSE under the symbol “CL.” The following table sets forth the reported intraday high and low prices and monthly trading volumes of the SVS from January 1, 2024, up to December 31, 2024.15


Period	High Trading Price (in C$)	Low Trading Price (in C$)	Volume
January 2024	$3.08	$1.77	5,956,222
February 2024	$3.56	$2.24	9,116,524
March 2024	$3.07	$2.03	6,154,939
April 2024	$3.58	$2.60	6,742,312
May 2024	$3.48	$2.44	4,746,397
June 2024	$2.60	$2.12	2,291,727
July 2024	$2.48	$2.07	2,529,207
August 2024	$2.79	$1.92	4,312,333
September 2024	$2.40	$2.11	2,565,313
October 2024	$2.40	$2.03	3,026,616
November 2024	$2.23	$1.41	6,072,068
December 2024	$1.71	$1.14	4,763,441

15 https://finance.yahoo.com/quote/CL.CN/history/

CONSOLIDATED CAPITALIZATION

The following table summarizes the long-term notes payable and loans payable and share capital of Cresco and the Company as of December 31, 2024.


THE COMPANY
($ in thousands)
Total Long-term notes payable and loans payable			$460,750
Security			Total
Subordinate Voting Shares(1)			331,490,358
Proportionate Voting Shares(2)			17,106,732
Cresco Redeemable Units(3)			92,057,226
Special Subordinate Voting Shares			1,589
Shares Outstanding (on an as-converted to Subordinate Voting Share basis)			440,655,905
Options(4)			24,153,380
Restricted share units			8,927,332
Super Voting Shares(5)			500,000
Fully-Diluted Outstanding(6)			474,236,617
(1)SVS includes 759,608 net shares pending issuance or cancellation (2)As discussed above under the heading “Description of the Securities,” in order to maintain foreign private issuer status, certain US resident members of Cresco will receive PVS rather than SVS on a 1:200 basis. PVS carry voting and economic rights proportionate to SVS. Each PVS is convertible into 200 SVS. This table presents the PVS on an as-converted basis. (3)Cresco Redeemable Units are convertible to PVS on a 200:1 basis and such PVS are convertible into SVS on a 1:200 basis. (4)24,153,380 options outstanding at a weighted average exercise price of $2.91 per SVS. 30,908,918 SVS reserved for future grants. (5)Each carrying 2,000 votes. In the aggregate, the MVS represent approximately 74% voting control and are not convertible into SVS or other equity securities of the Company. (6)Fully-Diluted Outstanding shares assumes conversion of all outstanding instruments which could have a dilutive effect (currently or in the future).

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets out, for each of the Company’s directors and executive officers, the person’s name, age, state and country of residence, position with the Company, principal occupation(s) during the last five (5) years, and if an existing officer of Cresco prior to the Business Combination, the date on which the person became such an officer. The Company’s directors are elected annually and, unless re-elected, will retire from office at the end of the next annual general meeting of shareholders.

Directors and Officers

Name and State
and Country of Residence

Age

Position(s) with the Company

Cresco Officer / Director Since

Principal Occupation(s)(1)

Securities of Company Directly or Indirectly Held(2)

Security Class

Number of Securities

Percentage Owned

Charles Bachtell(5)

Chicago, IL,

United States

Chief Executive Officer and Director

03/2015

Chief Executive Officer

MVS

132,932

26.59%

Redeemable Units

12,347,597

13.58%

PVS

1,062,500

6.27%

SVS

829,886

0.25%

Sharon Schuler

Southborough, MA,

United States

Chief Financial Officer

09/2024

Chief Financial Officer

N/A

John Schetz,

Chicago, IL,

United States

General Counsel

06/2018

General Counsel

SVS

123,579

0.04%

Gregory Butler

Chicago, IL,

United States

President

02/2020

President

SVS

156,411

0.05%

Angie Demchenko

Chicago, IL,

United States

Chief People Officer

07/2019

Chief People Officer

SVS

120,749

0.04%

Jason Erkes

Chicago, IL,

United States

Chief Communications Officer

09/2018

Chief Communications Officer

SVS

308,499

0.09%

Zach Marburger

Chicago, IL,

United States

Chief Information Officer

01/2019

Chief Information Officer, Cresco

SVS

172,475

0.05%

Robert M. Sampson(3)(6)

Chicago, IL,

United States

Director

05/2015

EVP - CrossCountry Mortgage

MVS

133,308

26.66%

Redeemable Units

10,101,049

11.11%

PVS

800

0.00%

SVS

285,531

0.09%

Gerald Corcoran(3)(5)

Winnetka, IL,

United States

Director

03/2017

CEO & Chairman of the Board of R.J. O’Brien & Associates, LLC

SVS

1,208,987

0.36%

Name and State
and Country of Residence

Age

Position(s) with the Company

Cresco Officer / Director Since

Principal Occupation(s)(1)

Securities of Company Directly or Indirectly Held(2)

Security Class

Number of Securities

Percentage Owned

Thomas J. Manning(5)

Evanston, IL,

United States

Director and Chairman

10/2016

Chairman, Cresco Board

MVS

133,760

26.75%

PVS

100,000

0.59%

Randy D. Podolsky(3)(4)(5)

Lincolnshire, IL,

United States

Director

12/2016

Real Estate – Podolsky & Associates, Ltd

Redeemable Units

260,604

0.29%

SVS

213,797

0.06%

Michele Roberts(4)

New York, NY,

United States

Director

06/2020

Director

SVS

20,000

0.01%

Marc Lustig(6)

Vancouver, BC

Canada

Director

01/2020

Director

SVS

102,232

0.03%

SSVS

1,589

100.00%

(1)For prior occupations of each director and officer for the last 5 years, if applicable, please see biographies below.

(2)Includes as-converted holdings of PVS, SVS, MVS, SSVS, and Cresco Redeemable Units as of the date of this AIF. Excludes all options outstanding and unvested restricted stock units.

(3)Denotes members of the audit committee for the Company. The Company’s audit committee meets the composition requirement for “venture issuers” as set out in NI 52-110.

(4)Denotes member of the nominating and governance committee of the Company.

(5)Denotes member of the executive committee of the Company.

(6)Denotes member of the compensation committee of the Company.

As of the date of this AIF, the directors and executive officers of the Company (as listed in this AIF), as a group, beneficially owned, or controlled or directed, directly or indirectly, on a non-diluted basis, a total of (i) 3.5 million SVS, representing approximately 1.1% of the total number of outstanding SVS, (ii) 1.2 million PVS (as-converted), representing approximately 6.9% of the total number of outstanding PVS, (iii) 1,589 SSVS (as-converted), representing all of the outstanding SSVS, (iv) 0.4 million MVS, representing 80.0% of the total number of outstanding MVS, and (v) 22.7 million Cresco Redeemable Units, representing approximately 25.0% of the total number of outstanding Cresco Redeemable Units.

Biographies

The following are brief profiles of the Company’s executive officers and directors.

Charles Bachtell, Chief Executive Officer and Director

Charles Bachtell serves as a director and the Company’s Chief Executive Officer. Prior to joining the Company, Mr. Bachtell served for a decade as the Executive Vice President and General Counsel of Guaranteed Rate. Mr. Bachtell’s experience as an attorney brings with him legal expertise in both corporate governance and regulatory compliance. He is a founding member of the Illinois Cannabis Bar Association and cannabis industry trade associations in IL, PA, and OH. He also serves as Chairperson of the US Cannabis Roundtable, an industry organization formed by the combination of the National Cannabis Roundtable and US Cannabis Council, for both of which Mr. Bachtell had also served as Chairperson. Mr. Bachtell is an adjunct Professor at Northwestern University Pritzker School of Law, where he teaches a course on the legal and regulatory issues in the emerging cannabis industry.

Sharon Schuler, Chief Financial Officer

Sharon Schuler joined the Cresco team as CFO in late 2024 and brings more than twenty (20) years of experience in finance, strategy, and operations across both private equity and publicly traded midsize and global multibillion-dollar organizations in retail and wholesale. Prior to joining Cresco Labs, Ms. Schuler was responsible for planning and analysis of BJ’s Wholesale Club’s short and long-term financial outlook. Prior to that, she spent over twenty (20) years in senior financial management roles for large public and private national retailers, including The TJX Companies, Clarks America, and Caleres. Ms. Schuler holds an MBA in Integrated Management and a bachelor’s in economics from Michigan State University.

John Schetz, General Counsel

John Schetz serves as the Company’s General Counsel. Prior to joining the Company, Mr. Schetz served as Executive Vice President, General Counsel, and Secretary of Stericycle, Inc., where he was responsible for global legal affairs. Prior to his tenure at Stericycle, Mr. Schetz was a partner in the Corporate Department of McDermott Will & Emery LLP in Chicago. Mr. Schetz’s experience as a partner in a large law firm and as Chief Legal Officer of a multinational public company brings to the Company a broad and deep understanding of legal and business matters across multiple industries.

Gregory Butler, President

Greg Butler serves as the Company’s President. Prior to joining the Company, Mr. Butler served as Operational Partner at MINIMAL, a global award-winning design firm, overseeing MNML Ventures, the creative capital accelerator of MINIMAL. Prior to his service at MINIMAL, Mr. Butler worked at MillerCoors where he led the Miller Family of brands, a $2 billion portfolio, overseeing more than $225 million in annual spend. Mr. Butler brings to the Company a strong background in driving brand growth for top-tier CPG companies and business growth and capital management strategic advising for leading private equity portfolio companies.

Angie Demchenko, Chief People Officer

Angie Demchenko is responsible for overseeing all aspects of human resources, its practices, and operations to meet the needs of the constantly evolving business. Previously, she served as Vice President, Head of Human Resources for Starwood Retail Partners, the retail real estate arm of Starwood Capital Group and leading operator of shopping malls and lifestyle centers. In addition, she was the Vice President, Human Resources for General Growth Properties, one of the largest shopping mall owners in the U.S. prior to its acquisition by Brookfield Property Partners, and Senior Vice President, Human Resources for Jones Lang LaSalle, a Fortune 500 commercial real estate services firm.

Jason Erkes, Chief Communications Officer

Jason Erkes serves as the company’s Chief Communications Officer and has been involved with the company since its inception. As the person charged with overseeing the company’s internal and external communications strategy, he has helped position Cresco Labs’ leadership in cannabis through education, transparency, and relationships cultivated with influential journalists. His innovative efforts have helped build a company culture dedicated to connection, authenticity, and community. He has been a journalist, political advisor, entrepreneur, turnaround expert, community leader, and philanthropist throughout his career. In 2020, he was named one of the Top 10 Most Influential Communications Professionals to Watch in Cannabis by Green Market Report.

Zach Marburger, Chief Information Officer

Zach Marburger is the Company’s Chief Information Officer. He is responsible for overseeing the technological and data infrastructure throughout the organization and designing, scaling, and implementing technological systems and data platforms to optimize the customer experience. As an entrepreneur, he was previously involved in Colorado’s cannabis technology industry. He was the founder and Chief Executive Officer of Whaxy, a startup offering

software tools like menu management and online ordering for cannabis retail dispensaries and businesses. It was acquired by cannabis technology platform MassRoots in 2016. In addition, he was also the co-founder and Chief Executive Officer of Topple Track, a startup providing a scalable, self-serve, content monitoring platform for musicians and record labels, which was acquired by Symphonic Distribution in 2015.

Robert M. Sampson, Director

Robert Sampson serves as a director of the Company. Mr. Sampson has more than twenty (20) years of operating experience in large business, including twelve (12) years in the heavily regulated mortgage industry, having served as Chief Operating Officer at Guaranteed Rate, a retail mortgage bank. As the former Chief Operating Officer of Cresco, Mr. Sampson oversaw the construction of two (2) 40,000 square foot cement precast structures and one (1) 30,000 square foot hybrid greenhouse structure and was responsible for all facility operations and systems including the design and implementation of fertigation and irrigation systems, inventory control systems, compliance process procedures, audits, security, and IT. Mr. Sampson is currently Executive Vice President of CrossCountry Mortgage, a mortgage firm based in Cleveland.

Gerald Corcoran, Director

Gerry Corcoran serves as a director of the Company. Mr. Corcoran has served as Chief Executive Officer of R.J. O’Brien & Associates, LLC since 2000 and Chairman of the Board since 2007. In July 2014, Mr. Corcoran was elected Chairman of the FIA (formerly Futures Industry Association) and he served in that position until March 2016. Following that time, he was elected Treasurer of the FIA Board of Directors, serving in that role until March 2017. Corcoran serves on the FIA’s Executive Committee. He has been a member of FIA’s Board of Directors since March 2008 and served as Vice Chairman from March 2013 until July 2014. He also serves on the Board of Directors of the National Futures Association, the self-regulatory organization for the futures industry.

Thomas J. Manning, Chairman and Director

Thomas J. Manning serves as the Chairman of the Board of Directors of the Company. Mr. Manning is the former Chairman and Chief Executive Officer of Dun & Bradstreet, a leading provider of corporate information and analytics. Mr. Manning serves as a director of CommScope and until December 2023, ChinData. He is also a former Senior Fellow at Harvard University’s Advanced Leadership Initiative, an executive-in-residence at the Booth School of Business at the University of Chicago and an adjunct faculty member at the University of Chicago Law School, where he taught corporate governance, private equity, innovation, and US-China relations. He was based in Hong Kong for nearly twenty (20) years and served as CEO of Cerberus Capital Asia, Capgemini Asia and Ernst & Young Consulting Asia and as a senior partner at Bain & Company. During the past decade, he served on the boards of various publicly listed Chinese companies, including Bank of Communications, Gome Electrical Appliances, AsiaInfo-Linkage, iSoftStone and Clear Media. Earlier in his career, he was extensively involved in the medical field as the founder and CEO of a biomedical device company and a founder of McKinsey’s health care consulting practice.

Randy D. Podolsky, Director

Randy D. Podolsky serves as a director of the Company. He has served the entrepreneurial, corporate, institutional, and not-for-profit commercial real estate clients for over forty-five (45) years and served as Managing Principal of his firm from 1986 to 2015. Now operating under the name of Riverwoods Development Partners, Mr. Podolsky provided personalized transaction, contract negotiation, and advisory services to financial institutions, users, owners, and not-for-profits for all facets of commercial real estate. Mr. Podolsky’s current project is developing Navy Pier Marina, a dedicated transient and commercial recreational boat marina at Chicago’s Navy Pier. Mr. Podolsky recently served as a board member and chair of the real estate committee of the Waukegan Port District, which owns and operates Waukegan Harbor & Marina, the Port of Waukegan and Waukegan National Airport. Mr. Podolsky is an active volunteer member of the U.S. Coast Guard Auxiliary since 1991 and served as the elected District Commodore of the Ninth Western Region in 2009 and 2010.

Michele Roberts, Director

Ms. Roberts serves as a director of the Company. From 2014 to 2022, Ms. Roberts has served as the Executive Director of the National Basketball Players Association (the “NBPA”), working on behalf of NBA players to ensure their rights are protected and are fairly compensated for the value they bring to the sport and their impact on society. Prior to joining the NBPA, she was a trial lawyer with Skadden, Arps, Slate, Meagher & Flom. Her practice focused on complex civil and white-collar criminal litigation before state and federal courts and in administrative proceedings. Ms. Roberts is a Fellow of the American College of Trial Lawyers. She worked for eight (8) years in the office of the Public Defender Service for the District of Columbia, where she was named Chief of the Trial Division and served as counsel in more than forty (40) jury trials. Ms. Roberts is a frequent lecturer and presenter to both the bench and bar on a variety of topics related to litigation and trial practice. She taught trial advocacy as an adjunct member of the faculty at Harvard Law School and was an instructor with the National Institute of Trial Advocacy.

Marc Lustig, Director

Marc Lustig serves as a director of the Company. Mr. Lustig was the founder and Chief Executive Officer of Cannabis Royalties & Holdings Corp. (“Origin House”), a leading distributor of cannabis products including its owned brands in California and other markets. Following the acquisition of Origin House by Cresco in January 2020, Mr. Lustig oversaw capital markets activities for Cresco, including executing on the Company’s capital strategy, until he left such role in mid-2021. He continues to assist from time to time in managing relationships with Cresco’s various capital markets stakeholders.

Cease Trade and Bankruptcy

None of the Company’s directors or executive officers has, within the ten (10) years prior to the date of this AIF, been a director, chief executive officer, or chief financial officer of any company (including the Company) that, while such person was acting in that capacity (or after such person ceased to act in that capacity but resulting from an event that occurred while that person was acting in such capacity) was the subject of a cease trade order, an order similar to a cease trade order, or an order that denied the Company access to any exemption under securities legislation, in each case for a period of more than thirty (30) consecutive days.

None of the Company’s directors or executive officers has, within the ten (10) years prior to the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager, or trustee appointed to hold the assets of such director or executive officer, been a director or executive officer of any company, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager, or trustee appointed to hold its assets.

No director or executive officer of the Company has: (i) been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

To the best of the Company’s knowledge, there are no known existing or potential material conflicts of interest among the Company, or a subsidiary of the Company, and a director or officer of the Company or a subsidiary of the Company as a result of their outside business interests except that certain of the Company’s or its subsidiaries’ directors and officers serve as directors and officers of other companies, and therefore it is possible that a conflict may arise between their duties to the Company and their duties as a director or officer of such other companies.

PROMOTERS

No person or company has been within the two (2) years immediately preceding the date of this AIF, a promoter of the Company.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

To the Company’s knowledge, there are no legal proceedings or regulatory actions material to the Company to which it is a party, or has been a party to, or of which any of its property is or was the subject matter of and no such proceedings or actions are known by the Company to be contemplated.

There have been no material penalties or sanctions imposed against the Company by a court or regulatory authority, and the Company has not entered into any settlement agreements before any court relating to provincial or territorial securities legislation or with any securities regulatory authority, during the most recently completed financial year.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as disclosed below and elsewhere in this AIF no director, executive officer, unitholder, or shareholder that beneficially owns, controls, or directs, directly or indirectly, more than 10% of the voting securities of the Company, or any of their respective associates or affiliates, has any material interest, direct or indirect, in any transaction within the three (3) years before the date of this AIF which has materially affected or is reasonably expected to materially affect the Company or a subsidiary of the Company.

AUDITOR, TRANSFER AGENT, AND REGISTRAR

The auditor of the Company is Marcum LLP and the transfer agent and registrar for the SVS, PVS, SSVS, and MVS is Odyssey Trust Company at its principal offices in Calgary, Alberta.

MATERIAL CONTRACTS

The Company is a party to the following material contracts:

•Support Agreement entered into by and among the Company, Cresco Corp, and Cresco LLC (see the “Description of Capital Structure – Support Agreement” section for greater detail.);

•Tax Receivable Agreement entered into by and among Cresco Corp, Cresco LLC, the Cresco Members, and the Cresco LTIP Unitholders (see the “Description of Capital Structure – Tax Receivable Agreement” section for greater detail.);

•A&R LLC Agreement (see the “Description of Capital Structure – Description of Unit Capital of Cresco – A&R LLC Agreement” section for greater detail.);

•Senior Secured Term Loan Agreement entered into by and among the Company, a third-party administrative agent, and a syndicate of lenders (see the “General Development of the Business – Debt Financing Activities” section for greater detail.); and

•Mortgage Loans agreement entered into by and among the JDRC Ellenville, LLC, a subsidiary of the Company and a third-party lender (see the “General Development of the Business – Debt Financing Activities” section for greater detail.).

INTERESTS OF EXPERTS

No person or corporation whose profession or business gives authority to a statement made by the person or corporation and who is named as having prepared or certified a part of a filing made by the Company under National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) or as having prepared or certified a report or valuation described or included in a filing made by the Company under NI 51-102 holds any beneficial interest,

direct or indirect, in any securities or property of Cresco or of an associate or affiliate of Cresco and no such person is expected to be elected, appointed, or employed as a director, senior officer, or employee of Cresco or of an associate or affiliate of Cresco and no such person is a promoter of Cresco or an associate or affiliate of Cresco. Marcum LLP is independent of the Company under the standards of the Public Company Accounting Oversight Board and the rules and regulations of the United States Securities and Exchange Commission.

ADDITIONAL INFORMATION

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities, and securities authorized for issuance under equity compensation plans, as applicable, is contained in the Company’s management information circular dated June 03, 2024, which is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar. Additional financial information is provided in the Financial Statements and MD&A, which are also available on SEDAR+ and EDGAR. Additional information relating to the Company can also be found under the Company’s profile on SEDAR+ and EDGAR.

Exhibit 99.5

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

This management discussion and analysis (“MD&A”) of the financial condition and results of operations of Cresco Labs Inc. (the “Company,” “Cresco Labs,” “we,” or “our”) is dated March 14, 2025 and has been prepared for the years ended December 31, 2024 and 2023. It is supplemental to, and should be read in conjunction with, the Company’s audited Consolidated Financial Statements and accompanying notes as of and for the years ended December 31, 2024 and 2023, and the Company’s Annual Information Form for the year ended December 31, 2024, filed on SEDAR+ and EDGAR. The Company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Financial information presented in this MD&A is presented in United States (“U.S.”) dollars (“USD” or “$”) unless otherwise indicated.

The Company has provided certain supplemental non-GAAP financial measures in this MD&A. Where the Company has provided such non-GAAP financial measures, we have also provided a reconciliation to the most comparable GAAP financial measure. Please see the information under the heading “Non-GAAP Financial Measures” for additional information on the Company’s use of non-GAAP financial measures.

This MD&A contains certain “forward-looking statements” and certain “forward-looking information” as defined under applicable U.S. securities laws and Canadian securities laws. Please refer to the discussion of forward-looking statements and information set out under the heading “Cautionary Statement Regarding Forward-Looking Information,” located at the beginning of the Company’s Annual Information Form for the year ended December 31, 2024, filed on SEDAR+ and EDGAR. As a result of many factors, the Company’s actual results may differ materially from those anticipated in these forward-looking statements and information. Please refer to the discussion of risks and uncertainties set out under the heading “Risk Factors,” located within the Company’s Annual Information Form for the year ended December 31, 2024, filed on SEDAR+ and EDGAR. Additional information relating to the Company, including the Company’s Annual Information Form for the year ended December 31, 2024, is available on SEDAR+ (www.sedarplus.ca) and EDGAR (www.sec.gov).

OVERVIEW OF THE COMPANY

Incorporated on July 6, 1990, in the Province of British Columbia, Cresco Labs (“the Company”) is licensed to grow, manufacture, and sell cannabis and cannabis-based products in several U.S. states. The Company’s headquarters is located at 600 W. Fulton Street, Suite 800, Chicago, IL 60661, and its registered office is at 666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8. As of December 31, 2024, the Company had approximately 2,900 employees.

Cresco Labs primarily engages in the cultivation of medical-grade cannabis, the production of cannabis-derived medical-grade products, and their distribution to consumers in legalized cannabis markets in the United States, whether for medical or adult-use. The Company strives to provide consumers with high-quality and consistent cannabis-based products, focusing on regulatory adherence while developing condition-specific cannabis strains and non-invasive delivery methods. These non-invasive delivery methods, which are alternatives to smoke inhalation, aim to deliver controlled-dosage medicinal cannabis relief to qualified patients and consumers in legalized cannabis markets in the United States.

As of March 14, 2025, the Company operates a total of seventy-two (72) dispensaries and thirteen (13) cultivation and production facilities across eight (8) states, where cannabis use, medical or both medical and adult-use, has been approved by state and local regulatory bodies. Of the states in which we operate, California, Illinois, Massachusetts, Michigan, New York, and Ohio have adult-use cannabis programs.

As of March 14, 2025, the Company operates the following number of dispensaries and cultivation and production facilities by state:


State	Adult-Use and Medical Dispensaries	Adult-Use Dispensaries	Medical Dispensaries	Cultivation and Production Facilities
California	—	—	—	1
Florida	—	—	33	1
Illinois	5	5	—	3
Massachusetts1	2	1	1	3
Michigan	—	—	—	1
New York	—	—	3	1
Ohio	5	—	—	1
Pennsylvania	—	—	17	2
Total	12	6	54	13

1The cultivation facility in Leicester, MA is currently closed.

The Company operates its dispensaries under the brand, Sunnyside*®1. Our Sunnyside* dispensaries are home for a judgement-free cannabis shopping experience, where all are welcome to explore, discover and purchase a wide array of high-quality products. The Company's portfolio of owned cannabis consumer-packaged goods includes Cresco®1, High Supply®2, Mindy’sTM, Good News®2, RemediTM, Wonder Wellness Co.®2, and FloraCal® Farms2. The Company distributes and markets these products both to third-party licensed retail cannabis stores across the U.S. and to the Company’s owned retail stores.

1The Sunnyside*® (inclusive of the stand-alone asterisk mark) and Cresco® brands maintain federal trademark registrations for websites pertaining to medical cannabis and cannabis educational services, as well as multiple state trademark registrations.

2 The High Supply®, Good News®, Wonder Wellness Co.®, and FloraCal® Farms brands maintain federal trademark registrations for apparel and multiple state trademark registrations.

FEDERAL REGULATORY ENVIRONMENT

Canadian-Securities Administrators Staff Notice 51-352 (Revised) – Issuers with U.S. Marijuana-Related Activities (“Staff Notice 51-352”) provides specific disclosure expectations for issuers that currently have, or are in the process of developing, cannabis-related activities in the U.S. as permitted within a particular state’s regulatory framework. All issuers with U.S. cannabis-related activities are expected to clearly and prominently disclose certain prescribed information in prospectus filings, and other required disclosure documents. For information on the Company’s access to capital and financing options to support continuing operations, please refer to the “Liquidity and Capital Resources” section further below.

In accordance with Staff Notice 51-352, Cresco Labs will evaluate, monitor and reassess the disclosures contained herein and any related risks, on an ongoing basis and the same will be supplemented, amended and communicated to investors in public filings, including in the event of government policy changes or the introduction of new or amended guidance, laws, or regulations regarding marijuana regulation. As a result of the Company’s operations, it is subject to Staff Notice 51-352, and accordingly provides the following disclosure:

Cresco Labs currently directly derives a substantial portion of its revenues from the cannabis industry in certain U.S. states, which industry is illegal under U.S. Federal Law. As of December 31, 2024, the Company is directly involved (through licensed subsidiaries) in both the medical and adult-use cannabis industry in the states of California, Florida, Illinois, Massachusetts, Michigan, New York, Ohio, and Pennsylvania as permitted within such states under applicable state law which have regulated such industries.

The cultivation, sale, and use of cannabis is illegal under federal law pursuant to the U.S. Controlled Substance Act of 1970 (“CSA”). Under the CSA, the policies and regulations of the U.S. Federal Government and its agencies are that cannabis has no medical benefit and a range of activities, including cultivation and the personal use of cannabis, is prohibited. The Supremacy Clause of the U.S. Constitution establishes that the U.S. Constitution and federal laws made pursuant to it are paramount and in case of conflict between federal and state law, the federal law shall apply. Unless and until the U.S. Congress amends the CSA with respect to medical and/or adult-use cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a significant risk that federal authorities may enforce current U.S. federal law. If the U.S. Federal Government begins to enforce U.S. federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing applicable state laws are repealed or curtailed, the Company’s business, results of operations, financial condition, and prospects would be materially adversely affected.

Despite the current state of the federal law and the CSA, the states of Alaska, Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Maine, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia, Washington and the District of Columbia, have legalized adult-use of cannabis. Adult-use sales have not yet begun in Minnesota, Delaware or Virginia. Additionally, although the District of Columbia voters passed a ballot initiative in November 2014, no adult-use operations exist yet because of a prohibition on using funds for regulation within a federal appropriations amendment to local District spending powers.

Currently, over three quarters of the U.S. states have enacted legislation to legalize and regulate the sale and use of medical cannabis, provided that there are strict purchasing or possession limits. However, there is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local government authorities will not limit the applicability of state laws within their respective jurisdictions.

The Company’s objective is to capitalize on the opportunities presented as a result of the changing regulatory environment governing the cannabis industry in the U.S. Accordingly, there are significant risks associated with the business of the Company. Unless and until the U.S. Congress amends the CSA with respect to medical and/or adult-use cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a significant risk that federal authorities may enforce current federal law and the business of the Company may be

deemed to be producing, cultivating, extracting, or dispensing cannabis or aiding or abetting or otherwise engaging in a conspiracy to commit such acts in violation of federal law.

For these reasons, the Company’s investments in the U.S. cannabis market may subject the Company to heightened scrutiny by regulators, stock exchanges, clearing agencies and other Canadian authorities. There are risks associated with the business of the Company. See “Risk Factors” in the Annual Information Form for the year ended December 31, 2024, filed on SEDAR+ and EDGAR.

On November 20, 2019, the House Judiciary Committee approved the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (the “MORE Act”) by a 24 to 10 vote. The MORE Act would decriminalize and remove cannabis as a Schedule I controlled substance. Following the Judiciary Committee approval in November 2019, the MORE Act was passed by the House by a vote of 228-164 in December 2020. The bill did not advance in the U.S. Senate. The bill was reintroduced by Representative Nadler (D-NY) in May 2021. On September 30, 2021, the MORE Act passed the House Judiciary Committee by a vote of 26-15. Two Republicans joined all of the committee’s Democratic members to move the bill forward. On April 1, 2022, the U.S. House of Representatives passed the MORE Act once again. The bill was received in the Senate and read twice and referred to the Committee on Finance; however, the bill was not brought to a vote in 2022 and would need to be reintroduced by the new Congress. On September 22, 2023, Rep. Nadler reintroduced the MORE Act (H.R. 5601) where it has yet to receive a committee hearing.

On April 19, 2021, the SAFE Banking Act of 2021 (the “SAFE Banking Act” or “SAFE”) again passed the U.S. House of Representatives by a 321–101 vote. The U.S. Senate opted to pursue comprehensive federal reform legislation rather than bring the SAFE Banking Act up for a regular order vote due to proposed comprehensive federal reform legislation led by Senate Majority Leader Chuck Schumer (D-NY), Senator Ron Wyden (D-OR) and Senator Cory Booker (D-NJ). On April 26, 2023, SAFE was reintroduced as a bipartisan and bicameral piece of legislation by Sen. Jeff Merkley (D-OR), Sen. Steve Daines (R-MT), Rep. Dave Joyce (R-OH), and Rep. Earl Blumenauer (D-OR). The reintroduced bill included important new changes that could provide opportunities for non-depository Community Development Financial Institutions and Minority Depository Institutions. In May 2023, the Senate Committee on Banking, Financial Services, and Urban Affairs discussed SAFE during their hearing titled, “Examining Cannabis Banking Challenges of Small Businesses and Workers.” On September 27, 2023, the SAFE Banking Act passed in the Senate Banking Committee, demonstrating bipartisan support for allowing state-legal marijuana businesses to access financial services and setting up the bill for a full vote in the chamber. The 23-member committee voted 14-9 in favor of sending the bill to the Senate floor with technical amendments. It is the first time the banking legislation rebranded as the Secure and Fair Enforcement Regulation (“SAFER”) Banking Act has garnered a yes vote in the Senate. In September 2024, the Senate Banking Committee passed the SAFER Banking Act with bipartisan support, moving it forward for a Senate floor vote. However, the bill did not receive a vote in the U.S. House. The bill is anticipated to be reintroduced by Congress in 2025.

On October 6, 2022, former President Joe Biden announced executive action to pardon thousands convicted of federal marijuana possession. He urged state governors to take similar actions for state offenses and requested the U.S. Department of Health and Human Services (“HHS”) and the U.S. Department of Justice to review marijuana's federal classification. The U.S. Food and Drug Administration, under the HHS, carried out an eight-step scientific review into marijuana to determine whether it should be rescheduled, descheduled or remain in Schedule I. On August 30, 2023, the HHS delivered a recommendation to the U.S. Drug Enforcement Administration (“DEA”) to move cannabis from Schedule I to Schedule III. The HHS recommendation means that the nation’s top health agency no longer considers cannabis a drug that lacks medical value and carries the high potential for abuse. The DEA has confirmed that it received the HHS recommendation and will initiate a five-factor review, which differs from HHS’s eight-factor criteria. In early 2024, it was reported that the DEA sent a letter to congressional Cannabis Caucus co-chair Rep. Blumenauer (D-OR), stating it was ‘now conducting its review’ into the potential rescheduling of cannabis. The letter from DEA confirmed that it had received the HHS rescheduling recommendations, and also asserted that it has ‘final authority’ over the decision. See “Recent Developments” for additional updates related to rescheduling.

On December 27, 2022, Congresswoman Rep. Nancy Mace (R-SC) filed a bill that would provide federal tax relief for cannabis businesses by amending the Internal Revenue Service (“IRS”) Code Section 280E. The bill would

allow state-legal cannabis operators to be able to deduct business expenses on their federal taxes, an option applicable to any other legal business. The bill did not receive a vote. On April 17, 2023, Rep. Blumenauer (D-OR), refiled the bill, the Small Business Tax Equity Act, which would amend IRS Code 280E to allow state-legal cannabis businesses to take federal tax deductions. Rep. Mace (R-SC), Rep. Barbara Lee (D-CA), Rep. Joyce (R-OH), and Rep. Blumenauer (D-OR) are cosponsors of the refiled bill.

On April 14, 2023, Rep. Joyce (R-OH) and House Democratic Leader Hakeem Jeffries (D-NY) reintroduced bipartisan legislation, the Preparing Regulators Effectively for a Post-Prohibition Adult-Use Regulated Environment Act (“PREPARE Act”), which would create a process for the federal government to establish regulations for cannabis upon legalization. The PREPARE Act directs the U.S. Attorney General to establish the “Commission on the Federal Regulation of Cannabis” to advise on a regulatory framework modeled after Federal and State regulatory frameworks with respect to alcohol.

On April 19, 2023, Rep. Joyce (R-OH) and Rep. Alexandria Ocasio-Cortez (D-NY) introduced the Harnessing Opportunities by Pursuing Expungement Act. This bipartisan bill would reduce the financial and administrative burden on states with respect to expunging cannabis offenses. Specifically, the bill would create a new grant program under the U.S. Department of Justice, the State Expungement Opportunity Grant Program, and authorize it to be funded up to $20.0 million over the span of fiscal years 2024-2033.

On April 19, 2023, Rep. Lee (D-CA) introduced the Veterans Medical Marijuana Safe Harbor Act, with twelve (12) cosponsors. Sen. Brian Schatz (D-HI) led a companion measure filed on April 20, 2023. The bills seek to legalize medical cannabis for military veterans. Physicians employed by the U.S. Department of Veterans Affairs would also be permitted to make recommendations for medical cannabis for the first time under the bill.

On April 20, 2023, Rep. Brian Mast (R-FL) filed the Gun Rights and Marijuana Act, which would allow medical cannabis patients and adult-use consumers to purchase and possess firearms.

On December 7, 2023, Rep. Joyce (R-OH), joined by four colleagues— Rep. Blumenauer (D-OR), Rep. Mast (R-FL), Rep. Lori Chavez‐DeRemer (R-OR), and Rep. Troy Carter (D-LA)— introduced a revised version of the Strengthening the Tenth Amendment Through Entrusting States Act. The bill removes marijuana as a substance covered by the federal Controlled Substances Act. This means marijuana will no longer be on the DEA’s list of controlled substances. It would also federally decriminalize people using, selling, or transferring marijuana if it is legal in their state, territory, or tribal reservation and if they comply with state regulations. Finally, it allows for interstate commerce in marijuana and would authorize the federal government to regulate and track interstate marijuana commerce to make sure the commerce remains between jurisdictions where it is legal.

On April 30, 2024, the DEA publicly recommended that cannabis be rescheduled from a Schedule I controlled substance to a Schedule III controlled substance. The DEA recommendation was reviewed by the White House Office of Management and Budget (“OMB”). Subsequent to OMB’s review, the DEA proposal was published in the federal register, and the formal rule making process began during which the DEA received public comment on its rescheduling plan. After the close of the public comment period, the DEA scheduled a hearing before an Administrative Law Judge (“ALJ”). On October 31, 2024, shortly after DEA Administrator Anne Milgram signed off on over two dozen witnesses to participate in the rescheduling hearing, Chief ALJ John Mulrooney issued a preliminary order signaling the information provided on those set to testify was insufficient and requesting additional details and potential availability for a formal hearing in January or February 2025. The order from the DEA ALJ said that selected participants must provide such details by November 12, 2024.

On December 2, 2024, the DEA held its first hearing on the Biden administration's cannabis rescheduling proposal, focusing on procedural and logistical matters. The judge emphasized that the hearings are not intended to debate the merits of cannabis. This initial session set the stage for substantive hearings in early January 2025. The first hearings were set to begin the week of January 20, 2025. However, DEA Chief ALJ Mulrooney issued a ruling on January 6, 2025, that included the cancellation of a hearing scheduled for January 21, 2025, pending the outcome of an “interlocutory appeal” to the agency’s eventual administrator. While Chief ALJ Mulrooney rejected key arguments from rescheduling proponents about how alleged improper communications and witness selection decisions by DEA

Administrator Anne Milgram warranted the agency’s removal from the process altogether, he ultimately granted a request for leave to file an interlocutory appeal and staying the proceedings for at least three months.

THE STATES IN WHICH WE OPERATE, THEIR LEGAL FRAMEWORK AND HOW IT AFFECTS OUR BUSINESS

Illinois Operations

The Compassionate Use of Medical Cannabis Pilot Program Act, which allows individuals diagnosed with a debilitating medical condition access to medical cannabis, became effective January 1, 2014. There were over forty-one (41) qualifying conditions as part of the initial medical program.

The Opioid Alternative Pilot Program launched on January 31, 2019, and allows patients that receive, or are qualified to receive, opioid prescriptions access to medical cannabis as an alternative in situations where an opioid could generally be prescribed. Under this program, patients with doctor approval can receive near-immediate access to cannabis products from an Illinois licensed dispensary. The Opioid Alternative Pilot Program eliminates the previously required fingerprinting and background checks that often delay patients’ access to medical cannabis by up to three months.

In January 2019, J.B. Pritzker (D) was sworn into office as governor of Illinois. Cresco Labs’ CEO and co-founder, Charles Bachtell, was appointed to the Cannabis Legalization Subcommittee of the governor’s transition team. Cannabis Legalization was one of four subcommittees under the governor’s Restorative Justice and Safe Communities Transition Committee. The primary goals of the Cannabis Legalization Subcommittee were to evaluate and develop implementation recommendations for the governor’s platform on legalizing cannabis.

In June 2019, the Illinois House of Representatives and Senate passed Senate Bill (“SB”) 2023 which added eleven (11) additional debilitating illnesses such as chronic pain, migraines and irritable bowel syndrome to the list of qualifying medical conditions. This bill was signed into law in August 2019 by Governor Pritzker.

Additionally, in June 2019, Governor Pritzker signed the Cannabis Regulation and Taxation Act (“CRTA”) into law, making Illinois the 11th state to legalize recreational cannabis. Adult-use sales of cannabis in Illinois began on January 1, 2020.

Cresco Labs is licensed to operate in the state of Illinois as a medical and adult-use cultivator and product manufacturer. Phoenix Farms, LLC (“Phoenix”), PDI Medical III, LLC (“PDI”), FloraMedex, LLC (“FloraMedex”), MedMar Lakeview, LLC (“MedMar Lakeview”) and MedMar Rockford, LLC (“MedMar Rockford”) are each licensed to operate retail dispensaries in the state of Illinois. Further, each of these medical and adult-use dispensary licenses allowed for one (1) additional adult-use dispensary license, for a total of ten (10) dispensary locations, which are all now open and branded as Sunnyside* dispensaries. In November 2021, the Company relocated its Sunnyside* dispensaries in Buffalo Grove and Lakeview (Chicago) to larger facilities. The 10,000 square-foot Sunnyside* Lakeview location is approximately 400 feet from Wrigley Field, the home of the Chicago Cubs, making it the closest cannabis dispensary in the country to a national sports stadium. Under applicable laws, the licenses permit Cresco Labs and its subsidiaries to collectively cultivate, manufacture, process, package, sell and purchase cannabis pursuant to the terms of the licenses, which are issued by the Illinois Department of Agriculture (“IDOA”) and the Illinois Department of Financial and Professional Regulation (“IDFPR”) under the provisions of the Illinois Revised Statutes 410 ILCS 130 and 410 ILCS 705. All licenses are, as of the date hereof, active with the state of Illinois, including three (3) hemp processor and transportation licenses. There are currently nine (9) categories of licenses in Illinois: (i) adult-use cultivation center (ii) craft grower; (iii) adult-use dispensing organization; (iv) infuser; (v) transporter; (vi) community college cannabis vocational pilot program; (vii) medical cannabis cultivation center; (viii) medical cannabis dispensing organization; and (ix) laboratory testing. The licenses are independently issued for each approved activity.

All cultivation/processing establishments and transporters must register with the IDOA, and all dispensaries must register with the IDFPR. If applications contain all required information after vetting, establishments are issued a

license/registration certificate. Registration certificates for medical cannabis operations are valid for a period of one (1) year and are subject to annual renewals after required fees are paid and the business remains in good standing. Registration certificates for adult-use cultivation are valid for a period of one (1) year. Registration certificates for adult-use dispensing are valid for a period of two (2) years. Registration certificates for both adult-use cultivation and dispensing are subject to renewals after required fees are paid and the business remains in good standing. Renewal requests are typically communicated through email from the IDOA or IDFPR and include a renewal form. While the Company’s compliance controls have been developed to mitigate the risk of any material violations of a license arising, there is no assurance that Illinois cannabis licenses will be renewed in the future in a timely manner. Any unexpected delays or costs associated with the licensing renewal process could impede the ongoing or planned operations of Illinois cannabis and could have a material adverse effect on the Company’s business, financial condition, results of operations, or prospects.

In June 2023, Governor Pritzker signed a budget bill that includes provisions that will allow licensed cannabis businesses to take state tax deductions that are currently prohibited at the federal level due to Internal Revenue Code (“IRC”) Section 280E. The key section now enacted decouples cannabis businesses from the federal tax policy, which currently bans the industry from making key deductions that are available to other traditional markets, significantly increasing the effective tax rate that they pay. The provision will be added to the state’s existing tax code to allow cannabis business deductions for “an amount equal to the deductions and credits that were disallowed under Section 280E of the IRC for the taxable year” as of the current tax year.

On September 14, 2023, Chicago 2nd Ward Alderman and Public Safety Committee Chairman Brian Hopkins introduced an ordinance that would limit the sale of Delta-8 and other intoxicating, hemp-derived products. Under Hopkins’ plan, only state-licensed marijuana businesses could sell most tetrahydrocannabinol (“THC”) products in Chicago. That includes synthetic cannabis like products containing Delta-8, Delta-10 and THC-O. Other businesses could only stock hemp-based offerings with negligible amounts of Delta-9 that correspond with the Farm Bill. They also could not call themselves dispensaries, advertise the sale of THC, or use iconography commonly associated with cannabis, like images of a cannabis plant. The ordinance was referred to the City Rules Committee and is awaiting a hearing.

On December 8, 2023, Illinois Governor Pritzker signed a bill into law that waives the annual licensing fees for existing cannabis transporters for three years beginning January 1, 2024. The legislation, SB 1559, also restricts the IDOA from making available or accepting new license applications for cannabis transporters until January 2027. In addition, the new law provides that upon completion of a disparity and availability study published by the Illinois Cannabis Regulation Oversight Office, the IDOA may modify or change the licensing application process to reduce or eliminate barriers and remedy any discrimination identified in the study. The disparity and availability study was published by the Illinois Cannabis Regulation Oversight Office on July 11, 2024.

In May 2024, Illinois State Senator Kimberly Lightford (D) introduced a bill to ban synthetic and intoxicating hemp products, including Delta-8 THC, due to concerns over safety and unregulated market practices. The bill, which sought to clarify existing laws and impose restrictions on these products, passed the Senate with unanimous bipartisan support (52-0). However, it stalled in the House and was not brought to a vote. In December 2024, Governor Pritzker announced his support for this bill in a press conference.

In January 2025, Senator Lightford’s bill stalled once again in the Illinois House. The governor stated that he would explore using his executive powers to protect youth from unregulated hemp products but emphasized that legislative action is essential to fully address the issue.

Illinois Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

Cresco Labs, LLC

Adult-Use Cultivation Center License

License Number: 1503060739-AU

Kankakee

03/30/2026

License to operate an adult-use cultivation center

Adult-Use Cultivation Center License

License Number: 1503060740-AU

Lincoln

03/30/2026

License to operate an adult-use cultivation center

Adult-Use Cultivation Center License

License Number: 1503060741-AU

Joliet

03/30/2026

License to operate an adult-use cultivation center

Medical Cannabis Cultivation Center Operating Permit

License Number: 1503060739

Kankakee

05/18/2025

License to operate a medical cannabis cultivation center

Medical Cannabis Cultivation Center Operating Permit

License Number: 1503060740

Lincoln

03/09/2026

License to operate a medical cannabis cultivation center

Medical Cannabis Cultivation Center Operating Permit

License Number: 1503060741

Joliet

03/09/2026

License to operate a medical cannabis cultivation center

Industrial Hemp Processor License

License Number: 1204-301

Kankakee

12/31/2025

License to process industrial hemp

Industrial Hemp Processor License

License Number: 1204-302

Joliet

12/31/2025

License to process industrial hemp

Industrial Hemp Processor License

License Number: 1204-303

Lincoln

12/31/2025

License to process industrial hemp

Transporter License

1503060741-TR

Joliet

07/14/2025

License to transport cannabis

Transporter License

1503060740-TR

Lincoln

07/14/2025

License to transport cannabis

Transporter License

1503060739-TR

Kankakee

07/14/2025

License to transport cannabis

Holding Entity

Permit/License

City

Expiration Date

Description

Phoenix Farms of Illinois, LLC

Registered Medical Cannabis Dispensing Organization Certificate

License: 280.000035

Champaign

04/26/2025

License to operate a medical cannabis dispensary

Registered Adult-Use Cannabis Dispensing Organization Certificate

License: 284.000006

Champaign

03/31/2026

License to operate an adult-use cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000056

Danville

03/31/2026

License to operate an adult-use cannabis dispensary

PDI Medical III, LLC

Registered Medical Cannabis Dispensing Organization Certificate

License: 280.000016

Buffalo Grove

12/07/2025

License to operate a medical cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000009

Buffalo Grove

03/31/2026

License to operate an adult-use cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000080

Naperville

03/31/2026

License to operate an adult-use cannabis dispensary

FloraMedex, LLC

Registered Medical Cannabis Dispensing Organization Certificate

License: 280.000034

Elmwood Park

04/18/2025

License to operate a medical cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000010

Elmwood Park

03/31/2026

License to operate an adult-use cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000061

Schaumburg

03/31/2026

License to operate an adult-use cannabis dispensary

Holding Entity

Permit/License

City

Expiration Date

Description

MedMar Lakeview, LLC

Registered Medical Dispensing Organization Certificate

License: 280.000050

Chicago

01/13/2026

License to operate a medical cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000008

Chicago

03/31/2026

License to operate an adult-use cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000053

Chicago

03/31/2026

License to operate an adult-use cannabis dispensary

MedMar Rockford, LLC

Registered Medical Cannabis Dispensing Organization Certificate

License: 280.000013

Rockford

11/24/2025

License to operate a medical cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000007

Rockford

03/31/2026

License to operate an adult-use cannabis dispensary

Registered Adult-Use Dispensing Organization Certificate

License: 284.000059

South Beloit

03/31/2026

License to operate an adult-use cannabis dispensary

Illinois License and Regulations

The medical dispensary licenses permit Cresco to purchase cannabis and cannabis products from cultivation/processing facilities and allow the sale of medical cannabis and cannabis products to registered patients at five (5) of the Illinois locations. The adult-use dispensary license permits Cresco to purchase adult-use cannabis and cannabis products from cultivation/processing facilities, craft growers and infusers, and allows the sale of adult-use cannabis and cannabis products to customers aged twenty-one (21) or older at all Illinois dispensary locations. As of December 31, 2024, the Company has ten (10) Sunnyside* dispensary locations in Illinois, the maximum allowed by the State of Illinois. Two (2) of the ten (10) are located within the City of Chicago.

The medical cultivation licenses permit Cresco to acquire, possess, cultivate, manufacture/process cannabis into edible medical cannabis products and/or medical cannabis-infused products, deliver, transfer, have tested, transport, supply, or sell cannabis and related supplies to medical cannabis dispensaries. The adult-use cultivation licenses permit Cresco to acquire, possess, cultivate, manufacture/process adult-use cannabis into edible cannabis products and/or cannabis-infused products, deliver, transfer, have tested, transport, supply, or sell cannabis and related supplies to dispensing organizations, craft growers, infuser organizations, and transporters. In September 2019, the three (3) cultivation facilities were approved for growing adult-use cannabis by the IDOA, for a total cultivation capacity of 630,000 square feet, the maximum allowed by law.

The transporting organization licenses allow Cresco to transport cannabis or cannabis-infused products.

Illinois Reporting Requirements

The State of Illinois currently uses BioTrack as the state’s computerized track-and-trace (“T&T”) system used to track commercial cannabis activity and movement across the distribution chain (“seed-to-sale”) transactions. Individual licensees, whether directly or through third-party integration systems, are required to push data to the state to meet all reporting requirements. Phoenix, PDI, FloraMedex, MedMar Lakeview, and MedMar Rockford use the commercial version of BioTrack as their in-house computerized seed-to-sale software for production operations and Dutchie for their retail operations, which integrate with the state’s BioTrack program and captures the required data points for cultivation, manufacturing, and retail as required in the Illinois Compassionate Use of Medical Cannabis Program Act and the CRTA.

Illinois Inspection, Storage and Security Requirements

As to its cultivation facilities, Illinois regulations require Cresco to store cannabis and cannabis-infused products in a safe, vault, or secured room in such a manner to prevent diversion, theft, or loss. Any cannabis that is not a finished product must likewise be maintained in a secured area within the facility only accessible to authorized personnel. All locks and security equipment safeguarding the cannabis must be kept in good working order, and the storage areas must be locked and protected from unauthorized access at all times.

The cultivation facilities must also have an operational 24-hour, seven (7) days a week, closed-circuit television surveillance system on the premises that complies with certain regulatory minimum standards. Access to the surveillance area is restricted to only those people who are essential to surveillance operations, law enforcement agencies, security system service personnel, and the regulator. In addition, video surveillance recordings shall be retained for ninety (90) days at the facilities and an additional ninety (90) days off-site.

The cultivation facilities must maintain and use a professionally monitored robbery and burglary alarm system that meets certain regulatory minimum standards. A qualified alarm system vendor must test the system annually.

With respect to its Illinois dispensaries, Cresco must store inventory on-site in a secured and restricted access area consistent with the security regulations and tracked in accordance with the inventory tracking regulations. Any containers storing medical cannabis or cannabis products that have been tampered with or opened must be stored separately until disposed; such materials can only be stored at the dispensary for one week. Dispensaries are monitored by the IDFPR inspectors in addition to the Illinois State Police (“ISP”).

The dispensaries must also implement security measures to deter and prevent entry into and theft from restricted access areas that contain cannabis and/or currency, including having a commercial-grade alarm and surveillance system installed by an Illinois licensed private alarm contractor or private alarm contractor agency. The facility must also have security measures to protect the premises, registered qualifying patients, designated caregivers, adult-use customers, and dispensing organization agents.

Regulatory oversight in Illinois is primarily bifurcated between two (2) agencies. Cultivation centers, craft growers, infusers, and transporters are licensed and monitored by the IDOA, and dispensary facilities are licensed and monitored by the IDFPR. All facility types also receive oversight from the ISP. At cultivation facilities, ISP performs on-site inspections at least monthly, while IDOA performs weekly scheduled on-site inspections. Dispensary facilities are inspected on a random cadence by IDFPR, generally each quarter, by a combination of both on-site physical inspections and electronic desk reviews of seed-to-sale reporting data. ISP also performs dispensary inspections monthly.

Illinois Transportation Requirements

All cannabis transported between cultivation and dispensary facilities must be transported in a properly insured, state registered delivery vehicle. Cannabis and cannabis products must be separated by individual scheduled deliveries, within a locked receptacle, with a pre-generated delivery manifest for each individual scheduled delivery.

Pennsylvania Operations

The Pennsylvania medical marijuana program was signed into law on April 17, 2016, under Act 16 and provided access to state residents with one (1) of twenty-one (21) qualifying conditions. The state, which consists of over twelve (12) million U.S. citizens and qualifies as the fifth largest population in the U.S., operates as a high-barrier market with very limited market participation. The state originally awarded only twelve (12) licenses to cultivate/process and twenty-seven (27) licenses to operate retail dispensaries (which entitled holders up to three (3) medical dispensary locations). Out of the hundreds of applicants in each license category, Cresco Yeltrah, LLC (“Yeltrah”) was awarded one (1) medical cannabis grower/processor license in Pennsylvania and one (1) dispensary license allowing three (3) dispensary locations in Pennsylvania. Cresco Labs was awarded the second highest overall score during the application process. On June 30, 2021, Pennsylvania Governor Tom Wolf (D) signed into law PA House Bill (“HB”) 1024, amending Act 16. HB 1024 implemented several changes to Act 16 including but not limited to the ability for grower/processors to obtain and transport bulk post-harvest plant material between grower/processors to process medical marijuana. The amendatory legislation also expanded the list of qualifying conditions, permits limited remediation of cannabis flower, requires the Department of Agriculture to update its list of approved pesticides, expands the number of clinical registrants, and affords clinical registrants with the same rights as grower/processors.

Retail sales commenced in February 2018 to a limited number of retail locations across the state. On February 15, 2018, Yeltrah was the first grower/processor to release product into the Pennsylvania market, approximately six (6) weeks ahead of any other producer, and its dispensary was the first to sell product to patients in the state.

On March 22, 2018, it was announced that the final phase of the Pennsylvania medical marijuana program would initiate its rollout, which would include thirteen (13) additional cultivation/processing licenses and twenty-three (23) additional dispensary licenses. The application period ran from April 2018 through May 2018. Yeltrah submitted additional dispensary applications and in December 2018 one (1) additional dispensary license was obtained to open three (3) additional dispensary locations, for a total of six (6) dispensary locations in the State of Pennsylvania. All six (6) dispensary locations are currently operational.

Under applicable laws, the licenses permit Yeltrah to cultivate, manufacture, process, package, sell, and purchase medical marijuana pursuant to the terms of the licenses, which are issued by the Pennsylvania Department of Health (“PDOH”) under the provisions of Medical Marijuana Act (35 P.S. §10231.101 — 10231.2110) and Chapters 1141a, 1151a, and 1161a of the Pennsylvania regulations. In the latter half of 2022, the PDOH completed the process of revising its medical regulations, which were implemented in the first quarter of 2023.

There are three (3) categories of licenses in Pennsylvania: (i) grower/processer, (ii) dispensary, and (iii) clinical registrant. The Yeltrah licenses are independently issued for each approved activity for use at Yeltrah facilities in Pennsylvania.

All grower/processor establishments and all dispensaries must register with the PDOH. Registration certificates are valid for a period of one (1) year and are subject to annual renewals after required fees are paid and the business remains in good standing. While the Company’s compliance controls have been developed to mitigate the risk of any material violations of a license arising, there is no assurance that Pennsylvania cannabis licenses will be renewed in the future in a timely manner. Any unexpected delays or costs associated with the licensing renewal process could impede the ongoing or planned operations of Pennsylvania cannabis and could have a material adverse effect on the Company’s business, financial condition, results of operations, or prospects.

On November 24, 2021, Cresco Labs completed its acquisition of Bay, LLC d/b/a Cure Pennsylvania (“Bay”) for aggregate consideration of $89.0 million. The acquisition added one (1) additional dispensary license, which allowed for three (3) additional dispensary locations in the State of Pennsylvania. All three (3) dispensary locations are operational and have been rebranded as Sunnyside* dispensaries.

On December 9, 2021, Cresco Labs completed its acquisition of Laurel Harvest Labs, LLC (“Laurel Harvest”) for consideration equal to $136.7 million. Laurel Harvest’s permit is a Clinical Registrant permit license (“CR”). A CR

permittee is approved by the PDOH to hold a permit as both a grower/processor and a dispensary. At the time of the acquisition, Laurel Harvest had one (1) operational dispensary in Montgomeryville. The CR permit entitled Laurel Harvest to an additional five (5) dispensary locations throughout the Commonwealth. In the first quarter of 2022, the dispensary was rebranded as a Sunnyside* dispensary. On February 8, 2023, a second dispensary under the Laurel Harvest license opened in Erie, PA. On June 29, 2023, the Company announced the opening of the third and fourth dispensaries under the Laurel Harvest license in Somerset and Washington, PA. The fifth dispensary under the Laurel Harvest license opened on October 5, 2023 in Altoona, PA. The sixth dispensary, location in Gettysburg, PA, opened on February 23, 2024.

On September 1, 2022, the Company closed on a sale and leaseback transaction to sell its Brookville, Pennsylvania, facility to Aventine Property Group (“Aventine”). Concurrent with the closing of the sale, the Company entered into a long-term, triple-net lease agreement with Aventine regarding the property and will continue to operate the facility as a permitted cannabis cultivation and processing facility.

Governor Josh Shapiro (D) frequently issued support for legalizing adult-use cannabis during his campaign. Democrats won enough seats in the November 2022 midterm elections to control Pennsylvania’s House for the first time in over a decade. Governor Shapiro has said legalization efforts must include criminal justice reform, specifically mentioning expungement of non-violent marijuana convictions. Governor Shapiro included legalizing and taxing cannabis in his 2023-2024 budget. A bipartisan pair of Pennsylvania senators have introduced a bill to legalize cannabis in the state. Senators Dan Laughlin (R) and Sharif Street (D) filed the legislation in June 2023, about two months after first announcing their plans to team up on a reform push again after their joint cannabis efforts in prior sessions. The two senators previously sponsored a legalization bill that was not ultimately enacted in the previous session, but they say the filed proposal represents a significant improvement that they hope to advance.

On December 15, 2023, Pennsylvania Governor Josh Shapiro signed a bill to allow all licensed medical cannabis grower-processors to serve as retailers and sell their cannabis products directly to patients. Under the measure, the state Department of Health will create a process to allow the state’s ten (10) independent marijuana grower-processors to apply to obtain a dispensary permit to engage in direct commerce with patients. Additionally, the state’s four (4) independent dispensaries can also get grower permits to cultivate products in-house.

On April 24, 2024, the Company finalized its acquisition of Keystone Integrated Care, LLC (“Keystone”). Prior to the acquisition, Keystone operated two (2) dispensaries in Pittsburgh, PA and Greensburg, PA and held a third dispensary license. With the additional license, the Company has the opportunity to open one (1) more dispensary within the Commonwealth, further expanding our presence and reach and bringing the total number of dispensaries added to three (3). See “Recent Developments” for additional information related to this acquisition.

In June 2024, Pennsylvania State Representatives Aaron Kaufer (R) and Emily Kinkead (D) introduced a bipartisan bill to legalize adult-use cannabis, reflecting growing momentum as neighboring states embrace legalization. The legislation, supported by twenty (20) cosponsors, proposes a regulated cannabis market overseen by the Pennsylvania Department of Agriculture, prioritizing social equity, small businesses, and public safety. Key features include permitting adults twenty-one (21) and older to purchase and possess up to thirty (30) grams of cannabis, expungement pathways for prior cannabis convictions, and tax revenues allocated to local governments, law enforcement, and drug prevention initiatives. While the proposal has sparked optimism, it did not receive a committee hearing before the legislative session concluded.

In October 2024, Pennsylvania enacted legislation allowing medical cannabis businesses to deduct ordinary business expenses on their state tax returns, counteracting the restrictions imposed by IRS Code 280E at the federal level. This tax relief was included in the broader budget reforms and ensures state-licensed cannabis companies can claim deductions typically denied under federal law. The move is seen as a significant step in alleviating financial pressures on the cannabis industry within the state, providing immediate benefits for tax filings starting in 2024.

Pennsylvania

Pennsylvania Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

Cresco Yeltrah, LLC

Medical Marijuana Grower/Processor Permit Applicant ID: GP-6012-17

Brookville

06/20/2025

Permit to grow and process medical marijuana

Medical Marijuana Dispensary Permit Applicant ID: D-5016-17

Butler

06/29/2025

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-5016-17

Pittsburgh

06/29/2025

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-5016-17

New Kensington

06/29/2025

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-18-1007

Wyomissing

12/18/2025

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-18-1007

Philadelphia

12/18/2025

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-18-1007

Ambler

12/18/2025

Permit to operate a medical marijuana dispensary

Bay, LLC

Medical Marijuana Dispensary Permit Applicant ID: D-1069-17

Lancaster

06/29/2025

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-1069-17

Philadelphia

06/29/2025

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-1069-17

Phoenixville

06/29/2025

Permit to operate a medical marijuana dispensary

Laurel Harvest Labs, LLC

Medical Marijuana Grower/Processor Permit Applicant ID: CR02-GP20-1202

Mount Joy

02/20/2026

Permit to grow and process medical marijuana

Medical Marijuana Dispensary Permit Applicant ID: CR02-D20-2202

Erie

02/20/2026

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: CR02-D20-2202

Montgomeryville

02/20/2026

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: CR02-D20-2202

Somerset

02/20/2026

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: CR02-D20-2202

Washington

02/20/2026

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: CR02-D20-2202

Altoona

02/20/2026

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: CR02-D20-2202

Gettysburg

02/20/2026

Permit to operate a medical marijuana dispensary

Keystone Integrated Care, LLC

Medical Marijuana Dispensary Permit Applicant ID: D-5006-17

Pittsburgh

06/29/20241

Permit to operate a medical marijuana dispensary

Medical Marijuana Dispensary Permit Applicant ID: D-5006-17

Greensburg

06/29/20241

Permit to operate a medical marijuana dispensary

1 The PDOH administratively extended the expiration date of this license while it completes the license renewal.

Pennsylvania License and Regulations

The retail dispensary permits authorize Yeltrah, Bay, Laurel Harvest, and Keystone to purchase medical marijuana and medical marijuana products from medical growing/processing facilities and allows the sale of medical marijuana and medical marijuana products to registered patients.

The medical grower/processor permit authorizes Yeltrah to acquire, possess, cultivate, manufacture/process into edible medical marijuana products and/or medical marijuana-infused products, deliver, transfer, have tested, transport, supply, or sell medical marijuana and related supplies to medical marijuana dispensaries.

The CR held by Laurel Harvest authorizes the permittee to operate as both a grower/processor and a dispensary and enter into a research contract with an academic clinical research center that operates or partners with an acute care hospital licensed and operating in the Commonwealth. Laurel Harvest has a contractual relationship with Temple University, which has established one of the most sophisticated cannabis research programs in the country.

Pennsylvania Reporting Requirements

Pennsylvania uses the MJ Platform as its computerized T&T system for seed-to-sale transactions. The MJ platform is a cloud-based, seed-to-sale, cannabis compliance software for marijuana businesses. Individual permittees are required to use the MJ Platform to push data to the state to meet all reporting requirements. Yeltrah, Bay, Laurel Harvest, and Keystone use the MJ Platform as their in-house computerized seed-to-sale software, which integrates with the state’s MJ Platform program and captures the required data points for growing, processing, and dispensing as required in the Pennsylvania medical marijuana laws and regulations.

Pennsylvania Inspection, Storage and Security

Pennsylvania regulations require the maintenance of storage areas at Yeltrah’s and Laurel Harvest’s grower/processor facilities in a clean and orderly condition, free from infestation. These separate and locked limited access areas are used for the grower/processor to store seeds, immature plants, mature plants, and medical marijuana that is expired, damaged, deteriorated, mislabeled, contaminated, recalled, or whose containers or packages have been opened or breached until such product is destroyed or otherwise disposed of.

The regulations also require Yeltrah’s and Laurel Harvest’s grower/processor facilities to have a commercial grade security system to prevent unauthorized entry and to prevent and detect any attempted diversion. This security must include an alarm system that covers the interior and exterior of the facility, including a silent alarm.

A dispensary must also have a locked limited access area for the storage of medical marijuana that is expired, damaged, deteriorated, mislabeled, contaminated, recalled, or whose containers or packages have been opened or breached until such product is returned to the grower/processor.

Yeltrah’s, Bay’s, Laurel Harvest’s and Keystone’s dispensaries must have a security system with the same features as that for the grower/processor facility. This system must be professionally monitored 24-hours a day and seven (7) days a week with fixed cameras on the interior and exterior of the facilities. The surveillance system must store data for a period of 180 days (absent special circumstances) in a readily available format for investigative purposes.

Inspections of both dispensary and grower/processor sites in Pennsylvania is the responsibility of the PDOH. Other than facility modifications, or other requested reviews, inspections are on a random cadence.

Pennsylvania Transportation Requirements

Transporting of marijuana and marijuana products between dispensaries and grower/processor locations are closely monitored by the PDOH. All delivery vehicles are registered with the regulatory body and must be properly insured. All marijuana and marijuana product for transport is properly manifested prior to leaving any facility and is held under lock-and-key during the duration of the transport.

Ohio Operations

HB 523, effective on September 8, 2016, legalized medical marijuana in Ohio. The Ohio Medical Marijuana Control Program (“OMMCP”) allows people with certain medical conditions, upon the recommendation of an Ohio-licensed physician certified by the State Medical Board, to purchase and use medical marijuana. HB 523 required that the framework for the OMMCP become effective as of September 2018. This timeframe allowed for a deliberate process to ensure the safety of the public and to promote access to a safe product.

The Division of Cannabis Control (“DCC”), within the Department of Commerce, oversees the OMMCP and Patient and Caregiver Registry, and licenses and regulates medical marijuana cultivators, processors, dispensaries, and testing laboratories. Prior to the DCC, the OMMCP was administered by both the Board of Pharmacy and the Department of Commerce. The State Medical Board of Ohio is responsible for certifying physicians to recommend medical marijuana and approving qualifying conditions.

Several forms of medical marijuana are legal in Ohio, these include: inhalation of marijuana through a vaporizer (not direct smoking), oils, tinctures, plant material, edibles, lotions, creams, patches, and any other forms approved by the State of Ohio.

Cresco Labs Ohio, LLC (“Cresco Labs Ohio”) applied for and, on November 30, 2017, received one (1) cultivation license. Cresco Labs Ohio’s cultivation facility is a hybrid greenhouse structure located in Yellow Springs, Ohio. On December 12, 2018, Cresco Labs Ohio was awarded one (1) dispensary license located in Wintersville, the first dispensary Certificate of Operation in the state. Medical retail sales commenced on January 16, 2019, with the first cannabis sale taking place at the Wintersville dispensary. This was the second state medical marijuana program in which the Company was first to market.

On June 8, 2020, Cresco Labs Ohio was granted a provisional processing license by the State of Ohio. Cresco Labs Ohio received its Certificate of Operation to begin processing activities on June 11, 2021.

On February 16, 2021, the Company completed its acquisition of Verdant Creations, LLC for total consideration of $25.0 million. The acquisition added dispensaries in Cincinnati, Chillicothe, Newark, and Marion, Ohio. This acquisition brought the Company’s dispensary presence, which was medical-only at the time, in Ohio to five (5), the maximum allowed by the State of Ohio at that time.

On November 7, 2023, Ohio voters approved Issue 2, making Ohio the 24th state to legalize recreational marijuana. The law took effect on December 7, 2023, and allows for additional forms of cannabis to be sold to consumers.

In June 2024, Ohio issued its first provisional licenses for adult-use cannabis under its dual-use framework, with applications opening earlier in the year. These provisional licenses were granted to businesses already participating in the state’s medical marijuana program, enabling a quicker transition to adult-use sales once compliance requirements were met. On August 6, 2024, adult-use cannabis sales begin in Ohio.

All current medical marijuana operators in Ohio seeking to sell adult-use marijuana were required to transition to a dual-use license. A dual-use license allows operators to sell both medical and adult-use marijuana. Upon obtaining a dual-use license, the original medical license becomes inactive, effectively replaced by the dual-use license.

Cresco Labs Ohio successfully transitioned its medical Cultivation Tier 1 license, medical Processor license, and medical dispensing licenses to dual-use licenses. With its Tier 1 cultivation license, Cresco Labs Ohio also gains the ability to open three (3) additional dual-use dispensaries through what is known as the 10(B) application process. Once operational, this will bring Cresco Labs Ohio’s total dispensaries in the state to eight (8).

Cresco Labs Ohio’s five (5) dispensaries were all granted certificates of operation to serve both patients and adult-use customers and are operational as dual-use license holders. See “Recent Developments” for additional information.

In November 2024, Ohio State Senator Stephen Huffman (R) introduced SB 326, which seeks to ban intoxicating hemp products, including those containing cannabinoids like Delta-8 THC. The legislation would set strict caps on THC content in hemp products—allowing no more than 0.5 mg of Delta-9 THC per serving and 2 mg per package. Huffman argues that these unregulated products, widely available in convenience stores and often marketed to minors, pose public safety risks. The bill would not impact Ohio's regulated cannabis programs but aims to eliminate synthetic and hemp-derived intoxicants.

Ohio Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

Cresco Labs Ohio, LLC

CCC000013-00

Yellow Springs

09/13/2025

Dual-Use Cultivation License

CCD000027-00

Wintersville

07/01/2025

Dual-Use Dispensary License

CCP000012-00

Yellow Springs

06/10/2025

Dual-Use Processor License

Verdant Creations Newark, LLC

CCD000013-00

Newark

07/01/2025

Dual-Use Dispensary License

Verdant Creation Marion, LLC

CCD000129-00

Marion

07/01/2025

Dual-Use Dispensary License

Care Med Associates, LLC

CCD000024-00

Cincinnati

07/01/2025

Dual-Use Dispensary License

Verdant Creations Chillicothe, LLC

CCD000012-00

Chillicothe

07/01/2025

Dual-Use Dispensary License

Ohio License and Regulations

The dispensary licenses permit all of the Company’s Ohio dispensaries to purchase cannabis and cannabis products from cannabis cultivation and/or processing facilities and allows the sale of cannabis and cannabis products to medical patients and adult-use customers who are twenty-one (21) and over.

The cannabis cultivation and processor license permits Cresco Labs Ohio to acquire, possess, cultivate, manufacture/process into cannabis and cannabis products, deliver, transfer, have tested, transport, supply, or sell cannabis and related supplies to cannabis dispensaries.

Ohio cultivation and processor licenses are renewable annually by the DCC. Renewal applications are due at least thirty (30) days prior to the expiration date of the Certificate of Operation. The DCC shall grant a renewal if the renewal application was timely filed, the annual fee was timely paid, there are no reasons warranting denial of the renewal and the cultivator/processor passes inspection. Ohio dispensary licenses expire biennially on the date identified on the certificate. Renewal information, including a renewal fee, must be submitted at least forty-five (45) days prior to the date the existing certificate expires. If the dispensary is operated in compliance with Ohio dispensary regulations and the renewal fee is paid, the DCC shall renew the Certificate of Operation within forty-five (45) days after the renewal application is received.

Ohio Reporting Requirements

Ohio uses METRC as its computerized T&T system for seed-to-sale transactions, which integrates with the state’s METRC via application programming interface (“API”). Licensees are required to use METRC in Ohio to push data to the state to meet all reporting requirements. Cresco Labs Ohio integrates its in-house seed-to-sale tracking system for retail operations, Dutchie, with the commercial version of METRC, and with the state’s METRC software to capture the required data points as required in the Ohio medical marijuana laws and regulations.

Ohio Inspections, Storage and Security Requirements

For Cresco Labs Ohio’s dispensaries, a designated representative is responsible for providing supervision and control of cannabis and cannabis products to ensure that they are dispensed in accordance with the law and regulations. In addition, the dispensaries must have physical or electronic security over such items. Cresco Labs Ohio’s dispensaries must also maintain security (with alarms and surveillance equipment) as required by the regulations to prevent diversion and theft, as well as to protect patients or customers, caregivers, and employees.

Medical marijuana must also be stored in a secure area and tracked in the inventory tracking system. No person is permitted in secure areas unless under the personal supervision of a licensed dispensary employee. The storage area must be clean and free of infestation. Containers storing expired, damaged, deteriorated, misbranded, adulterated, or opened medical marijuana shall be separated from other medical marijuana until they are properly destroyed.

The regulations permit Cresco Labs Ohio to store cannabis inventory at its cultivation and processing facility in a designated, enclosed, locked facility identified in plans and specifications that it submitted to the DCC. This storage area can only be accessible by authorized individuals. On an annual basis, and as a condition to renewal of its cultivator and processor licenses, Cresco Labs Ohio must perform a physical, manual inventory, of the medical marijuana on hand and compare it to the annual report generated by the inventory tracking system. The cultivation and processing facility must install a commercial-grade security alarm system to prevent and detect diversion, theft, or loss. The facility also must maintain surveillance equipment to capture the entire facility and provide direct access to the regulator on a real-time basis. All equipment must be kept in good working order and inspected and tested on an annual basis by a third-party.

Ohio Transportation Requirements

Transporting cannabis and cannabis products between dispensaries and grower/processor locations must be properly manifested and is monitored by the DCC. All delivery vehicles are required to be registered with the OMMCP as required by state law.

California Operations

In 1996, California was the first state to legalize medical marijuana through Proposition 215, the Compassionate Use Act of 1996. This legalized the use, possession, and cultivation of medical marijuana by patients with a physician’s recommendation.

In 2003, SB 420 was signed into law establishing an optional identification card system for medical marijuana patients.

In September 2015, the California legislature passed three (3) bills collectively known as the “Medical Cannabis Regulation and Safety Act” (“MCRSA”). The MCRSA established a licensing and regulatory framework for medical marijuana businesses in California. The system created multiple license types for dispensaries, infused products manufacturers, cultivation facilities, testing laboratories, transportation companies, and distributors. Edible infused product manufacturers would require either volatile solvent or non-volatile solvent manufacturing licenses depending on their specific extraction methodology. Multiple agencies would oversee different aspects of the program and businesses would require a state license and local approval to operate. However, in November 2016, voters in California overwhelmingly passed Proposition 64, the “Adult-Use of Marijuana Act” (“AUMA”) creating an adult-use marijuana program for adults twenty-one (21) years of age or older. AUMA had some conflicting provisions with MCRSA, so in June 2017, the California State Legislature passed SB 94, known as Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which amalgamates MCRSA and AUMA to provide a set of regulations to govern medical and adult-use licensing regime for cannabis businesses in the State of California. MAUCRSA went into effect on January 1, 2018. Previously, the four (4) agencies that regulated marijuana at the state level are the Bureau of Cannabis Control (“BCC”), the California Department of Food and Agriculture, the California Department of Public Health (“CDPH”) and the California Department of Tax and Fee Administration (“CDTFA”). On July 12, 2021, California Governor Gavin Newsom (D) signed into law Assembly Bill (“AB”) 141, which established the Department of Cannabis Control (“DCC”). The DCC consolidates the BCC, CDTFA’s CalCannabis Licensing Division and CDPH’s Manufactured Cannabis Safety Branch into a single department. The DCC is charged with licensing, inspecting and providing regulatory oversight over all cannabis businesses in California.

California Operations — Cub City, LLC and Sonoma's Finest FKA FloraCal

The Company is licensed to cultivate, manufacture and distribute medical and adult-use cannabis, and cannabis-related products.

In March 2022, the DCC initiated a rule making process in which it promulgated a comprehensive regulatory proposal, including amendments to its current rules that would make permanent emergency rules that had been in effect since September 2021. Comments on the proposed rules were submitted by all interested parties by April 19, 2022. The DCC then considered the comments submitted and issued an updated rule set for a second comment period. A final version of the rules was filed by the DCC with the California Office of Administrative Law on September 26, 2022. The rules are now in effect. With respect to legislation, the California legislature passed AB 195, which was signed into law by Governor Newsom on June 30, 2022. AB 195 eliminates the cannabis cultivation tax and serves to shift responsibility for collecting the cannabis excise tax from distributors to retailers.

During the second quarter of 2022, the Company initiated a plan to shut down a cultivation facility and production facility in California. As a result of this plan, the Company exercised its early termination right to reduce the existing lease terms to 180 days. All operations at the facilities ceased in the third quarter of 2022 and the corresponding licenses were surrendered in the fourth quarter of 2022.

During the fourth quarter of 2022, management committed to a plan to restructure certain operations and activities within the California reporting unit. It was determined that the Company’s shift in strategy was an indicator of impairment for associated assets. $89.5 million in goodwill impairment and $1.0 million in impairment to ROU assets was recorded to the California reporting unit during 2022. During the first quarter of 2023, the Company adjusted the values of certain leases at the facilities impacted as a result of a change in the underlying assumptions regarding renewal options for those leases. Due to differences between the carrying amounts of the ROU assets and lease liabilities associated with these leases, a gain on lease termination of $1.1 million is included in Other (expense) income, net, in the Consolidated Statements of Operations. Further, the Company accelerated depreciation on leasehold improvements related to those leases, with additional depreciation expense taken on these leasehold improvements in the amount of $1.1 million during the first quarter of 2023.

During the third quarter of 2023, management determined it is more likely than not that the California reporting unit carrying values exceed their fair value due to updated forecasts and projections for the reporting unit. $9.9 million in intangible asset and goodwill impairment was recorded to the California reporting unit in the third quarter of 2023.

In October 2023, Governor Newsom signed the three (3) cannabis-related bills sent to his desk by lawmakers this session, approving measures related to business licensing changes, distribution of fines collected from illicit cannabis operations, and membership of a state marijuana task force. SB 833 will allow regulators at the DCC to approve requests from cannabis cultivators to change their license type to a smaller category or inactive status. AB 1448 stipulates that a portion of civil penalties that are collected following enforcement action against unlicensed marijuana businesses will be transferred from the state general fund to local treasurers in jurisdictions that brought the action against the illegal operators. AB 993 also adds representatives of the state Civil Rights Department and Department of Industrial Relations to an existing marijuana task force that is responsible for facilitating communication between state and local cannabis regulators.

During the third quarter of 2024, management determined it is more likely than not that the California reporting unit’s carrying value exceeded its fair value due to updated forecasts and projections for the reporting unit. As a result, $2.3 million of impairment charges reducing the carrying value of licenses was recognized.

In October 2024, Governor Newsom announced that a court rejected a legal challenge from the hemp industry seeking to block enforcement of the state’s updated hemp regulations. These regulations, enacted in 2021, aimed to align hemp-derived products with cannabis industry standards, including rigorous testing and labeling requirements to ensure consumer safety. The court upheld the state’s authority to enforce these rules, emphasizing the need for a consistent framework for all cannabis-related products in California.

California Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

Sonoma's Finest

Medium Indoor Cultivation (Annual)

CCL18-0002186

Unincorporated Sonoma County

03/21/2025

Cultivation: Medical Medium Indoor

Processor (Annual)

CCL19-0000639

Unincorporated Sonoma County

06/27/2025

Processor

Distribution (Annual)

C11-0001222-LIC

Unincorporated Sonoma County

06/25/2025

Distribution

Cub City, LLC

Small Indoor Cultivation (Provisional)

CCL18-0002062

Santa Rosa

03/21/2025

Cultivation: Medical Small Indoor

Nursery (Annual) CCL22-0000377

Santa Rosa

08/23/2025

Nursery

California License and Regulations

In the State of California, only cannabis that is grown in the state can be sold in the state. Although California is not a vertically-integrated system, the state also allows the Company to make a wholesale purchase of cannabis from, or a distribution of cannabis and cannabis product to, another licensed entity within the state.

In order to legally operate a medical or adult-use cannabis business in California, the operator must have both a local and state license. This requirement limits license holders to operate only in cities with marijuana licensing programs. Therefore, cities in California are allowed to determine if they will have a marijuana licensing program and determine the number of licenses they will issue to marijuana operators.

California state and local licenses are renewed annually. Each year, licensees are required to submit a renewal application. While renewals are annual, there is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner and there are no material violations noted against the applicable license, the Company would expect to receive the applicable renewed license in the ordinary course of business.

California Reporting Requirements

The State of California uses METRC as the state’s T&T system used to track seed-to-sale transactions. The system allows for other third-party system integration via API. Cresco utilizes an electronic system independent of METRC that integrates with METRC via API. T&T currently captures required data points for cultivation, distribution, and retail as stipulated in the corresponding regulatory agencies’ regulations.

California Inspections, Storage and Security

The current regulatory environment has a singular oversight body for all license types, California’s DCC. Cultivation and distribution facilities are also regularly inspected by local municipal and county boards to ensure compliance with local zoning and other ordinances.

New York Operations

New York States’s medical cannabis program was introduced in July 2014 when former Governor Andrew Cuomo (D) signed the Compassionate Care Act, which legalized medical cannabis oils for patients with certain qualifying conditions. Under this program, five (5) registered organizations (“ROs”) were licensed to dispense cannabis oil to patients, with the first sale to a patient completed in January 2016. In December 2016, the New York State Department of Health (“NYSDOH”) added chronic pain as a qualifying condition and in the month-and-a-half following the addition of chronic pain, the number of registered patients increased by 18%. In August 2017, the NYSDOH granted licenses to five (5) additional ROs.

In July 2018, the NYSDOH added opioid replacement as a qualifying condition, meaning any condition for which an opioid could be prescribed is now a qualifying condition for medical cannabis. In August 2018, former Governor Cuomo, prompted by an NYSDOH study which concluded the “positive effects” of cannabis legalization “outweigh the potential negative impacts,” appointed a group to draft a bill for regulating legal adult-use cannabis sales in New York.

On October 8, 2019, the Company completed its acquisition of Gloucester Street Capital, the parent entity of Valley Agriceuticals, LLC (“Valley Ag”). At the time, Valley Ag was one (1) of the ten (10) holders of a vertically-integrated license from NYSDOH allowing for the cultivation and processing of medical cannabis as well as the establishment of four (4) medical cannabis dispensaries in the State of New York.

On January 6, 2021, former Governor Cuomo announced a proposal to legalize and create a comprehensive system to oversee and regulate adult-use cannabis in New York as part of the 2021 State of the State. Under the Governor’s proposal, a new Office of Cannabis Management (the “OCM”) would be created to oversee the new adult-use program, as well as the state’s existing medical and cannabinoid hemp programs. Additionally, an equitable structure for the adult-use market will be created by offering licensing opportunities and assistance to entrepreneurs in communities of color who have been disproportionately impacted by the war on drugs.

On February 16, 2021, former Governor Cuomo announced 30-day amendments to the governor’s proposal to establish a comprehensive adult-use cannabis program in New York. Specifically, these amendments detailed how the $100.0 million in social equity funding will be allocated, enable the use of delivery services and refine which criminal charges will be enforced as it relates to the improper sale of cannabis to further reduce the impact on communities.

Former Governor Cuomo signed SB 854/AB 1248A on March 31, 2021, creating New York’s adult-use cannabis program. This legislation expands Cresco Labs’ potential dispensary footprint to eight (8), with three (3) dispensaries reserved to be co-located adult-use, allows existing vertical ROs to wholesale branded products and creates a strong social equity program with 50% of licenses dedicated to social equity applicants. The Cannabis Control Board (the “CCB”) that oversees the rollout of the program was seated in 2021. In December 2022, the OCM promulgated a series of adult-use regulations that would govern, among other things, the licensing process for the adult-use cannabis program. Those rules underwent a public comment and revision process and the revised version was introduced on June 14, 2023 for another public comment period. The public comment period closed on July 31, 2023 and finalized rules were adopted by the CCB on September 12, 2023. These rules went into effect as of September 27, 2023. OCM has adopted other adult-use regulations, including those governing packaging, labeling, marketing, advertising, and laboratories.

Previously, on March 30, 2022, proposed rules related to the issuance of conditional adult-use retail dispensary licenses were published by the OCM. Those rules underwent a public comment period and final rules were approved by the CCB on July 14, 2022. The regulations went into effect on August 3, 2022. In addition to the adoption of rules and ongoing rulemakings, on February 22, 2022, the current governor of New York, Kathy Hochul (D), signed legislation that provided a path for New York’s existing hemp operators to obtain provisional cannabis cultivator and processor licenses. Under that law, hemp farmers that were licensed with the Department of Agriculture as of December 31, 2021 would be allowed to cultivate up to 43,500 square feet outdoors, 25,000 square feet in

greenhouse facilities, or no more than 30,000 square feet comprising a combination of the outdoor and greenhouse space. The hemp businesses would be required to meet environmental sustainability, labor peace, and equity benchmarks to be allowed to cultivate and minimally process cannabis until June 2023. Hemp businesses issued provisional licenses are required to begin operations within six months of the license being issued. After June 2023, the hemp businesses are required to apply for a cultivator or processor license.

Through the aforementioned agreements and regulatory approval, Cresco Labs now has a license for a cultivation and manufacturing facility in the state of New York, as well as four (4) dispensary locations strategically located across the state. These four (4) dispensary locations are branded as Sunnyside* dispensaries. The Sunnyside* dispensary in Williamsburg, NY is temporarily closed at this time. The Company has successfully renewed its initial licenses and all licenses are, as of the date hereof, active with the state of New York.

Further, the state of New York’s fiscal year 2022 to 2023 budget included Section 280E deductions, which permits tax deductions for commercial cannabis activity. This applies to taxable years beginning on January 1, 2023. The budget also included a $200.0 million Social Equity Fund, which allows the state of New York to invest in a private fund to finance the leasing and equipping of up to one hundred fifty (150) conditional adult-use retail dispensaries in the state to be operated by individuals who have been impacted by the inequitable enforcement of marijuana laws.

Through the OCM, New York began issuing licenses for cannabis cultivation and processing in 2022. Approximately two hundred seventy-nine (279) conditional cultivation licenses have been granted along with approximately forty (40) conditional processor licenses. The application period for Conditional Adult-Use Retail Dispensary (“CAURD”) licenses was open from August 25, 2022 to September 25, 2022 and the state received approximately nine hundred (900) applications, for one hundred seventy-five (175) available licenses. On April 3, 2023, the CCB provisionally approved ninety-nine (99) more CAURD licenses, increasing New York’s total provisional retail dispensary licenses to one hundred sixty-five (165) at that time. The licenses included four (4) for Western New York, one (1) for Central New York, five (5) for Mid-Hudson and three (3) for Brooklyn. The CCB had previously been prevented from issuing provisional licenses in those regions because of a court injunction. On July 19, 2023, the CCB provisionally approved an additional two hundred twelve (212) CAURD licenses, bringing the total number of provisional retail dispensary licenses in the state to four hundred sixty-three (463). On October 4, 2023, Governor Hochul announced that hundreds of cultivation and retail licenses will be made available for individuals and businesses interested in legally growing and selling cannabis. In the same announcement, Hochul said the results of the aggressive enforcement against the illegal sales of cannabis state-wide resulted in more than 8,500 pounds of marijuana being seized with a street value of more than $42.0 million after two hundred forty-six (246) inspections.

On December 29, 2022, New York officially opened retail cannabis sales to adults over age twenty-one (21). Under the law passed in March 2021, consumers are allowed to purchase up to three (3) ounces of cannabis and twenty-four (24) grams of cannabis concentrate.

In June of 2023, Governor Hochul announced that Chicago Atlantic Admin, LLC (“Chicago Atlantic”) invested up to $150.0 million senior secured capital in the New York State Cannabis Social Equity Investment Fund (the “Fund”). The legislation that allowed for the Fund's creation provided for a $200.0 million cap of combined investments into it. With Chicago Atlantic's investment, the Fund received support to reach its funding goal of up to $200.0 million, which Governor Hochul and the legislature sought when it adopted legislation to create support for individuals affected by the unequal enforcement of cannabis prohibition.

Also in June 2023, Governor Hochul signed AB 7430 into law which extends certain authorizations of conditional adult-use cultivators and processors to minimally process and distribute cannabis products until June 1, 2024.

Also part of the 2024 budget, Governor Hochul signed a law that will allow the OCM to assess civil penalties against unlicensed cannabis businesses that would undercut their efforts, with fines of up to $20,000 a day for the most egregious conduct. This legislation also makes it a crime to sell cannabis and cannabis products without a license.

In the summer of 2023, New York regulators began accepting applications for cannabis businesses interested in organizing cannabis farmers markets in the state. The CCB voted to authorize Cannabis Growers Showcases (“CGS”). Regulators opened the applications and posted guidance and templates for municipal approval for the events. However, in January 2024, OCM announced the CGS would cease. Since its inception in late 2023, the CGS program generated more than $4.0 million in sales, according to the OCM. The agency’s rationale for winding them down before the end of the year was new retail dispensaries expected to open over the next few weeks and months, making CGS events moot.

Additionally, in July 2023, the New York City Economic Development Corporation (“NYCEDC”) posted a request for proposal (“RFP”), soliciting lenders and an administrator for its Cannabis NYC Loan Fund, which will provide low-cost financing to social equity applicants looking to enter the marijuana market. Officials are aiming to raise $20.0-$30.0 million for the fund, which was developed in partnership with the New York City Department of Small Business Services. That includes an initial infusion of $8.0 million from the city. The total will depend on private lenders’ response to the RFP.

During the third quarter of 2023, management determined it is more likely than not that the New York reporting unit carrying values exceed their fair value due to updated forecasts and projections for the reporting unit. $40.0 million in intangible asset and goodwill impairment was recorded to the New York reporting unit in the third quarter of 2023.

In 2024, New York’s cannabis program issued over six hundred (600) adult-use cannabis licenses, with approximately one hundred fifty (150) dispensaries operational statewide. Sales exceeded $1.0 billion in 2024. Local and state enforcement authorities are continuing efforts to crack down on unlicensed cannabis stores.

In October 2024, the New York City Department of Small Business Services and the NYCEDC launched applications for the Cannabis NYC Loan Fund, aimed at supporting cannabis entrepreneurs in the city. This initiative provides low-interest loans to social equity licensees, prioritizing individuals disproportionately impacted by cannabis criminalization. The fund is part of the Cannabis NYC program, which seeks to create a sustainable and inclusive cannabis industry by offering financial assistance, education, and support services.

New York Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

Valley Agriceuticals, LLC

Certificate of Registration Number: MM0801M

Middletown

11/16/2025

Acquiring, possession, manufacture, sale, transporting, and distributing medical marijuana

Certificate of Registration Number: MM0802D

Brooklyn

11/16/2025

Acquiring, possession, manufacture, sale, transporting, and distributing medical marijuana

Certificate of Registration Number: MM0803D

Huntington

11/16/2025

Acquiring, possession, manufacture, sale, transporting, and distributing medical marijuana

Certificate of Registration Number: MM0804D

Bardonia

11/16/2025

Acquiring, possession, manufacture, sale, transporting, and distributing medical marijuana

Certificate of Registration Number: MM0805D

New Hartford

11/16/2025

Acquiring, possession, manufacture, sale, transporting, and distributing medical marijuana

New York License and Regulations

The New York Licenses (“NY Licenses”) permit the sale of medical cannabis products to any qualified patient who possesses a physician’s recommendation. Under the terms of the NY Licenses, Valley Ag is permitted to sell OCM approved medical cannabis manufactured products to any qualified patient, provided that the patient presents a valid government-issued photo identification and OCM-issued registry identification card proving that the patient or designated caregiver meets the statutory conditions to be a qualified patient or designated caregiver. Registry identification cards are valid for one year after the date the certification is signed. The card contains the recommendation from the physician and the limitation on form or dosage of medical cannabis.

Allowable forms of medical cannabis in New York State are the following: concentrates (e.g. shatter, wax, resins), edibles (e.g., capsules, beverages, tablets, tinctures, baked goods, gummies, chocolates, and additional forms), flower, vaporization cartridges and single use pens, topical forms, and transdermal patches.

New York is a vertically-integrated system for medical cannabis; however, it does allow Registered Organizations to wholesale manufactured products to one another. As such, Valley Ag has the ability to be vertically-integrated and cultivate, harvest, process, transport, sell, and dispense cannabis products. Delivery is allowed from dispensaries to patients; however, the delivery plan must be pre-approved by the NYSDOH.

New York Reporting Requirements

At this time, the OCM does not require a specific statewide seed-to-sale tracking system. As a result, Valley Ag currently uses Dutchie and Canix for this purpose. Dutchie and Canix will implement the necessary connectivity so that the Company may continue to utilize these systems while simultaneously maintaining communications with the OCM’s selected seed-to-sale tracking system, BioTrack.

Every month the OCM requests a dispensing report in Excel format, via email, showing all products dispensed for the month.

New York Inspections, Storage and Security

Cresco’s dispensaries and processing facility in New York are licensed and supervised by the New York OCM. The regulations permit Cresco to store medical cannabis inventory at its processing facility and dispensaries in a designated, enclosed, locked vault identified in plans and specifications that are submitted to and approved by the OCM. This storage area can only be accessible by authorized individuals. The processing facility and dispensaries must install a commercial grade security alarm system to prevent and detect diversion, theft, or loss. The facilities also must maintain surveillance equipment to capture the entire facility and provide direct access to the regulator on a real-time basis. All this equipment must be kept in good working order.

Transport of medical cannabis inventory between the processing facility and dispensaries is completed using secure, OCM registered vehicles. All inventory is properly manifested using the seed-to-sale system prior to embarking on any transport.

Inspections are randomized and primarily conducted virtually as a review of seed-to-sale and dispensing data. On-site inspections are conducted at random and when a complaint has been received by the OCM.

Massachusetts Operations

The Massachusetts medical cannabis market was established through “An Act for the Humanitarian Medical Use of Marijuana” in November 2012, when voters passed Ballot Question 3 “Massachusetts Medical Marijuana Initiative” with 63% of the vote. The first Massachusetts dispensary opened in June 2015 and by November 2016, Massachusetts voters legalized adult-use cannabis by passing ballot Question 4 “Massachusetts Marijuana Legalization” with 54% of the vote. In July 2017, former Governor Baker signed legislation that would lay the groundwork for the state’s adult-use market. The Cannabis Control Commission (“CCC”) launched adult-use cannabis sales in November 2018.

On October 1, 2019, Cresco Labs acquired Hope Heal Health, Inc. (“HHH”) via certain agreements giving it operational control before cash consideration was settled. On February 7, 2020, the Company legally closed the acquisition and paid the cash consideration of $27.5 million.

On September 2, 2021, the Company completed the acquisition of 100% of the membership interests of Cultivate Licensing, LLC (“Cultivate”) for total consideration of $99.3 million. Cultivate owned and operated two (2) cultivation and manufacturing center locations, two (2) adult-use and medical dispensary locations and one (1) adult-use dispensary location. The closing of this acquisition was contingent upon the Company surrendering its adult-use retail license for the Fall River dispensary. After the closing of the acquisition, the Fall River dispensary location transitioned to medical only.

The Massachusetts Senate and House of Representatives passed bills SB 2823 and HB 4791 in August of 2022. The bills address several cannabis related issues, including host community agreement reform, a social equity trust fund, and the referendum process for social consumption licenses. On August 11, 2022, former Governor Charlie Baker (R) signed both measures into law. More recently, the CCC published proposed regulations to review Host Community Agreements (“HCA”) for compliance with the new HCA law. The regulations were adopted and only apply to new applications and renewals after March 1, 2024.

Starting in January 2023, Massachusetts adopted a curriculum designed to educate teens on the risks of driving while under the influence of cannabis. Under the program, as of January 1, 2023, Massachusetts became the first state that has legalized the recreational use of marijuana to adopt the curriculum designed by the American Automobile Association Northeast, according to the state Registry of Motor Vehicles. The current driver education curriculum addressing impaired driving was updated to include information on cannabis, such as how THC, the active chemical in marijuana, affects cognition, vision, reaction time, and perception of time and distance.

On June 29, 2023, municipal equity guidance was released by the CCC that states a municipality must establish initial policies to promote equity in the cannabis industry no later than July 1, 2023, and a city or town that is not a host community must establish these policies before entering into a HCA. If a host community fails to establish the required social equity policies, the host community will be subject to a monetary penalty in an amount equal to the annual total of all HCA community impact fees received from all marijuana businesses operating within that host community. Additionally, the guidance stipulates that a city or town can choose to engage in a local voter initiative petition process or adopt a municipal ordinance or by-law to allow the sale of cannabis for consumption on the premises where sold.

During the second quarter of 2023, management determined it is more likely than not that the Massachusetts reporting unit carrying value exceeded its fair value due to updated forecasts and projections for this reporting unit. As a result, a $21.5 million impairment charge reducing the carrying value of goodwill and licenses was recognized.

During a May 22, 2023 meeting, the CCC voted to rescind their existing Social Consumption Pilot Program regulations which would have capped the number of municipalities that could serve as a host community for social consumption establishments at twelve (12) in favor of launching a new and ongoing regulatory review and drafting process under the cannabis equity law, which contains no such cap.

In December 2023, Massachusetts regulators voted to permit cannabis transport businesses to send only one (1) employee on deliveries, instead of two (2), in a move that could cut costs for such operators. By a 3-1 vote, the CCC agreed to overhaul the state’s marijuana delivery rules by easing the two-person requirement. Following a rewrite of the rules, this rule change went into effect, together with other changes, in November 2024.

Massachusetts Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

Cresco HHH, LLC

RMD-686

Fall River

03/16/2025

Medical cultivation, manufacturing and processing and it establishes and allows for dispensary operations

MC281478

Fall River

03/26/2025

Marijuana Cultivator -Tier 4

MP281361

Fall River

04/11/2025

Marijuana Product Manufacturer

Cultivate Cultivation, LLC

MP281305

Leicester

04/11/2025

Marijuana Product Manufacturer

MC281266

Leicester

04/11/2025

Marijuana Cultivator

Cultivate Leicester, Inc.

MR282522

Framingham

04/09/2025

Marijuana Retailer

RMD-3193

Framingham

03/16/2025

Medical cultivation, manufacturing and processing and it establishes and allows for dispensary operations

MC282053

Uxbridge

04/12/2025

Marijuana Cultivator

MP281742

Uxbridge

04/12/2025

Marijuana Product Manufacturer

MR281843

Worcester

04/11/2025

Marijuana Retailer

MR281268

Leicester

03/16/2025

Marijuana Retailer

RMD-485

Leicester

03/16/2025

Medical cultivation, manufacturing and processing and it establishes and allows for dispensary operations

Massachusetts License and Regulations

The CCC oversees the medical and adult-use cannabis programs. Each medical licensee must be vertically-integrated and may have up to two (2) locations. Licensed medical dispensaries are given priority in adult-use licensing. Adult-use cultivators will be grouped into eleven (11) tiers of production (ranging from up to 5,000 square feet to no larger than 100,000 square feet) and regulators will move a licensee down to a lower tier if that licensee has not shown an ability to sell at least 70% of what it produced. Medical dispensaries that wish to add the ability to sell cannabis products to non-patients will be required to reserve 35% of their inventory, or the six-month average of their medical cannabis sales for medical cannabis patients. In order to achieve an adult-use license, a prospective licensee must first sign a “Host Community Agreement” with the town in which it wishes to locate. In both the medical and adult-use markets, extracted oils, edibles, and flower products are permitted, as well as wholesaling.

Registration certificates are valid for a period of one (1) year and are subject to annual renewals after required fees are paid and the business remains in good standing. Renewal requests are typically communicated through email from the CCC and include a renewal form.

Massachusetts Reporting Requirements

The State of Massachusetts uses METRC as the state’s T&T system used to track seed-to-sale transactions. The system allows for other third-party system integration via API. HHH, Cultivate Cultivation, LLC, and Cultivate Leicester, Inc, primarily utilizes Canix as their in-house seed-to-sale tracking system for cultivation and processing activities and Dutchie for retail, both of which integrate with METRC via API.

Massachusetts Dispensary Requirements

A licensee shall follow its written and approved operation procedures in the operation of its dispensary locations. The siting of dispensary locations is expressly subject to local/municipal approvals pursuant to state law and municipalities that control the permitting application process that a licensee must comply with. More specifically, a licensee shall comply with all local requirements regarding siting, provided, however, that if no local requirements exist, a licensee shall not be sited within a radius of five hundred (500) feet of a school, daycare center, or any

facility in which children commonly congregate. Each licensee is required to enter into a HCA with the local community in which a facility is located.

Massachusetts Security Requirements

A licensee shall implement sufficient security measures to deter and prevent unauthorized entrance into areas containing marijuana and theft of marijuana at the licensed premises. A licensee shall also utilize a security/alarm system and maintain a backup alarm system with all of the capabilities of the primary system, and both systems shall be in good working order at all times and shall be inspected and tested on regular intervals.

Massachusetts Transportation

Marijuana or marijuana-infused products (“MIPs”) may only be transported by dispensary agents on behalf of a licensee. A licensee shall staff all transport vehicles with a minimum of one (1) dispensary agent. Prior to leaving the origination location, a licensee must weigh, inventory and account for, on video, all marijuana to be transported.

Marijuana must be packaged in sealed, labeled, and tamper-proof packaging prior to and during transportation. In the case of an emergency stop, a log must be maintained describing the reason for the stop, the duration, the location, and any activities of personnel exiting the vehicle. A licensee shall ensure that all delivery times and routes are randomized. Where videotaping is required when weighing, inventorying, and accounting of marijuana before transportation or after receipt, the video must show each product being weighed, the weight, and the manifest. A licensee must document and report any unusual discrepancy in weight or inventory to the Massachusetts CCC, the state's regulatory body which creates regulations for both the medical and adult-use markets, and local law enforcement within 24 hours. A licensee shall report to the CCC and local law enforcement any vehicle accidents, diversions, losses, or other reportable incidents that occur during transport, within 24 hours. A licensee shall retain all transportation manifests for no less than one (1) year and make them available to the CCC upon request. Any cash received from a qualifying patient or personal caregiver must be transported to a licensee immediately upon completion of the scheduled deliveries. Each dispensary agent transporting marijuana or MIPs shall have access to a secure form of communication with personnel at the origination location at all times that the vehicle contains marijuana or MIPs.

Massachusetts Inspections

The CCC, or its agents, may inspect a licensee and affiliated vehicles at any time without prior notice. Any violations found will be noted in a deficiency statement that will be provided to the licensee, and the licensee shall thereafter submit a Plan of Correction to the CCC outlining with particularity each deficiency and the timetable and steps to remediate the same. The CCC shall have the authority to suspend or revoke a certificate of registration.

Michigan Operations

In November 2008, Michigan residents approved the Michigan Medical Marihuana Act (the “MMMA”) to provide a legal framework for a safe and effective medical marijuana program. In September 2016, the Michigan Senate passed the Medical Marihuana Facilities Licensing Act and the Marihuana Tracking Act and together with the MMMA (collectively, the “Michigan Cannabis Regulations”) provides a comprehensive licensing and tracking scheme, respectively, for the medical marijuana program. Additionally, the Michigan Department of Licensing and Regulatory Affairs and its licensing board (“LARA”) has supplemented the Michigan Cannabis Regulations with “Emergency Rules” to further clarify the regulatory landscape surrounding the medical marijuana program. LARA is the main regulatory authority for the licensing of marijuana businesses.

On November 6, 2018, Michigan voters approved Proposal 1, to make marijuana legal under state and local law for adults twenty-one (21) years of age or older and to control the commercial production and distribution of marijuana under a system that licenses, regulates, and taxes the businesses involved. The act would be known as the Michigan Regulation and Taxation of Marihuana Act. In accordance with Proposal 1, LARA began accepting applications for retail (adult-use) dispensaries on November 1, 2019.

On March 25, 2019, an affiliate of the Company (the “Michigan Affiliate”) announced that it had completed the most comprehensive portion of Michigan’s application process, being pre-qualified for a cultivation and processing license in Michigan. The pre-qualification represents the authorization of the entity to move forward with the licensing process for its intended facilities.

On November 13, 2019, Michigan announced any existing medically licensed businesses would be allowed to sell adult-use marijuana beginning December 1, 2019. On March 5, 2020, the Michigan Affiliate was issued a medical processing license to begin manufacturing and processing flower into edible medical marijuana products and/or medical marijuana-infused products.

In 2020, the Michigan Affiliate received approval to operate one (1) adult-use processor license and one (1) medical processor license. The Michigan Affiliate received its first medical and adult-use cultivation licenses in June 2021. Additional cultivation licenses have been added as production capacity continues to grow.

On April 22, 2020, the Michigan Affiliate and related parties of the Company executed an amended and restated operating agreement which increased the Company’s related parties’ ownership from 50% to 85% in exchange for a capital commitment of $25.0 million. The agreement grants related parties a majority of profits, while the Company retains control, subject to a management services agreement, decision-making power, and rights to variable returns from the Michigan Affiliate.

On April 23, 2020, the Company announced that it had completed the sale of its Marshall, MI facility to Innovative Industrial Properties. Inc. (“IIP”). Concurrent with the closing of the sale, Cresco Labs entered into a long-term, triple-net lease agreement with IIP and continues to operate the property as a licensed cannabis cultivation and processing facility upon completion of redevelopment. On October 4, 2021, the Company unveiled its Marshall facility while celebrating the first harvest at the property. Following the unveiling of its Marshall facility, the Michigan Affiliate expanded its licensure to fully realize the growth potential of the Marshall facility. In late 2021, the Michigan Affiliate was awarded eight (8) additional Medical Class C Grower licenses bringing its total medical grow licenses to ten (10) in addition to its one (1) existing Medical Processor license. With increased medical grow potential, the Michigan Affiliate was also able to acquire seven (7) Adult-Use Excess Grower licenses in addition to its existing five (5) Adult-Use Class C Grow licenses and one (1) Adult-Use Processor license.

In June 2023, SB 180 and SB 179 were passed by the Senate, approved by the House of Representatives in October 2023, and subsequently signed by Governor Gretchen Whitmer (D) on October 19, 2023. The bipartisan legislation allows state-licensed marijuana businesses to conduct trade with tribal cannabis entities.

Michigan Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

Cresco Labs Michigan, LLC

PR-000067

Marshall

03/04/2026

Medical Processor License

AU-P-000127

Marshall

06/22/2025

Adult-Use Processor License

AU-G-C-000351

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-C-000352

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-C-000353

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-C-000354

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-C-000355

Marshall

06/22/2025

Adult-Use Cultivation

GR-C-001012

Marshall

03/04/2026

Medical Cultivation

GR-C-001013

Marshall

03/04/2026

Medical Cultivation

GR-C-001014

Marshall

03/04/2026

Medical Cultivation

GR-C-001015

Marshall

03/04/2026

Medical Cultivation

GR-C-001016

Marshall

03/04/2026

Medical Cultivation

GR-C-001017

Marshall

03/04/2026

Medical Cultivation

GR-C-001018

Marshall

03/04/2026

Medical Cultivation

GR-C-001019

Marshall

03/04/2026

Medical Cultivation

GR-C-000726

Marshall

03/04/2026

Medical Cultivation

GR-C-000727

Marshall

03/04/2026

Medical Cultivation

AU-G-EX-000239

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-EX-000240

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-EX-000241

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-EX-000242

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-EX-000243

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-EX-000244

Marshall

06/22/2025

Adult-Use Cultivation

AU-G-EX-000245

Marshall

06/22/2025

Adult-Use Cultivation

Michigan License and Regulations

Medical products may be purchased in a retail setting from a provisioning center by registered qualified patients, registered primary caregivers connected to a registered qualifying patient (each, a “Michigan Qualified Purchaser”); in each case, Michigan Qualified Purchasers must present a valid registry identification card (a “Michigan Registry ID”) issued by LARA. For a Michigan Qualified Purchaser to receive products, provisioning centers must deploy an inventory control and tracking system that is capable of interfacing with the statewide

monitoring system to determine (a) whether a Michigan Qualified Purchaser holds a Michigan Registry ID and (b) whether the sale or transfer will exceed the then-current daily and monthly purchasing limit for the holder of the Michigan Registry ID. Adult-use products may be purchased from a retail dispensary by any individual twenty-one (21) or older who provides a valid, unexpired photo identification.

All Michigan licenses are renewed annually through the Cannabis Regulatory Agency after the required fees are paid and the business remains in good standing. In addition, a sworn statement is required that states that the business is in good standing and will uphold a continuing reporting duty. The renewal fees are to be determined by the amount of gross weight of marijuana products transferred during the past year.

Michigan Reporting Requirements

Pursuant to the requirements of the Marihuana Tracking Act (the “MTA”), Michigan selected METRC as the state’s third-party solution for integrated marihuana industry verification. Using METRC, regulators can track third-party inventory, permissible sales, and seed-to-sale information. Additionally, provisioning centers can use the METRC API to connect their own inventory management and/or point-of-sale systems to verify the identity as well as permissible sales. Cresco Labs Michigan, LLC, primarily utilizes Canix as its in-house seed-to-sale tracking system for cultivation and processing activities and Dutchie for retail, both of which integrate with METRC via API.

Michigan Inspections

Inspections in Michigan are conducted on a scheduled, annual basis by agents from the Cannabis Regulatory Agency (“CRA”), which is a bureau within LARA. Agents may also conduct random inspections at any time during the license cycle, including virtual inspections of seed-to-sale data and security footage.

Michigan Storage & Security

All marihuana and marihuana equivalents must be stored securely at all times. All facilities, cultivation, processing, and retail are required to have a designated vault area for product storage. Designated vault areas must meet minimum construction requirements in regard to construction integrity and commercial locking mechanisms. Designated vault areas include specific standards around camera coverage to include clear visibility of all areas where product is stored and moved. Medical and adult-use product must be stored separately and clearly labeled as to which inventory it is included in.

Michigan Transportation

Marihuana and marihuana equivalents may only be moved between facilities in vehicles that have been registered with the CRA. Orders are individually packaged and manifested via the state mandated seed-to-sale system prior to leaving any facility. Each order is packaged individually and is coupled with its manifest within the vehicle. The route of transport, and departure and arrival times must be exact and vehicles may not vary from their route.

Florida Operations

In 2014, the Florida Legislature passed the Compassionate Use Act (the “CUA”) which was a low-THC (CBD) law, allowing cannabis containing not more than 0.8% THC to be sold to patients diagnosed with severe seizures or muscle spasms and cancer. The CUA created a competitive licensing structure and originally allowed for one (1) vertically-integrated license to be awarded in each of five (5) regions. The CUA set forth the criteria for applicants as well as the minimum qualifying criteria which included the requirement to hold a nursery certificate evidencing the capacity to cultivate a minimum of 400,000 plants, to be operated by a nurseryman and to be a registered nursery for at least thirty (30) continuous years. The CUA also created a state registry to track dispensations. In 2016, the Florida Legislature passed the Right to Try Act (the “RTA”), which expanded the State’s medical cannabis program to allow for full potency THC products to be sold as “medical marijuana” to qualified patients.

In November of 2016, the Florida Medical Marijuana Legalization ballot initiative (the “Initiative”) to expand the medical cannabis program under the RTA was approved by 71.3% of voters, thereby amending the Florida constitution. The Initiative is now codified as Article X Section 29 of the Florida Constitution and Section 381.986 of the Florida Statues.

The Initiative expanded the list of qualifying medical conditions to include cancer, epilepsy, glaucoma, HIV and AIDS, PTSD, ALS, Crohn’s disease, Parkinson’s disease, multiple sclerosis, or other debilitating medical conditions of the same kind or class or comparable to those other qualifying conditions and for which a physician believes the benefits outweigh the risks to the patient. The Initiative also provided for the implementation of state-issued medical cannabis identification cards. In 2017, the Florida Legislature passed legislation implementing the constitutional amendment and further codifying the changes set forth in the constitution into law (the “2017 Law”). The 2017 Law provides for the issuance of ten (10) licenses to specific entities and another four (4) licenses to be issued for every 100,000 active qualified patients added to the registry. The 2017 Law also initially limited license holders to a maximum of twenty-five (25) dispensary locations with the ability to purchase additional dispensary locations from one another and for an additional five (5) locations to be allowed by the State for every 100,000 active qualified patients added to the registry. The 2017 Law’s cap on dispensing facilities expired in April 2020.

On March 18, 2019, Governor Ron DeSantis (R) signed SB 182 “Medical Use of Marijuana” into law. Among other provisions, SB 182 repealed the state’s smoking ban that had been in place. The medical program is currently administered by the Florida Department of Health’s (“FDOH”) Office of Medical Marijuana Use (“OMMU”). OMMU is responsible for crafting and implementing regulations governing the program, overseeing the Medical Marijuana Use Registry, licensing operators to cultivate, process, and dispense medical marijuana and certifying testing laboratories. Governor DeSantis signed SB 768 into law on April 20, 2022, which includes the following provisions: FDOH will now collect samples of marijuana and marijuana delivery devices from a medical marijuana treatment center (“MMTC”) for specified testing, rather than only samples of edibles; FDOH is required to promulgate rules to allow for potency variations not to exceed 15% from labels and FDOH has the authority not to renew the license of a MMTC that has not begun to cultivate by their renewal date.

In February 2023, the FDOH announced that it would begin accepting applications for the newly created twenty-two (22) medical marijuana licenses from April 24, 2023 to April 28, 2023. After the application period concluded, a detailed review and assessment process took place. As a result, in November 2024, twenty-two (22) applicants were granted medical marijuana licenses.

In May 2023, Governor DeSantis signed HB 387 into law, which allows a qualified physician to conduct an examination by telehealth for a patient’s medical marijuana certification renewal if the physician previously conducted an in-person exam of the patient for the purpose of certification. The bill also helps Black farmers obtain medical marijuana licenses.

In June 2023, Governor DeSantis signed SB 1676 into law, which aims to ensure that all hemp products sold in Florida are safe for human consumption. Legal hemp products must comply with several requirements outlined in SB 1676, which includes requirements that any retailer distributing hemp products in the state test their products in a certified hemp testing laboratory and sales are restricted to adults aged twenty-one (21) or over beginning July 1, 2023. Hemp retailers in the state must also obtain a license from the Florida Department of Agriculture and Consumer Services.

On April 14, 2021, the Company completed the acquisition of Bluma Wellness Inc. (“Bluma”) for total consideration of $238.1 million. Bluma owned and operated 3 Boys Farm, LLC dba One Plant Florida (“One Plant”), a vertically-integrated, licensed MMTC in the state of Florida. As of the acquisition date, Bluma, under One Plant, had eight (8) strategically located dispensaries. Since the acquisition, Cresco Labs has rebranded these dispensaries as Sunnyside*® and opened an additional twenty-five (25) locations as of December 31, 2024.

During the third quarter of 2023, Management determined it is more likely than not that the Florida reporting unit carrying values exceed their fair value due to updated forecasts and projections for the reporting unit. $79.4 million in intangible assets and goodwill impairment was recorded to the Florida reporting unit in the third quarter of 2023.

In November 2024, an effort to legalize the use of recreational marijuana in Florida failed at the ballot box. Despite endorsements from the Florida Democratic Party to President Donald Trump, Amendment 3, which would have legalized the recreational use and manufacturing of marijuana in the state, received 56% of the vote, but failed to get the 60% voter support needed to pass a state constitutional amendment.

Florida Licenses

Holding Entity

Permit/License

City

Expiration Date

Description

3 Boys Farms, LLC

MMTC-2017-0008

Vertically-integrated State License for all activities and locations

06/02/2026

Cultivation, manufacturing, and processing and it establishes and allows for dispensary operations

Florida License and Regulations

The Florida license is a vertically integrated MMTC license. The license is issued by the FDOH’s OMMU and license holders can only own one license. There is no limit on the number of facilities that can be operated under an MMTC license. The Florida license is renewed bi-annually through the OMMU and the business remains in good standing.

Florida Reporting Requirements

Bluma uses Canix for cultivation and production operations and Dutchie for its retail operations, which are integrated with OMMU 's selected seed-to-sale tracking system, BioTrack.

Florida Inspections, Storage and Security

Cresco’s Florida facilities, both grow/processing and dispensaries, are regulated by the OMMU, an office within the Florida Department of Health. OMMU requires a licensee to establish security systems sufficient to ensure the safety of all individuals on site as well as security of all medical marijuana and medical marijuana product.

Each site must maintain a video surveillance system which includes camera coverage of all areas within the licensed site. This includes but is not limited to coverage of all means of ingress and egress, product storage areas, sales areas, and the perimeter of the facility. Cameras must be of a resolution and quality to be able to make out each individual, during day and night hours. Footage must be retained for a pre-determined timeframe, and employees within the facility must have the ability to access the system and generate historical footage, as well as still images.

All facilities must also maintain a physical security system inclusive of locks, access control devices, and audible alarms. All areas containing medical marijuana or medical marijuana product must be sufficiently secured from the public with access limited to specific credentialed employees.

Medical marijuana and medical marijuana product must be stored in a vault room whose design is submitted to and approved by OMMU. Vaults must meet specific security requirements to prevent unauthorized access or product theft/diversion. Security systems in vault areas are highly scrutinized so that all activity within the vault can be tracked at all times.

Inspections of all facility types in Florida are conducted by OMMU agents. Regular inspections happen upon the opening of new facilities and at the annual license review of each facility. Outside of those, random inspections can occur at any time, both on-site as well as desk reviews of security footage and seed to sale data.

Florida Transportation

Transportation of product between grow/process sites and dispensaries in Florida must be completed within an OMMU registered vehicle. All vehicles must maintain insurance coverage limits predetermined by OMMU. Product for delivery is segregated by individual delivery, with a prefilled manifest for each delivery accompanying. All manifests must be generated prior to leaving the grow/process facility. During deliveries, two (2) employees of the grow/process facility must stay with the vehicle at all times.

Cresco Compliance Program

Cresco’s Code of Conduct and Ethics is based on the Federal Sentencing Guidelines, subsequent guidance from the Office of Inspector General, and applicable federal and state laws, and regulations.

The Code of Conduct establishes Cresco Labs’ expectations for the conduct of all employees. All employees are expected to read, understand, and comply with the Code of Conduct and Company Policies. The Code of Conduct is introduced at onboarding for all new hires and is permanently posted in the Policy Library of the employee intranet. Employees are expected to raise issues, concerns, and report any violations in good faith and can do so with full confidence in their actions. If an employee does not wish to be identified, an independent hotline channel is available and is managed by an independent company. Retaliation against a reporting person by anyone may be against the law and is a direct violation of the Code of Conduct. Anti-retaliation policy training is an annual training subject for all people leaders. Employees are also protected from retaliation for any participation in a company led investigation of possible violations. Cresco Labs is committed to prompt and thorough investigation of any matter that violates the Code of Conduct or any other Company Policies. All allegations of wrongdoing reported through the above referenced hotline are appropriately investigated; such investigations are overseen and reviewed by the VP of Ethics and Compliance, in consultation with appropriate parties within Human Resources, Legal, Regulatory, Security, and/or Quality Assurance. All reported material incidents and trends are reviewed by the Company's Audit Committee and the Company’s Ethics Committee.

Risk & Control Framework

Cresco continues to work closely with internal and external risk area experts to further develop, enhance, and improve its compliance and risk management and mitigation processes and procedures in furtherance of continued compliance with the complex federal and state regulatory frameworks under which Cresco Labs operations are subject. The internal compliance program currently in place includes continued monitoring by managers and executives of Cresco and its subsidiaries to ensure that all operations conform to and comply with required laws, regulations, and operating procedures. Cresco further requires its operating subsidiaries to report and disclose all instances of non-compliance, regulatory, administrative, or legal proceedings that may be initiated against them.

Regulatory Compliance Program

Cresco has developed and continues to refine a robust regulatory compliance program designed to ensure operational requirements continue to be satisfied, and has worked closely with internal and external experts and counsel (“Regulatory Counsel”) covering every jurisdiction (state and local) in which it operates to assist in the development of Standard Operating Procedures (“SOPs”) which assist the Company in managing and monitoring its compliance with U.S. state law on an ongoing basis.

The Facility Directors, compliance and adherence team members, Regulatory Counsel, licensing professionals, and government affairs representatives for each jurisdiction serve as the liaison to state and local regulators during both regular business hours and after hours. Those individuals and teams are collectively responsible for ensuring operations and employees strictly comply with applicable laws, regulations, and licensing conditions and ensure that operations do not endanger the health, safety, or welfare of the community. The Facility Directors, compliance and adherence team members, Regulatory Counsel, licensing professionals, and government affairs representatives covering each location coordinate with each operational unit within each facility to ensure that the operation and all employees are following and complying with Cresco’s security procedures and all regulatory compliance standards.

In conjunction with Cresco’s Human Resources and Operations departments, the compliance and adherence teams, and Quality departments help oversee and implement mandatory training for employees based on their function and role, including but not limited to the following topics:

•Compliance with state and local laws

•Dispensing procedures

•Security & safety policies and procedures

•Inventory control procedures

•Seed-to-sale Tracking System

•Cultivation, Manufacturing & Quality Control

•Customer Complaints, Returns & Recalls procedures

•Distribution & Transportation procedures

Cresco’s compliance program emphasizes security and inventory control to ensure strict monitoring of cannabis and inventory from cultivation to sale or disposal. Only authorized, properly trained employees are allowed to access Cresco’s computerized seed-to-sale system.

Cresco’s compliance and adherence team members, Regulatory Counsel, licensing professionals, and government affairs representatives monitor all compliance notifications from regulators and inspectors in each market to ensure timely resolution of issues identified. Those individuals and teams maintain records of compliance notifications received from the state regulators or inspectors and how and when the issue was resolved. Cresco has a comprehensive set of SOPs that include detailed descriptions and instructions for receiving shipments of inventory, inventory tracking, recordkeeping, and record retention practices related to inventory, as well as procedures for performing inventory reconciliation and ensuring the accuracy of inventory tracking and recordkeeping, among other subjects. Cresco maintains accurate records of its inventory at all licensed facilities. Adherence to Cresco’s SOPs is mandatory and ensures that Cresco’s operations are compliant with the rules set forth by the applicable state and local laws, regulations, ordinances, licensing, and other requirements.

Seed-to-Sale Tracking Software

The Company utilizes state specified and/or approved third-party seed-to-sale tracking platforms, as required by state regulations, that integrate the inventory management program and facilitates the reporting, review, and assurance of continued compliance with state and local requirements. As specified by state requirements and Cresco Labs’ SOPs, daily, weekly, and monthly inventory counts, as well as random inventory spot checks, are built into routine operations to ensure that physical product inventory reflects the records of the inventory management systems. Product lots are traceable from cultivation through the manufacturing and shipping processes. This traceability is tested and verified at least annually.

Product Quality

Cresco Labs ensures compliance and the integrity of our products through the implementation of an effective quality management system. Operations follow established processes and quality is measured and monitored to ensure issues are identified and addressed in a timely manner.

RECENT DEVELOPMENTS

square feet of canopy, establishing the Company as one of only two operators of Kentucky’s coveted Tier 3 cultivation licenses.

On October 25, 2024, the Company repurchased $40.0 million principal amount of its senior secured term loan (the “Senior Loan”) and paid $0.3 million of accrued interest. There were no prepayment penalties or exit fees due on this repurchase. The purpose of this transaction is to reduce the Company’s Senior Loan balance and annual cash interest cost at an amount less than what would have been due at maturity.

On September 12, 2024, the Company announced the retirement of its Chief Financial Officer, Dennis Olis, and planned transition and appointment of Sharon Schuler to succeed as the next Chief Financial Officer.

On August 29, 2024, the Company entered into a second amendment of the Senior Secured Term Loan Agreement (the “Amended Loan Agreement”). Pursuant to the terms of the Amended Loan Agreement, the Company may from time to time purchase, by assignment, all or a portion of the lender’s loans, plus applicable accrued and unpaid interest, on the terms and conditions set forth in the Amended Loan Agreement.

On August 6, 2024, following the passage of Issue 2 in November 2023, adult-use cannabis sales began in Ohio following the Division of Cannabis Control issuing certificates of operation to cultivators, processors, testing labs, and an initial group of dispensaries. The Company’s five (5) dispensaries were all granted certificates of operation to serve both patients and adult-use customers and are operational.

On April 24, 2024, the Company successfully finalized its acquisition of Keystone for aggregate consideration of $8.5 million which includes a mix of $3.4 million in cash consideration, $2.8 million of equity, and $2.3 million in deferred consideration. Prior to the acquisition, Keystone operated two (2) dispensaries in Pittsburgh, PA and Greensburg, PA and held a third dispensary license. With the additional license, the Company has the opportunity to open one (1) more dispensary within the Commonwealth, further expanding its presence and reach, and bringing the total number of dispensaries added to three (3).

On February 9, 2024, the Company announced that as part of a transfer of Super Voting Shares (“MVS”) by both a current and former director of the Company: (a) Thomas J. Manning acquired from Dominic Sergi 100,000 MVS and from Charles Bachtell 33,760 MVS; and (b) Robert M. Sampson acquired from Charles Bachtell 33,308 MVS. Each purchase and sale of MVS was completed for aggregate consideration of $1.00, which were effected in accordance with the Company’s articles. MVS carry enhanced voting power but have no economic rights. After giving effect to the transactions described above, as of December 31, 2024:

•Mr. Bachtell owns or controls, (a) 132,932 MVS (representing approximately 26.59% of the outstanding MVS) and (b) voting securities of the Company representing approximately 19.85% of the votes attaching to all classes of outstanding shares of the Company.

•Mr. Manning owns or controls, (a) 133,760 MVS (representing approximately 26.75% of the outstanding MVS) and (b) voting securities of the Company representing approximately 19.84% of the votes attaching to all classes of outstanding shares of the Company; and

•Mr. Sampson owns or controls, (a) 133,308 MVS (representing approximately 26.66% of the outstanding MVS) and (b) voting securities of the Company representing approximately 19.79% of the votes attaching to all classes of outstanding shares of the Company.

On February 1, 2024, the Company announced the promotion of Greg Butler to the position of President.

COMPONENTS OF OUR RESULTS OF OPERATIONS

Revenue

For the three months ended December 31, 2024 and 2023, approximately 66.8% and 63.2%, respectively, of our revenue was derived from Company-owned retail dispensary locations. Retail revenue includes medical and adult-use cannabis sales. Revenue from the wholesale of cannabis products represents the remaining 33.2% and 36.8%, respectively, for the same periods. For the year ended December 31, 2024 and 2023, 65.1% and 60.3%, respectively, of our revenue was derived from Company-owned retail dispensary locations. Revenue from the wholesale of cannabis products represents the remaining 34.9% and 39.7%, respectively, for the same periods.

Gross profit

Gross profit is calculated as revenue less cost of goods sold (“COGS”). COGS includes the direct and indirect costs attributable to the cultivation and production of the products sold and is comprised of the following:

•Direct and indirect labor costs: Include all salaries, benefits, and taxes for all employees at the cultivation and manufacturing facilities.

•Direct supplies: Include direct material costs for maintenance of the plant, supplies and nutrients, production expenses including inventory purchases, packaging costs, and equipment used to process marijuana.

•Facility expenses: The facility expenses for the cultivation operations are the cost for the facility, utilities, property taxes, maintenance, and costs associated with monitoring the security systems.

•Other operating expenses: Include all costs associated with the facility itself, including insurance, community benefit fees, professional services related to licenses and compliance, uniforms, employee training programs, tracking and inventory management systems, product testing, business development, information technology, license renewal fees, and certain excise taxes.

In addition to market fluctuations, cannabis costs are affected by various state regulations that limit the sourcing and procurement of cannabis products. The changes in regulatory environments may create fluctuations in gross profit over comparative periods. Additionally, gross profit may include the cost of inventory required to be marked to fair value as part of purchase accounting in a business combination.

Selling, general and administrative expenses (“SG&A”)

SG&A consist of salary and benefit costs of employees, depreciation and amortization, consulting and professional fees, advertising and marketing, legal, accounting fees, office and retail operation costs, share-based compensation, certain excise taxes, technology, insurance, security, travel and entertainment, finance and investor relations expenses, and rent expense. SG&A is a component of Total operating expenses as discussed in the “Selected Financial Information” section below.

For the three months and years ended December 31, 2024 and 2023, SG&A was comprised of the following:


	Three Months Ended December 31,				Year Ended December 31,
($ in thousands)	2024		2023		2024		2023
	(unaudited)
Payroll and employee costs	$	33,629	$	31,253	$	129,501	$	141,177
Depreciation and amortization	5,457		9,978		21,770		24,538
Facility expenses	3,873		4,169		16,246		19,739
Rental fees	3,190		3,263		12,898		13,208
Selling and marketing expense	3,888		616		12,089		8,296
Share-based compensation	3,133		2,278		11,803		12,924
Consulting and professional fees	1,710		3,620		9,222		12,206
Excise taxes	1,489		3,223		8,585		14,829
Computer and software expense	2,070		1,927		7,862		9,038
Business insurance	1,261		2,170		4,975		9,217
Accounting	935		1,169		4,528		4,963
Legal	634		27		3,476		8,267
Travel and employee expense	727		685		2,739		3,005
Finance and investor relations expense	486		535		2,340		2,331
Bad debt expense	1,115		2,740		1,400		10,392

Other expense	1,023		1,370		5,408		5,042
Total SG&A	$	64,620	$	69,023	$	254,842	$	299,172

Other (expense) income, net

Other (expense) income, net consists mainly of reoccurring gains (losses) on investments, foreign currency, loss on provision for loan receivables, gain (loss) on disposition of assets, as well as ad hoc expenses, such as gain (loss) on lease termination, and loss on debt extinguishment. These gains (losses) do not generally correlate to revenue. Other (expense) income, net is added to Interest expense, net, to sum to Total other expense, net discussed in the “Selected Financial Information” section below.

For the three months and years ended December 31, 2024 and 2023, Other (expense) income, net consisted of the following:


	Three Months Ended December 31,				Year Ended December 31,
($ in thousands)	2024		2023		2024		2023
	(unaudited)
Tax receivable agreement expense	$	(4,981)	$	—	$	(65,648)	$	—
Loss on debt extinguishment	(1,002)		—		(1,002)		—
Gain (loss) on disposal of assets	(25)		411		(683)		762
Loss on provision - loan receivable	(68)		(57)		(330)		(314)
Realized loss on financial instruments	—		(94)		(81)		(94)
Gain from insurance proceeds	11		—		1,335		—
Gain (loss) on foreign currency	807		(236)		1,039		(303)
Escrow receipt on prior acquisition	—		—		598		—
Debit card rebate income	288		40		465		144
Gain on legal settlement	—		—		266		—
Gain on exit operations	—		—		125		—
Unrealized gain (loss) on investments held at fair value	5		16		9		(406)
Gain on lease termination	—		—		—		1,263
Other income (expense), net	1,693		(30)		1,978		688
Other (expense) income, net	$	(3,272)	$	50	$	(61,929)	$	1,740

Interest expense, net

Interest expense, net consists mainly of interest on notes and loans payable, financing activities, leases, accretion of debt discount and amortization of deferred financing fees, and interest income. Interest expense, net is included in Total other expense, net discussed in the “Selected Financial Information” section below.

For the three months and years ended December 31, 2024 and 2023, Interest expense, net consisted of the following:


	Three Months Ended December 31,				Year Ended December 31,
($ in thousands)	2024		2023		2024		2023
	(unaudited)
Interest expense – notes and loans payable	$	(9,004)	(9,711)		$	(37,926)	$	(43,575)
Interest expense – financing activities	(2,869)		(2,917)		(11,549)		(11,739)
Accretion of debt discount and amortization of deferred financing fees	(1,201)		(1,159)		(4,855)		(4,416)
Interest expense – leases	(772)		(822)		(3,146)		(3,513)
Interest income (expense) - deferred and contingent consideration	116		358		(1,378)		(380)
Interest income	657		665		2,922		2,148
Other interest (expense) income	(6)		(745)		(47)		656
Interest expense, net	$	(13,079)	$	(14,331)	$	(55,979)	$	(60,819)

Income Taxes

The Company is classified for U.S. federal income tax purposes as a U.S. corporation under Section 7874 of the IRC. The Company is subject to income taxes in the jurisdictions in which it operates and, consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events. As the Company operates in the cannabis industry, the Company is subject to the limits of IRC Section 280E for U.S. federal income tax purposes as well as state income tax purposes. Under IRC Section 280E, the Company is only allowed to deduct expenses directly related to the cost of goods sold. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E.

However, beginning in 2024, the Company is taking an uncertain tax position that its operations are not subject to IRC Section 280E and therefore intends to deduct such expenses with a related uncertain tax liability offsetting such deductions.

Additionally, certain states including Arizona, California, Illinois, Maryland, Massachusetts, Michigan, Pennsylvania, and New York do not conform to IRC Section 280E and, accordingly, the Company generally deducts all operating expenses on its income tax returns in these states.

SELECTED FINANCIAL INFORMATION

The Company reports results of operations of its affiliates from the date that control commences, either through the purchase of the business through a management agreement or through other arrangements that grant such control. The following selected financial information includes only the results of operations after the Company established control of its affiliates. Accordingly, the information included below may not be representative of the results of operations if such affiliates had included their results of operations for the entire reporting period. For discussion of our fiscal 2023 results of operations and comparison with fiscal 2022 results of operations, please refer to “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” filed on SEDAR+ on March 15, 2024 and on EDGAR on March 18, 2024.

Summary of Unaudited Quarterly Results


($ in thousands)	2024								2023
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Revenues, net	$	175,909	$	179,783	$	184,356	$	184,295	$	188,237	$	190,559	$	197,887	$	194,202
Income (loss) from operations	19,406		26,343		32,380		29,163		27,099		(107,756)		(10,752)		3,586
Net (loss) income attributable to Cresco Labs Inc.	(4,372)		(10,541)		(54,332)		(5,193)		2,635		(115,572)		(36,534)		(26,051)
Basic and Diluted EPS	$	(0.01)	$	(0.03)	$	(0.16)	$	(0.02)	$	0.01	$	(0.34)	$	(0.12)	$	(0.09)

Results of Operations

Three Months Ended December 31, 2024 Compared to the Three Months Ended December 31, 2023

The following tables set forth selected consolidated financial information for the periods indicated that are derived from our Consolidated Financial Statements and the respective accompanying notes prepared in accordance with GAAP.

The selected unaudited consolidated financial information set out below may not be indicative of the Company’s future performance:


	Three Months Ended December 31,
($ in thousands)	2024		2023		$ Change		% Change
Revenues, net	$	175,909	$	188,237	$	(12,328)	(6.5)	%
Cost of goods sold	91,883		92,091		(208)		(0.2)	%
Gross profit	84,026		96,146		(12,120)		(12.6)	%
Selling, general and administrative	64,620		69,023		(4,403)		(6.4)	%
Impairment loss	—		24		(24)		(100.0)	%
Total operating expenses	64,620		69,047		(4,427)		(6.4)	%
Total other expense, net	(16,351)		(14,281)		(2,070)		14.5	%
Income tax expense	(2,616)		(7,950)		5,334		(67.1)	%
Net income1	$	439	$	4,868	$	(4,429)	(91.0)	%
1Net income includes amounts attributable to non-controlling interests.

Revenues, net

Revenue for the three months ended December 31, 2024, decreased $12.3 million, or 6.5%, compared to the three months ended December 31, 2023. The decrease in revenue was primarily driven by price compression, price discounting, and increased competition in the Illinois and Massachusetts markets compared to the prior year period. The decrease was partially offset by retail growth in Ohio as well as increased sales volume in Florida compared to the prior year period.

COGS and Gross profit

COGS for the three months ended December 31, 2024, remained relatively flat with a slight decrease of $0.2 million, or 0.2%, compared to the three months ended December 31, 2023. The slight decrease was primarily attributable to decreased sales in Illinois offset by increased sales in Ohio and Florida.

Gross profit decreased by $12.1 million, or 12.6%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The decrease in gross profit was primarily driven by lower sales in Illinois and Massachusetts. As a percentage of revenue, gross profit was 47.8% and 51.1% for the three months ended December 31, 2024 and December 31, 2023, respectively. The decrease in gross profit as a percentage of revenue was driven by a higher percentage of total sales generated from lower margin states and price compression.

Total operating expenses

Total operating expenses for the three months ended December 31, 2024 decreased $4.4 million, or 6.4% compared to the three months ended December 31, 2023. The decrease was primarily attributable to reduced depreciation expenses from less capital expenditures during the year.

Total other expense, net

Total other expense, net for the three months ended December 31, 2024 increased $2.1 million, or 14.5%, compared to the three months ended December 31, 2023. The increase was primarily driven a decrease in interest expense related to the repurchase of a portion of our Senior Loan and a favorable change in foreign currency exchanges.

Provision for income taxes

Income tax expense for the three months ended December 31, 2024 decreased $5.3 million, compared to the three months ended December 31, 2023. The decrease was primarily due to 2023 underpayment interest and penalties being reversed due to uncertain tax position being applied to 2023 tax return filed in the fourth quarter of 2024.

Net income

Net income for the three months ended December 31, 2024 decreased $4.4 million compared to the three months ended December 31, 2023. The change is primarily driven by lower revenue discussed above.

Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023

The selected consolidated financial information set out below may not be indicative of the Company’s future performance:


	Year Ended December 31,
($ in thousands)	2024		2023		$ Change		% Change
Revenues, net	$	724,343	$	770,885	$	(46,542)	(6.0)	%
Costs of goods sold	359,889		408,519		(48,630)		(11.9)	%
Gross profit	364,454		362,366		2,088		0.6	%
Selling, general and administrative	254,842		299,172		(44,330)		(14.8)	%
Impairment loss	2,320		151,017		(148,697)		(98.5)	%
Total operating expenses	257,162		450,189		(193,027)		(42.9)	%
Total other expense, net	(117,908)		(59,079)		(58,829)		99.6	%
Income tax expense	(49,873)		(32,950)		(16,923)		51.4	%
Net loss1	$	(60,489)	$	(179,852)	$	119,363	(66.4)	%
1Net loss includes amounts attributable to non-controlling interests.

Revenues, net

Revenue for the year ended December 31, 2024 decreased $46.5 million, or 6.0%, compared to the year ended December 31, 2023. The decrease in revenue was primarily driven by increased competition, price compression, and price discounting in Illinois and Massachusetts and reduced operations in California, Maryland, and Arizona. This was partially offset by retail growth in Pennsylvania driven by new store openings, Ohio legalizing adult-use of cannabis, and increased sales volume in Florida.

COGS and Gross profit

COGS for the year ended December 31, 2024 decreased $48.6 million, or 11.9%, compared to the year ended December 31, 2023. The decrease was primarily attributable to lower sales in Illinois and reduced operations in California and Arizona.

Gross profit increased by $2.1 million, or 0.6%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in gross profit was primarily driven by the restructure of the California operations and production related efficiencies. As a percentage of revenue, gross profit was 50.3% and 47.0% for the year ended December 31, 2024 and December 31, 2023, respectively. The increase in gross profit as a percentage of revenue was driven by a higher percentage of total sales generated from higher margin states and production related efficiencies related to reduced California and Arizona operations.

Total operating expenses

Total operating expenses for the year ended December 31, 2024 decreased $193.0 million, or 42.9% compared to the year ended December 31, 2023. The decrease was primarily attributable to $151.0 million of impairment charges recorded during 2023 as the Company determined it is more likely than not that the Arizona, California, Florida, Massachusetts and New York reporting units' carrying value exceeded their fair value due to updated forecasts and projections for these reporting units, compared to $2.3 million of impairment recorded during year ended December 31, 2024 as the Company determined it is more likely than not that California reporting unit’s carrying

value exceeded their fair value due to updated forecasts and projections. The decrease in Total operating expenses was also due to reductions in payroll and employee costs, including share-based compensation due to restructuring activities as well as a reduction in bad debt expense.

Total other expense, net

Total other expense, net for the year ended December 31, 2024 increased $58.8 million, or 99.6%, compared to the year ended December 31, 2023. The increase was primarily driven by an increase in tax receivable agreement expense, offset by a decrease in interest expense related to the repurchase of a portion of our Senior Loan.

Provision for income taxes

Income tax expense for the year ended December 31, 2024 increased $16.9 million, or 51.4%, compared to the year ended December 31, 2023. The increase was primarily due to Illinois decoupling from IRC Section 280E in 2023 which reduced the provision for income taxes for the year ended December 31, 2023.

Net loss

Net loss for the year ended December 31, 2024 decreased $119.4 million compared to the year ended December 31, 2023. The decrease in net loss was primarily driven by lower revenue discussed above as well as a decrease in impairment losses recorded in 2024.

Selected Annual Information

The following presents selected financial data derived from our Consolidated Financial Statements for the years ended December 31, 2024, 2023 and 2022.


	Year Ended December 31,
($ in thousands)	2024		2023		2022
Revenues, net	$	724,343	$	770,885	$	842,681
Income (loss) from operations	107,292		(87,823)		(84,295)
Net loss attributable to Cresco Labs Inc.	(74,438)		(175,522)		(212,047)

Basic and Diluted EPS	$	(0.22)	$	(0.54)	$	(0.71)

($ in thousands)	December 31, 2024		December 31, 2023		December 31, 2022
Total assets	$	1,355,355	$	1,358,467	$	1,583,692
Non-current lease liabilities	155,334		163,811		173,345
Total long-term notes and loans payable, net	460,750		497,713		476,891

During the year ended December 31, 2024, the Company saw reductions in revenue compared to the prior year primarily due to increased competition, price compression, and price discounting in Illinois and Massachusetts and reduced operations in California, Maryland, and Arizona. During the year ended December 31, 2023, the Company saw reductions in revenue compared to the prior year primarily due to increased competition and price discounting in Illinois, along with reduced operations in California, Arizona, and Maryland. The 2024 and 2023 results above include $2.3 million and $151.0 million, respectively, of impairment charges, which are further explained in the Total operating expenses section above.

NON-GAAP FINANCIAL MEASURES

Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and Adjusted EBITDA (defined below) are non-GAAP financial measures and do not have standardized definitions under GAAP and may not be comparable to similar measures presented by other issuers. The Company has provided the non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. These supplemental

non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspectives and insights when analyzing the core operating performance of the business. This provides useful information for investors, allowing them to gain a clearer understanding of the Company’s operating performance and make more informed investment decisions. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to and should only be considered in conjunction with, the GAAP financial measures presented herein. Accordingly, the Company has included below reconciliations of the supplemental non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.


	Three Months Ended December 31,								Year Ended December 31,
($ in thousands)	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Net income (loss)1	$	439	$	4,868	$	(4,429)	(91.0)	%	$	(60,489)	$	(179,852)	$	119,363	(66.4)	%
Depreciation and amortization	13,904		20,252		(6,348)		(31.3)	%	59,096		62,512		(3,416)		(5.5)	%
Interest expense, net	13,079		14,331		(1,252)		(8.7)	%	55,979		60,819		(4,840)		(8.0)	%
Income tax expense	2,616		7,950		(5,334)		(67.1)	%	49,873		32,950		16,923		51.4	%
EBITDA (non-GAAP)	$	30,038	$	47,401	$	(17,363)	(36.6)	%	$	104,459	$	(23,571)	$	128,030	nm
Other income (expense), net	3,272		(50)		3,322		nm		61,929		(1,740)		63,669		nm
Fair value mark-up for acquired inventory	—		—		—		100.0	%	123		—		123		100.0	%
Adjustments for acquisition and other non-core costs	4,493		4,434		59		1.3	%	16,851		31,570		(14,719)		(46.6)	%
Impairment loss	—		24		(24)		(100.0)	%	2,320		151,017		(148,697)		(98.5)	%
Share-based compensation	3,705		3,017		688		22.8	%	14,164		16,356		(2,192)		(13.4)	%
Adjusted EBITDA (non-GAAP)	$	41,508	$	54,826	$	(13,318)	(24.3)	%	$	199,846	$	173,632	$	26,214	15.1	%
1Net income (loss) includes amounts attributable to non-controlling interests.

Adjusted EBITDA, a non-GAAP financial measure, is defined as Net income (loss), excluding depreciation and amortization; interest expense, net; income taxes; Other income (expense), net; fair value mark-up for acquired inventory; adjustments for acquisition and other non-core costs; impairment loss; and shares-based compensation. Non-core costs include non-operating costs, such as costs related to acquisitions and restructuring, unique legal expenses, and other expenses that are mostly one-time in nature. Adjusted EBITDA was $41.5 million for the three months ended December 31, 2024, compared to $54.8 million for the three months ended December 31, 2023. The decrease in adjusted EBITDA of $13.3 million is primarily due to a decrease in gross profit. Adjusted EBITDA was $199.8 million for the year ended December 31, 2024, compared to $173.6 million for the year ended December 31,

2023. The increase in adjusted EBITDA of $26.2 million is primarily driven by a reduction in payroll and employee costs due to restructuring activities, along with a decrease in operating expenses due to cost control initiatives.

CRITICAL ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS

The preparation of the Company’s Consolidated Financial Statements under GAAP requires management to make estimates, judgments and assumptions about the carrying amounts of certain assets and liabilities. Estimates and related assumptions are based on historical experience, and other relevant factors. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis for reasonableness, and relevancy. Where revisions are required, they are recognized in the period in which the estimate is revised for the current as well as future periods that are affected.

We believe that our accounting policies and estimates that require the most significant judgments, and assumptions are discussed below.

(i)Goodwill and Indefinite-Lived Intangible Asset Impairment

The Company relies on a number of factors, including historical results, business plans, forecasts, market data, and discount rates. An estimated fair value is determined using the present value of estimated future cash flows under this methodology, and any excess of recorded goodwill over estimated fair value is written off through impairment expense. Key estimates include perpetual growth rates ranging from 2.0% to 3.0% and discount rates ranging between 13.0% and 18.0% based on the pre-tax weighted average cost of capital of each reporting unit and other peers in the industry weighted-average cost of capital, and forecasts. Changes in the conditions for these judgments can significantly affect the assessed value of goodwill, and indefinite-lived intangible assets. We completed our annual evaluation for impairment of goodwill, and indefinite-lived intangible assets during the fourth quarter of 2024. The evaluation indicated that the fair value estimates of our reporting units exceeded their carrying values by sufficient margins, and no additional impairments were required.

(ii)Impairment of Long-lived Assets

The Company measures impairment by comparing the carrying value to the estimated fair value of long-lived assets, which is primarily by using the projected future cash flows based on forecasted data. Long-lived assets include, but are not limited to, property and equipment, right of use assets, and definite-lived intangible assets. When impairment exists, the related assets are written down to fair value.

(iii)Income Tax

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. Our most significant permanent, and temporary differences relate to Section 280E, amortization, and impairment charges. The Company reviews the adequacy of these provisions at the end of the reporting period. In addition to uncertain tax positions discussed below, our most significant underlying assumptions reviewed is the estimated timing and realization of deferred tax assets, and related valuation allowance. However, it is possible that at some future date an additional liability could result from audits by taxing authorities, and it is possible that there could be non-income based tax or other liabilities (including distribution liabilities to non-controlling interest holders which are based on income taxes) that result from these audits. Where the final outcome of these tax‑related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made. Any impact to non-income-based taxes, and other liabilities are evaluated in accordance ASC 450 Contingencies.

Uncertain tax positions are recognized and measured using a two-step process: (1) determine whether a benefit may be recognized and (2) measure the amount of the benefit. Tax benefits from uncertain tax positions may be recognized only if it is more likely than not that the tax position is sustainable based on its technical merits. Uncertain tax positions are evaluated at the individual tax position level. The tax benefit is measured by using a cumulative probability model: the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Any interest or penalties related to uncertain tax positions are recognized within Income taxes payable in the Consolidated Balance Sheets.

(iv)Contingencies

The Company is subject to lawsuits, investigations, and other claims related to employment, commercial, regulatory, and other matters that arise out of operations in the normal course of business. At each reporting period, the Company reviews the status of each significant matter and assesses the potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable, and the amount can be reliably estimated, such amount is recognized in Accrued liabilities.

Contingent liabilities are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value where the effect is material.

(v)Inventory

In calculating final inventory values, management compares the inventory cost to estimated net realizable value. The net realizable value of inventories represents the estimated selling price of inventory in the ordinary course of business, less all estimated costs of completion and costs necessary to complete the sale. The determination of net realizable value requires significant judgment including consideration of factors such as shrinkage, the aging of and future demand for inventory, and the future selling price the Company expects to realize by selling the inventory. Reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts, and net realizable value. The estimates are judgmental in nature and are made at a point in time, using available information, expected business plans, and expected market conditions. As a result, the actual amount received on sale could differ from estimates. Periodic reviews are performed on the inventory balance and the impact of changes in inventory reserves is recorded in COGS.

(vi)Expected Credit Loss (“ECL”) on Receivables

The Company calculates ECLs in accordance with ASC 326 Financial Instruments - Credit Losses using the current ECL methodology. The Company develops a provision matrix and measures the expected credit losses based on lifetime expected credit losses, taking into consideration historical credit loss experience and financial factors specific to the debtors. In developing a provision matrix, the Company:

(i) determines the appropriate groupings of receivables into categories of shared credit risk characteristics,

(ii) determines historical loss rates,

(iii) considers forward-looking macro-economic factors and adjusts historical loss rates to reflect relevant future economic conditions,

(iv) calculates expected credit losses and

(v) concludes on the accounting implications.

The inputs and models used for calculating expected credit losses may not always capture all characteristics of the market at the date of the financial statements. To reflect this, temporary, qualitative adjustments may be made using expert credit judgment. The allowance the Company records, if any, is the sum of these probability-weighted outcomes.

The critical accounting estimates below do not represent a material estimate in the preparation of our 2024 consolidated financial statements; however, these estimates have in the past been and are likely in the future to be significant based on our current policies.

(i)Business Combinations and Asset Acquisitions

Determination of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business. The classification can have a significant impact on the accounting on and subsequent to the acquisition date.

(ii)Share-Based Compensation

In determining the fair value of share-based awards for the purpose of calculating compensation expense, key estimates such as the rate of forfeiture of awards granted, the expected life of options, the volatility of the Company’s stock price and the risk-free interest rate are used. For awards with performance conditions, additional estimates for the probability of achievement of performance-based goals are also necessary.

(iii)Fair Value Measurements

Fair value is defined as a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on a specified date. The Company estimates fair value of financial instruments in accordance ASC 820 Fair Value Measurement, using quoted market prices whenever available and utilizing standard pricing models in situations where quoted market prices are not available.

Change in Accounting Policy

On December 1, 2024, the Company elected to change its accounting policy related to its annual impairment test date from October 1 to December 1. The Company implemented the change to better align impairment testing with our annual financial and strategic planning process, which includes several key factors for each reporting unit, including projected future operating results, anticipated future cash flows, discount rates, and the allocation of shared or corporate costs used in our annual impairment testing. During 2024, the Company performed annual impairment testing on October 1, 2024 and December 1, 2024, and concluded there was impairment of the carrying value of indefinite-lived intangible assets. The change was applied prospectively in accordance with ASC 250 Change in Accounting Principle.

On October 1, 2023, the Company elected to change its accounting policy related to the computation of short-term versus long-term lease liabilities. Previously, the current portion of the lease liability was determined by summing the present value of lease payments for the next twelve (12) months. Under the new methodology, the current portion of the lease liability is now calculated by summing the lease liability reduction for the next twelve (12) months. The Company implemented the change to better leverage its automated lease accounting software and further streamline its month-end and quarter-end close processes. Both methodologies are allowable under GAAP. The change was applied retrospectively, and all prior periods presented in the consolidated financial statements have been adjusted in accordance with the updated policy.

Newly Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company adopted this ASU for the fiscal year ended December 31, 2024. This ASU did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses. This ASU is intended to enhance transparency into the nature and function of expenses. The ASU requires that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization, and depletion. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Upon adoption, this ASU should be applied on a prospective basis, while retrospective application is permitted. The Company is currently assessing the impact of the disclosure requirements on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures. The ASU expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation, as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis, with retrospective application permitted. The Company plans to adopt this ASU for the fiscal year ended December 31, 2025 and is currently assessing the impact on our consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission's (“SEC”) Disclosure Update and Simplification Initiative. The amendments in this update represent changes to clarify or improve disclosure and presentation requirements of a variety of Topics in the ASC. The amendments should be applied on a prospective basis and allow users to more easily compare entities subject to SEC's existing disclosure with those entities that were not previously subject to the SEC's requirements. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

Reclassifications

Certain prior period amounts were reclassified to conform to the current presentation. As of December 31, 2023, the Company decoupled Tax receivable agreement liability and Uncertain tax position liability balances previously included in Other long-term liabilities on the Consolidated Balance Sheets. Additionally, the Company reclassified Loans receivable, short-term balances to Other current assets as well as Loans receivable, long-term and Investments to Other non-current assets. The reclassifications had no effect on Total Assets or Total Liabilities.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary sources of liquidity are cash and cash equivalents from the operations of our business, debt, and equity offerings. Our principal uses of cash include working capital related items, capital expenditures, debt, and tax related payments. Additionally, we may use cash for acquisitions and other investing or financing activities.

As of December 31, 2024, the Company held $137.6 million in Cash and cash equivalents and $6.7 million in Restricted cash, included in both Restricted cash and Other non-current assets on the Consolidated Balance Sheets, compared to $103.4 million in Cash and Cash equivalents, and $5.1 million in Restricted cash at December 31, 2023.

The Company is generally able to access private and/or public financing through, but not limited to, institutional lenders, such as the Amended Loan Agreement of $400.0 million, effective August 12, 2021, and amended on September 22, 2023, and August 29, 2024. JDRC Ellenville, LLC (“Ellenville”), an indirect subsidiary of the Company, entered into a $25.3 million loan on September 26, 2023, secured by real estate and improvements thereto. In addition, the Company has received and has access to private loans through individual investors and private and public equity raises. See “Recent Developments” for additional information on the repurchase of a portion of the Amended Loan Agreement.

The Company expects cash on hand and cash flows from operations, along with the private and/or public financing options discussed above, will be adequate to meet capital requirements and operational needs for the next twelve months. We cannot guarantee this will be the case, or that our assumptions regarding revenues and expenses underlying this belief will be accurate. If, in the future, we require more liquidity than contemplated, we may need to raise additional funds through debt and/or equity offerings. Adequate funds may not be available when needed or may not be available on terms favorable to us. If additional funds are raised by issuing equity securities, dilution to existing shareholders may result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition, and results of operations.

Cash Flows

Operating Activities

Net cash provided by operating activities was $132.5 million for the year ended December 31, 2024, an increase of $73.9 million compared to $58.6 million of net cash provided by operating activities during the year ended December 31, 2023. The $73.9 million increase was primarily attributable to a reduction in our income taxes payable related to our updated position on 280E, production efficiencies, reductions in payroll and employee costs due to restructuring activities, overall cost control initiatives, and reduced operations in certain markets in 2023.

Investing Activities

Net cash used in investing activities was $25.2 million for the year ended December 31, 2024, a decrease of $19.4 million compared to $44.6 million during the year ended December 31, 2023. The decrease in net cash used in investing activities was primarily driven by a decrease in capital expenditures, partially offset by an increase in acquisition related considerations, proceeds from sales of assets from exiting certain markets.

Financing Activities

Net cash used in financing activities was $71.5 million for the year ended December 31, 2024, an increase of $44.6 million compared to $26.9 million for the year ended December 31, 2023. The increase was primarily driven by repayment of a portion of the Senior Loan in 2024 and the proceeds of issuing long term debt in 2023, partially offset by a decrease in distributions to non-controlling interest redeemable unit holders and other members due to our updated tax position on 280E.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have a current or future effect on financial performance or financial condition, including without limitation, such considerations as liquidity and capital resources.

CONTRACTUAL OBLIGATIONS

The Company has the following contractual obligations as of December 31, 2024:


($ in thousands)	< 1 Year		1 to 3 Years		3 to 5 Years		> 5 Years		Total
Accounts payable & Accrued liabilities	$	63,922	$	—	$	—	$	—	$	63,922
Deferred and contingent consideration, short-term	2,486		—		—		—		2,486
Operating leases liabilities	29,467		59,187		58,523		133,219		280,396
Finance lease liabilities	5,020		10,386		10,093		13,368		38,867
Deferred and contingent consideration, long-term	—		7,736		—		—		7,736
Short-term borrowings and Long-term notes and loans payable	23,200		388,803		30,267		106,445		548,715
Tax receivable agreement liability	4,026		10,586		10,999		57,871		83,482
Other long-term liabilities	—		8,146		—		—		8,146
Total obligations as of December 31, 2024	$	128,121	$	484,844	$	109,882	$	310,903	$	1,033,750

RELATED PARTY TRANSACTIONS

See Note 14 “Related Party Transactions” in the Consolidated Financial Statements for the Company’s disclosures on related party transactions.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors and Company management mitigate these risks by assessing, monitoring, and approving the Company’s risk management processes. See Note 16 “Financial Instruments and Financial Risk Management” in the Consolidated Financial Statements for the Company’s disclosures on financial instruments and financial risk management.

SUMMARY OF OUTSTANDING SHARE AND SHARE-BASED DATA

Cresco Labs has the following securities issued and outstanding, as of December 31, 2024:


Securities						Number of Shares (in thousands)

Super Voting Shares						500
Subordinate Voting Shares1						331,490
Proportionate Voting Shares2						17,107

Special Subordinate Voting Shares3						2
Redeemable Units4						92,057

1 SVS includes shares pending issuance or cancellation

2 PVS presented on an “as-converted” basis to SVS (1-to-200)

3 SSVS presented on an “as-converted” basis to SVS (1-to-0.00001)

4 Redeemable units of Cresco Labs, LLC, each of which is exchangeable for one (1) SVS

crlbf-20241231_d2

Exhibit 99.6

CRESCO LABS INC.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2024 AND 2023

(Expressed in United States Dollars)

CRESCO LABS INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm			2
Consolidated Financial Statements:
Balance Sheets as of December 31, 2024 and December 31, 2023			3
Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and December 31, 2023			4
Statements of Changes in Shareholders’ Equity for the years ended December 31, 2024 and December 31, 2023			5
Statements of Cash Flows for the years ended December 31, 2024 and December 31, 2023			6
Notes to the Consolidated Financial Statements:
Note 1. Nature of Operations			8
Note 2. Summary of Significant Accounting Policies			9
Note 3. Inventory			20
Note 4. Property and Equipment			21
Note 5. Leases			22
Note 6. Intangible Assets and Goodwill			25
Note 7. Share Capital			28
Note 8. Share-Based Compensation			31
Note 9. Loss Per Share			35
Note 10. Acquisitions and Dispositions			36
Note 11. Long-term Notes and Loans Payable, Net			39
Note 12. Revenues and Loyalty Programs			41
Note 13. Other (Expense) Income, Net			42
Note 14. Related Party Transactions			42
Note 15. Commitments and Contingencies			43
Note 16. Financial Instruments and Financial Risk Management			44
Note 17. Variable Interest Entities			51
Note 18. Segment Information			52
Note 19. Interest Expense, Net			53
Note 20. Provision for Income Taxes and Deferred Income Taxes			53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Cresco Labs Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cresco Labs Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of a Matter – Change in Accounting Policy

As discussed in Note 2(p) to the consolidated financial statements, the Company has elected to change its accounting policy related to its annual impairment test date. The Company changed their annual date from October 1 to December 1, which has been presented prospectively.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

Marcum LLP (PCAOB ID: 688)

We have served as the Company’s auditor since 2019.

New York, NY

March 14, 2025


Cresco Labs Inc. Consolidated Balance Sheets As of December 31, 2024 and December 31, 2023 (In thousands of United States Dollars, except share amounts)


	December 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	137,564	$	103,429
Restricted cash	3,439		5,091
Accounts receivable, net	51,563		51,070
Inventory, net	83,343		107,789

Prepaid expenses	16,120		6,417

Other current assets	2,228		4,291
Total current assets	294,257		278,087
Non-current assets:
Property and equipment, net	344,846		368,308
Right-of-use assets	110,657		117,882
Intangible assets, net	293,994		296,966


Goodwill	283,484		279,697
Deferred tax asset	13,127		11,547

Other non-current assets	14,990		5,980
Total non-current assets	1,061,098		1,080,380
TOTAL ASSETS	$	1,355,355	$	1,358,467
LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	13,651	$	27,587
Accrued liabilities	54,296		69,079
Short-term borrowings	11,934		11,817
Income taxes payable	348		82,343
Current portion of lease liabilities	11,623		9,416
Deferred and contingent consideration, short-term	2,486		—


Total current liabilities	94,338		200,242
Non-current liabilities:
Long-term notes and loans payable, net	460,750		497,713

Lease liabilities	155,334		163,811
Deferred tax liability	38,950		40,457
Deferred and contingent consideration, long-term	7,736		6,577
Tax receivable agreement liability	79,457		13,714
Uncertain tax position liability	122,468		—
Other long-term liabilities	8,146		7,886
Total non-current liabilities	872,841		730,158
TOTAL LIABILITIES	$	967,179	$	930,400
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS’ EQUITY
Super Voting Shares, no par value; Unlimited shares authorized; 500,000 shares issued and outstanding at December 31, 2024 and December 31, 2023
Subordinate Voting Shares, no par value; Unlimited shares authorized; 331,490,358 and 320,757,119 issued and outstanding at December 31, 2024 and December 31, 2023, respectively
Proportionate Voting Shares1, no par value; Unlimited shares authorized; 17,106,732 and 18,949,596 issued and outstanding at December 31, 2024 and December 31, 2023, respectively
Special Subordinate Voting Shares2, no par value; Unlimited shares authorized; 1,589 shares issued and outstanding at December 31, 2024 and December 31, 2023
Share capital	1,706,822		1,689,452
Additional paid-in-capital	122,750		82,927
Accumulated other comprehensive loss	(2,232)		(1,151)
Accumulated deficit	(1,352,486)		(1,265,536)
Equity of Cresco Labs Inc.	474,854		505,692
Non-controlling interests	(86,678)		(77,625)
TOTAL SHAREHOLDERS’ EQUITY	388,176		428,067
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,355,355	$	1,358,467

1Proportionate Voting Shares (“PVS”) presented on an “as-converted” basis to Subordinate Voting Shares (“SVS”) (1-to-200)

2Special Subordinate Voting Shares (“SSVS”) presented on an “as-converted” basis to SVS (1-to-0.00001)

The accompanying notes are an integral part of these consolidated financial statements.


Cresco Labs Inc. Consolidated Statements of Operations and Comprehensive Loss For the Years Ended December 31, 2024 and 2023 (In thousands of United States Dollars, except share and per share amounts)


	Year Ended December 31,
		2024		2023
Revenues, net		$	724,343	$	770,885

Costs of goods sold		359,889		408,519

Gross profit		364,454		362,366

Operating expenses:
Selling, general and administrative		254,842		299,172
Impairment loss		2,320		151,017

Total operating expenses		257,162		450,189

Income (loss) from operations		107,292		(87,823)

Other income (expense), net:
Interest expense, net		(55,979)		(60,819)
Other (expense) income, net		(61,929)		1,740


Total other expense, net		(117,908)		(59,079)
Loss before income taxes		(10,616)		(146,902)
Income tax expense		(49,873)		(32,950)
Net loss		$	(60,489)	$	(179,852)
Net income (loss) attributable to non-controlling interests, net of tax		13,949		(4,330)
Net loss attributable to Cresco Labs Inc.		$	(74,438)	$	(175,522)

Net loss per share - attributable to Cresco Labs Inc. shareholders:
Basic and diluted loss per share		$	(0.22)	$	(0.54)



Basic and diluted weighted-average shares outstanding		345,474,155		323,819,766


Comprehensive loss:
Net loss		$	(60,489)	$	(179,852)
Foreign currency translation differences, net of tax		(1,081)		242
Total comprehensive loss for the period		(61,570)		(179,610)
Comprehensive income (loss) attributable to non-controlling interests, net of tax		13,949		(4,330)
Total comprehensive loss attributable to Cresco Labs Inc.		$	(75,519)	$	(175,280)

The accompanying notes are an integral part of these consolidated financial statements.


Cresco Labs Inc. Consolidated Statements of Changes in Shareholders’ Equity For the Years Ended December 31, 2024 and 2023 (In thousands of United States Dollars)


	Share capital		Additional paid-in capital		Accumulated other comprehensive income (loss), net of tax		Accumulated deficit		Non-controlling interests		Total

















































Balance as of January 1, 2023	$	1,617,093	$	87,537	$	(1,393)	$	(1,076,198)	$	(39,356)	$	587,683

















































Share-based compensation	9,059		6,280		—		—		—		15,339
Employee taxes withheld on certain share-based payment arrangements	—		(713)		—		—		—		(713)
Income tax reserve	—		—		—		7,212		—		7,212
Payable pursuant to tax receivable agreement	33		—		—		—		—		33

Equity issued related to settlement of acquisition related contingent consideration	47,238		—		—		—		—		47,238
Equity issuances and other adjustments	2		—		—		—		—		2
Tax distributions to non-controlling interest holders	—		(10,177)		—		787		(33,557)		(42,947)
Excess cash distributions to non-controlling interest holders	—		—		—		—		(6,170)		(6,170)
Cresco LLC shares redeemed	16,027		—		—		(21,815)		5,788		—
Foreign currency translation	—		—		242		—		—		242
Net loss	—		—		—		(175,522)		(4,330)		(179,852)
Ending Balance as of December 31, 2023	$	1,689,452	$	82,927	$	(1,151)	$	(1,265,536)	$	(77,625)	$	428,067
Exercise of stock options	14		(6)		—		—		—		8
Share-based compensation	6,403		7,928		—		—		—		14,331
Employee taxes withheld on certain share-based payment arrangements	—		(746)		—		—		—		(746)

Payable pursuant to tax receivable agreement	21		—		—		—		—		21


Equity issuances	(200)		—		—		—		—		(200)
Equity issuances related to acquisitions	2,850		—		—		—		—		2,850
Tax distributions to non-controlling interest holders	—		32,647		—		—		(22,077)		10,570
Excess cash distributions to non-controlling interest holders	—		—		—		—		(5,155)		(5,155)
Cresco LLC shares redeemed	8,282		—		—		(12,512)		4,230		—
Foreign currency translation	—		—		(1,081)		—		—		(1,081)
Net (loss) income	—		—		—		(74,438)		13,949		(60,489)
Ending Balance as of December 31, 2024	$	1,706,822	$	122,750	$	(2,232)	$	(1,352,486)	$	(86,678)	$	388,176

The accompanying notes are an integral part of these consolidated financial statements.


Cresco Labs Inc. Consolidated Statements of Cash Flows For the Years Ended December 31, 2024 and 2023 (In thousands of United States Dollars)


	Year Ended December 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(60,489)	$	(179,852)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	59,096		62,512
Amortization of operating lease assets	6,897		6,792
Bad debt expense and provision expense for expected credit loss	1,730		10,706
Share-based compensation expense	14,164		16,356
Loss on investments	72		500
(Gain) loss on changes in fair value of deferred consideration	(598)		1,204
Tax receivable agreement expense	65,648		—

Loss on inventory write-offs and provision	968		3,820
Change in deferred taxes	206		(32,659)
Accretion of discount and deferred financing costs on debt arrangements	4,855		4,416
Loss on debt extinguishment	1,002		—
Foreign currency (gain) loss	(1,039)		303
Loss (gain) on disposals of property and equipment	683		(13)

Impairment loss	2,320		151,017
Gain on lease termination	—		(1,965)
Proceeds of contingent consideration in excess of costs over estimated earnings	598		—
Loss on other adjustments to net income	24		209
Changes in operating assets and liabilities:
Accounts receivable	(1,731)		(5,369)
Inventory	18,556		23,491
Prepaid expenses and other assets	2,486		2,598
Accounts payable and accrued liabilities	(15,539)		27,795
Operating lease liabilities	(7,902)		(28,002)

Income taxes payable	40,473		(5,295)
NET CASH PROVIDED BY OPERATING ACTIVITIES	132,480		58,564
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(19,492)		(55,385)
Purchase of intangibles	(3,994)		(2,498)
Proceeds from tenant improvement allowances	1,055		2,594
Payment of acquisition consideration, net of cash acquired	(3,230)		—

Proceeds from disposals of property and equipment	432		11,704


Payments of loans and advances	—		(1,000)
NET CASH USED IN INVESTING ACTIVITIES	(25,229)		(44,585)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options	9		—

Proceeds from the issuance of long-term debt	—		20,175
Payment of debt issuance costs	—		(1,947)

Repayment of debt	(40,000)		—
Proceeds (payment) of acquisition-related contingent consideration	705		(1,787)
Payment for equity transfer	(200)		—
Tax distribution payments in accordance with the tax receivable agreement	—		(222)
Tax distributions to non-controlling interest redeemable unit holders and other members	(22,077)		(32,770)
Excess cash distributions to non-controlling interest redeemable unit holders and other members	(5,155)		(6,170)
Principal payment of property, plant, and equipment vendor financing	(976)		(701)

Principal payments on finance lease obligations	(3,784)		(3,485)

NET CASH USED IN FINANCING ACTIVITIES	(71,478)		(26,907)
Effect of exchange rate changes on cash and cash equivalents	(39)		(62)
Net increase (decrease) in cash and cash equivalents	35,734		(12,990)
Cash and cash equivalents and restricted cash, beginning of period	108,520		121,510
Cash and cash equivalents, end of period	137,564		103,429
Restricted cash, end of period	3,439		5,091
Restricted cash included in other non-current assets, end of period	3,251		—
Cash and cash equivalents and restricted cash, end of period	$	144,254	$	108,520


Cresco Labs Inc. Consolidated Statements of Cash Flows For the Years Ended December 31, 2024 and 2023 (In thousands of United States Dollars)


	Year Ended December 31,
	2024		2023
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

CASH PAID DURING THE PERIOD FOR:
Income tax, net	$	9,195	$	70,896
Interest	55,196		53,616

NON-CASH INVESTING AND FINANCING TRANSACTIONS:

Issuance of shares under business combinations and acquisitions	$	2,850	$	—
Non-cash consideration for business combination	—		47,238
Non-controlling interests redeemed for equity	4,230		5,788
Increase to net lease liability	680		1,474
Receivable due from seller of previous acquisition	—		705
Liability incurred to purchase property, equipment and intangibles	1,218		93
Liability of property, plant and equipment purchased through vendor financing	490		748
Purchase of property, plant and equipment through inventory	—		48
Purchase of inventory through inventory	39		—

(Overpaid) unpaid declared distributions to non-controlling interest redeemable unit holders	(17,401)		10,176
Receivable related to financing lease transactions	612		612

Liability incurred in accordance with tax receivable agreement	83,482		14,564

The accompanying notes are an integral part of these consolidated financial statements.


Cresco Labs Inc. Notes to the Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023


NOTE 1. NATURE OF OPERATIONS

Cresco Labs Inc. (“Cresco Labs” or the “Company”), formerly known as Randsburg International Gold Corp. was incorporated in the Province of British Columbia under the Company Act on July 6, 1990. The Company is one of the largest vertically-integrated multi-state cannabis operators in the United States licensed to cultivate, manufacture and sell retail and medical cannabis products primarily through Sunnyside*®, Cresco Labs’ national dispensary brand and third-party retail stores. Employing a consumer-packaged goods approach to cannabis, Cresco Labs’ 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®, Mindy’sTM, Good News®, RemediTM, Wonder Wellness Co.® and FloraCal® Farms. As of December 31, 2024, the Company operates in Illinois, Pennsylvania, Ohio, California, New York, Massachusetts, Michigan, and Florida pursuant to applicable state and local laws and regulations. These include the Illinois Compassionate Use of Medical Cannabis Program Act and the Illinois Cannabis Regulation and Tax Act; the Pennsylvania Medical Marijuana Act; Chapters 3796 and 3780 of the Ohio Revised Code; the California Medicinal and Adult-Use Cannabis Regulation and Safety Act; the New York Marihuana Regulation and Taxation Act; Massachusetts General Laws Chapters 94G and 94I; the Michigan Medical Marihuana Act, the Michigan Medical Marihuana Facilities Licensing Act, the Michigan Regulation and Taxation of Marihuana Act, and the Michigan Marihuana Tracking Act; and Article X section 29 of the Florida Constitution and section 381.986, Florida Statues, respectively.

The Company’s SVS are listed on the Canadian Securities Exchange under the ticker symbol “CL” and are quoted on the Over-the-Counter Market under the ticker symbol “CRLBF” and on the Frankfurt Stock Exchange under the symbol “6CQ.”

The Company’s corporate office is located at 600 W. Fulton Street, Suite 800, Chicago, IL 60661. The registered office is located at 666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8.


Cresco Labs Inc. Notes to the Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Basis of Preparation

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

(b)Basis of Measurement

The accompanying consolidated financial statements have been prepared on a going concern basis, under the historical cost convention, except for certain loans receivable, investments, and contingent considerations, which are recorded at fair value. Historical cost is generally based upon the fair value of the consideration given in exchange for assets acquired and the contractual obligation for liabilities incurred.

(c)Functional and Presentation Currency

The Company’s functional currency and that of the majority of its subsidiaries is the United States (“U.S.”) dollar. The Company’s reporting currency is the U.S. dollar (“USD”). Foreign currency denominated assets and liabilities are remeasured into the functional currency using period-end exchange rates. Gains and losses from foreign currency transactions are included in Other (expense) income, net in the Consolidated Statements of Operations.

Assets and liabilities of foreign operations having a functional currency other than USD (e.g., Canadian dollars) are translated at the rate of exchange prevailing at the reporting date; revenues and expenses are translated at the monthly average rate of exchange during the period. Gains or losses on translation of foreign subsidiaries and net investments in foreign operations are included in Foreign currency translation differences, net of tax in the Consolidated Statements of Comprehensive Loss and Accumulated other comprehensive loss on the Consolidated Balance Sheets.

(d)Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries with intercompany balances and transactions eliminated upon consolidation. Subsidiaries are those entities over which the Company has the power over the investee, is exposed, or has rights, to variable involvement with the investee; and has the ability to use its power to affect its returns. The following are Cresco Labs’ wholly-owned or controlled entities as of December 31, 2024:

Entity

Location

Purpose

Percentage
Held

Cresco Labs Inc.

British Columbia, Canada

Parent Company

Cali-Antifragile Corp.

California

Holding Company

100%

River Distributing Co., LLC

California

Holding Company

100%

Sonoma's Finest fka FloraCal

California

Cultivation

100%

Cub City, LLC

California

Cultivation

100%

CRHC Holdings Corp.

Ontario, Canada

Holding Company

100%

Cannroy Delaware Inc.

Delaware

Holding Company

100%

Laurel Harvest Labs, LLC

Pennsylvania

Cultivation and Dispensary Facility

100%

JDRC Mount Joy, LLC

Illinois

Holding Company

100%

JDRC Scranton, LLC

Illinois

Holding Company

100%

Bluma Wellness Inc.

British Columbia, Canada

Holding Company

100%

Cannabis Cures Investments, LLC

Florida

Holding Company

100%

3 Boys Farm, LLC

Florida

Cultivation, Production and Dispensary Facility

100%

Farm to Fresh Holdings, LLC

Florida

Holding Company

100%

Cresco U.S. Corp.

Illinois

Holding Company

100%

Keystone Integrated Care, LLC

Pennsylvania

Dispensary

100%

Cresco Labs Michigan Management, LLC

Michigan

Holding Company

100%

MedMar Inc.

Illinois

Holding Company

100%

MedMar Lakeview, LLC

Illinois

Dispensary

88%


Cresco Labs Inc. Notes to the Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023

Entity

Location

Purpose

Percentage
Held

MedMar Rockford, LLC

Illinois

Dispensary

75%

Gloucester Street Capital, LLC

New York

Holding Company

100%

Valley Agriceuticals, LLC

New York

Cultivation, Production and Dispensary Facility

100%

Valley Agriceuticals Real Estate

New York

Holding Company

100%

JDRC Ellenville, LLC

Illinois

Holding Company

100%

CMA Holdings, LLC

Illinois

Holding Company

100%

BL Real Estate, LLC

Massachusetts

Holding Company

100%

BL Pierce, LLC

Massachusetts

Holding Company

100%

BL Uxbridge, LLC

Massachusetts

Holding Company

100%

BL Main, LLC

Massachusetts

Holding Company

100%

BL Burncoat, LLC

Massachusetts

Holding Company

100%

BL Framingham, LLC

Massachusetts

Holding Company

100%

BL Worcester, LLC

Massachusetts

Holding Company

100%

Cultivate Licensing LLC

Massachusetts

Holding Company

100%

Cultivate Worcester, Inc.

Massachusetts

Dispensary

100%

Cultivate Leicester, Inc.

Massachusetts

Cultivation, Production and Dispensary Facility

100%

Cultivate Framingham, Inc.

Massachusetts

Dispensary

100%

Cultivate Cultivation, LLC

Massachusetts

Cultivation and Production Entity

100%

High Road Holdings LLC

Delaware

Holding Company

100%

SPS Management, LLC

Delaware

Holding Company

100%

GoodNews Holdings, LLC

Illinois

Licensing Company

100%

Wonder Holdings, LLC

Illinois

Licensing Company

100%

JDRC Seed, LLC

Illinois

Educational Company

100%

CP Pennsylvania Holdings, LLC

Illinois

Holding Company

100%

Bay, LLC

Pennsylvania

Dispensary

100%

Bay Asset Management, LLC

Pennsylvania

Holding Company

100%

Ridgeback, LLC

Colorado

Holding Company

100%

Cresco Labs Texas, LLC

Texas

Holding Company

100%

Cresco Labs, LLC

Illinois

Operating Entity

64%

Cresco Labs Ohio, LLC

Ohio

Cultivation, Production and Dispensary Facility

99%

Cresco Labs Notes Issuer, LLC

Illinois

Holding Company

Wellbeings, LLC

Delaware

CBD Wellness Product Development

100%

Cresco Labs SLO, LLC

California

Holding Company

100%

SLO Cultivation Inc.

California

Holding Company

80%

Cresco Labs Joliet, LLC

Illinois

Cultivation and Production Facility

100%

Cresco Labs Kankakee, LLC

Illinois

Cultivation and Production Facility

100%

Cresco Labs Logan, LLC

Illinois

Cultivation and Production Facility

100%

Cresco Labs PA, LLC

Illinois

Holding Company

100%

Cresco Yeltrah, LLC

Pennsylvania

Cultivation, Production and Dispensary Facility

100%

Strip District Education Center

Pennsylvania

Holding Company

100%

JDC Newark, LLC

Ohio

Holding Company

100%

Verdant Creations Newark, LLC

Ohio

Dispensary

100%

Strategic Property Concepts, LLC

Ohio

Holding Company

100%

JDC Marion, LLC

Ohio

Holding Company

100%

Verdant Creations Marion, LLC

Ohio

Dispensary

100%

Strategic Property Concepts 4, LLC

Ohio

Holding Company

100%

JDC Chillicothe, LLC

Ohio

Holding Company

100%

Verdant Creations Chillicothe, LLC

Ohio

Dispensary

100%

Strategic Property Concepts 5, LLC

Ohio

Holding Company

100%

JDC Columbus, LLC

Ohio

Holding Company

100%

Care Med Associates, LLC

Ohio

Dispensary

100%

Arizona Facilities Supply, LLC

Arizona

Holding Company

100%

PDI Medical III, LLC

Illinois

Dispensary

100%

Phoenix Farms of Illinois, LLC

Illinois

Dispensary

100%

FloraMedex, LLC

Illinois

Dispensary

100%


Cresco Labs Inc. Notes to the Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023

Entity

Location

Purpose

Percentage
Held

Cresco Edibles, LLC

Illinois

Holding Company

100%

TSC Cresco, LLC

Illinois

Licensing

75%

Cresco HHH, LLC

Massachusetts

Cultivation, Production and Dispensary Facility

100%

Cresco Labs Missouri Management, LLC

Missouri

Holding Company

100%

JDRC Acquisitions, LLC

Illinois

Holding Company

100%

JDRC 7841 Grand LLC

Illinois

Holding Company

100%

JDRC Lincoln, LLC

Illinois

Holding Company

100%

JDRC Danville, LLC

Illinois

Holding Company

100%

JDRC Kankakee, LLC

Illinois

Holding Company

100%

JDRC Brookville, LLC

Illinois

Holding Company

100%

Cresco Labs Michigan, LLC1

Michigan

Cultivation and Production Facility

85%

1Legally, Cresco Labs Michigan, LLC is 42.5% owned by a related party within management of the Company.

Cresco U.S. Corp., which is wholly owned by the Company, is the sole manager of Cresco Labs, LLC; Cresco Labs, LLC is the sole owner and manager of Cresco Labs Notes Issuer, LLC. Therefore, the Company controls Cresco Labs Notes Issuer, LLC and has consolidated its results into the consolidated financial statements.

Non-controlling interests (“NCI”) represent ownership interests in consolidated subsidiaries by parties that are not shareholders of the Company. They are shown as a component of total equity in the Consolidated Balance Sheets, and the share of income attributable to NCI is shown as Net income attributable to non-controlling interests, net of tax in the Consolidated Statements of Operations and in the Consolidated Statements of Comprehensive Loss. Changes in the parent company’s ownership that do not result in a loss of control are accounted for as equity transactions.

(e)Cash and Cash Equivalents

Cash and cash equivalents include cash deposits in financial institutions, other deposits that are readily convertible into cash, and cash on hand at retail locations. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents and mainly consist of certificates of deposits.

(f)Restricted Cash

Restricted cash represents amounts held in escrow related to investments, acquisitions, and building improvements.

(g)Accounts Receivable

Accounts receivable are recorded net of allowance for doubtful accounts. The Company develops a provision matrix and measures the expected credit losses based on lifetime expected credit losses, taking into consideration historical credit loss experience and financial factors specific to the debtors. The Company also estimates and provides an allowance for doubtful accounts based on contractual payment terms, actual payment history of its customers, current economic conditions, and individual customer circumstances. Accounts receivable are evaluated monthly based on expected collections over its life and an adjustment is recorded as needed. When a receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts previously written off are credited to the Consolidated Statements of Operations. See Note 16 “Financial Instruments and Financial Risk Management” for further discussion.

(h)Inventory

Inventory is primarily composed of raw materials (cannabis and non-cannabis), work-in-process, and finished goods. Inventory is recorded at the lower of cost or net realizable value, with cost determined


Cresco Labs Inc. Notes to the Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023

using the weighted average cost method. For manufactured inventory, costs incurred during the growing and production of cannabis and cannabis-based products are capitalized, net of yield adjustments, as incurred to the extent that costs are less than net realizable value. These costs include, but are not limited to, materials, labor, overhead and occupancy costs, cannabis taxes, and depreciation expense on equipment involved in manufacturing, packaging, labeling, inspection, and testing. Fixed costs associated with underutilized facilities are taken as expenses within the current period. Capacities are set using normalized operating capacity as defined by GAAP. Costs related to purchased finished goods are recorded at cost, including freight. The Company reviews inventory for obsolete, redundant, and slow-moving goods and any such inventory is written down to net realizable value.

(i)Property and Equipment

Property and equipment is stated at cost, net of accumulated depreciation. Land is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. The Company evaluates the recoverability of property, plant and equipment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. In those cases, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future undiscounted cash flows, the Company will determine the fair value of the assets within the asset group and record an impairment loss calculated as the excess in carrying value over fair value. Equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Leasehold improvements are amortized over the lesser of the life of the lease or estimated useful life of the improvement. Any gain or loss arising from derecognition or impairment of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the accompanying Consolidated Statements of Operations. The Company assesses property and equipment for indicators of impairment throughout the reporting period. See Note 4 “Property and Equipment” for additional details.


	2024		2023
Audit Fees	$	2,473,090	$	3,081,166
Audit-Related Fees	8,000		27,700

Other Fees	1,200		—
Total	$	2,482,290	$	3,108,866


Category						Estimated Useful Life
Customer Relationships						1 - 8 years

Trade Names						10 years
Permit Application Fees						1 - 2 years


($ in thousands)	December 31, 2024		December 31, 2023
Raw materials	$	12,010	$	12,649
Raw materials - non-cannabis	13,213		17,937
Work-in-process	33,803		51,538
Finished goods	22,931		24,138
Finished goods - non-cannabis	1,386		1,527

Inventory, net	$	83,343	$	107,789


($ in thousands)	December 31, 2024		December 31, 2023
Land and Buildings	$	209,668	$	207,194
Machinery and Equipment	44,347		41,928
Furniture and Fixtures	43,054		37,912
Leasehold Improvements	183,522		173,614
Website, Computer Equipment and Software	11,853		11,124
Vehicles	2,784		2,892
Construction In Progress	12,037		14,483
Total property and equipment, gross	507,265		489,147
Less: Accumulated depreciation	(162,419)		(120,839)
Property and equipment, net	$	344,846	$	368,308


	Year Ended December 31,
($ in thousands)		2024		2023
Depreciation expense included in cost of goods sold and ending inventory		$	28,648	$	35,716
Depreciation expense included in selling, general and administrative expense		15,547		18,475
Total depreciation expense		$	44,195	$	54,191


($ in thousands)	Operating Leases		Finance Leases		Total
2025	$	29,467	$	5,020	$	34,487
2026	29,613		5,146		34,759
2027	29,574		5,240		34,814
2028	29,551		5,124		34,675
2029	28,972		4,969		33,941
Thereafter	133,219		13,368		146,587
Total lease payments	$	280,396	$	38,867	$	319,263
Less: imputed interest	(134,142)		(15,998)		(150,140)
Less: tenant improvement allowance	(1,915)		(251)		(2,166)
Present value of lease liabilities	144,339		22,618		166,957
Less: current lease liabilities	(9,629)		(1,994)		(11,623)
Present value of long-term lease liabilities	$	134,710	$	20,624	$	155,334


($ in thousands)	Long-term financing liabilities
2025	$	13,875
2026	14,223
2027	14,580
2028	14,946
2029	15,321
Thereafter	81,598
Total financing payments	$	154,543
Less: interest	(60,919)
Less: tenant improvement allowance	(75)
Present value of financing liabilities	$	93,549
Less: short-term financing liabilities	(2,609)
Present value of long-term financing liabilities	$	90,940


($ in thousands)	Estimated Amortization Expense
2025	$	6,119
2026	4,271
2027	3,281
2028	2,963
2029	1,709

Total estimated amortization expense	$	18,343


($ in thousands)	Total
Balance at January 1, 2023	$	330,555
Impairment loss	(50,858)

Balance at December 31, 2023	279,697

Additions from acquisitions	3,637
Measurement period adjustments	150
Balance at December 31, 2024	$	283,484


(shares in thousands)	Redeemable Units	SVS1	PVS2	MVS	SSVS3
Beginning balance, January 1, 2023	106,106	280,994	20,082	500	1

RSUs issued	—	1,727	—	—	—
Issuance of shares related to settlement of acquisition contingent consideration	—	27,091	—	—	—
Cresco LLC redemptions	(9,407)	9,407	—	—	—
PVS converted to SVS	—	1,132	(1,132)	—	—
Issuances related to employee taxes on certain share-based payment arrangements	—	406	—	—	—
Share issuances	—	—	—	—	1
Ending Balance, December 31, 2023	96,699	320,757	18,950	500	2


Stock options exercised	—	5	—	—	—
RSUs issued	—	2,338	—	—	—
Issuance of shares related to acquisitions	—	1,422	—	—	—
Cresco LLC redemptions	(4,642)	4,642	—	—	—
PVS converted to SVS	—	1,843	(1,843)	—	—
Issuances related to employee taxes on certain share-based payment arrangements	—	483	—	—	—
Ending Balance, December 31, 2024	92,057	331,490	17,107	500	2


($ in thousands)	TSC Cresco, LLC				MedMar Inc. (Lakeview)				MedMar Inc. (Rockford)				Cresco Labs Ohio, LLC				SLO Cultivation Inc.				Cresco Labs Michigan, LLC				Cresco Labs, LLC1,3







Revenue	$	—			$	40,511			$	65,362			$	18,215			$	—			$	23,275			$	358,060
Gross profit	(397)				26,198				43,051				5,684				(115)				574				194,803
Net income (loss)	$	230			$	16,453			$	35,927			$	(4,224)			$	(384)			$	(6,226)			$	2,077
Net income (loss) allocated to NCI4	$	86			$	2,041			$	8,986			$	(49)			$	(77)			$	(899)			$	3,861
NCI percentage as of December 31, 2024	25.0		%	1	12.4		%	2	25.0		%	2	1.2		%	1	20.0		%	1	15.0		%	1	36.4		%


(Stock options and intrinsic value in thousands)	Number of stock options outstanding	Weighted-average exercise price		Weighted-average remaining contractual life (years)	Aggregate intrinsic value




Outstanding – January 1, 2024	24,103	$	4.45	6.6	$	328
Granted1	4,822	1.51
Granted under the Option Exchange Program	2,237	2.10
Exercised	(5)	1.68
Forfeited	(3,117)	5.60
Cancelled under the Option Exchange Program	(3,887)	8.16
Outstanding - December 31, 2024	24,153	$	2.91	6.33	$	—
Exercisable - December 31, 2024	15,303	$	3.27	5.29	$	—
1 Granted stock options include stock options issued to the Company’s Chief Executive Officer during the year ended December 31, 2024 that vest based on the achievement of certain market-based performance goals over the performance period, including the achievement of certain stock price performance targets.


(In thousands, except per share data)	December 31, 2024		December 31, 2023

Weighted-average per share grant date fair value of stock options granted	$	1.03	$	1.21
Intrinsic value of stock options exercised, using market price at exercise date	$	3	$	—


(shares in thousands)	Number of RSUs outstanding	Weighted-average fair value
Outstanding – January 1, 2024	6,862	$	2.91
Granted	5,061	1.40
Vested and settled	(2,271)	2.82
Forfeited	(725)	2.18
Outstanding - December 31, 2024	8,927	$	2.14


	Year Ended December 31,
($ in thousands)		2024		2023
Cost of goods sold		$	1,121	$	1,059
Selling, general and administrative expense		5,313		6,025
Total share-based compensation expense for stock options		$	6,434	$	7,084


	Year Ended December 31,

($ in thousands, except per share amounts)		2024		2023
Numerator:
Net loss		$	(60,489)	$	(179,852)
Less: Net income (loss) attributable to non-controlling interests, net of tax		13,949		(4,330)
Net loss attributable to Cresco Labs Inc.		$	(74,438)	$	(175,522)

Denominator:
Weighted-average basic and diluted shares outstanding		345,474,155		323,819,766



Loss per Share:
Basic and diluted loss per share		$	(0.22)	$	(0.54)


($ in thousands)	Amount
Total consideration:
Shares issued	$	2,850
Cash	12
Payments of acquisition-related transaction costs on behalf of the acquiree	2,930
Payments	462
Contingent consideration	2,280
Total consideration	$	8,534

Net identifiable assets (liabilities) acquired
Cash	$	174
Inventory	250
Property and equipment	2,789
Other current assets	22
Customer relationships	300
Licenses	2,300
Total identifiable assets acquired	$	5,835

Accounts payable	$	(642)
Short-term liabilities	(446)
Total identifiable liabilities assumed	$	(1,088)

Purchase price allocation
Net identifiable assets acquired	$	4,747
Goodwill	3,787
Total consideration	$	8,534


		Year Ended December 31,
($ in thousands)	Classification		2024		2023
Operating Leases

Lessor has minority interest in MedMar	Rent expense		$	288	$	288
Lessor is an MVS shareholder1	Rent expense		98		1,187

Finance Leases
Lessor has minority interest in MedMar	Depreciation expense		$	306	$	306
Lessor has minority interest in MedMar	Interest expense		218		246
Lessor is an MVS shareholder1	Depreciation expense		8		90
Lessor is an MVS shareholder1	Interest expense		5		69


	December 31, 2024
($ in thousands)	Amortized Cost		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	137,564	$	—	$	—	$	—	$	137,564
Restricted cash1	6,690		—		—		—		6,690
Security deposits2	4,079		—		—		—		4,079
Accounts receivable, net	51,563		—		—		—		51,563
Loans receivable, short-term3	545		—		—		—		545
Loans receivable, long-term3	1,695		—		—		—		1,695
Investments4	—		53		—		600		653

Financial Liabilities:
Accounts payable	$	13,651	$	—	$	—	$	—	$	13,651
Accrued liabilities	50,271		—		—		—		50,271
Short-term borrowings	11,934		—		—		—		11,934
Current portion of lease liabilities	11,623		—		—		—		11,623
Deferred and contingent consideration, short-term	—		—		—		2,486		2,486


Long-term notes and loans payable, net	460,750		—		—		—		460,750
Lease liabilities	155,334		—		—		—		155,334
Deferred and contingent consideration, long-term	—		—		—		7,736		7,736
Tax receivable agreement liability5	83,482		—		—		—		83,482
Other long-term liabilities6	8,146		—		—		—		8,146


Year Ended December 31, 2024
Level 3 Fair Value Measurements
($ in thousands)	Deferred and contingent consideration, short-term		Deferred consideration and contingent, long-term
Balance as of December 31, 2023	$	—	$	6,577
Additions1	—		2,304
Change in fair value recorded in Interest expense, net	40		1,301




Other2	2,446		(2,446)
Balance as of December 31, 2024	$	2,486	$	7,736


Year Ended December 31, 2023
Level 3 Fair Value Measurements
($ in thousands)	Deferred consideration and other payables, short-term		Deferred consideration, long-term
Balance as of December 31, 2022	$	47,821	$	7,770

Change in fair value recorded in Interest expense, net	1,953		—
Change in fair value recorded in Other income, net	—		(895)
Payments1	(50,072)		—


Other2	298		(298)
Balance as of December 31, 2023	$	—	$	6,577


($ in thousands)	Valuation classification	December 31, 2024		December 31, 2023
Short-term loans receivable - Kurvana, net of ECL	Amortized cost	$	545	$	493
Short-term loans receivable - Spark’d, net of ECL	Amortized cost	—		928

Total Loans receivable, short-term		$	545	$	1,421