GRUSF 0001829126-24-002948 6-K Filing: May 1, 2024

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

WASHINGTON,D.C. 20549

FORM6-K

REPORTOF FOREIGN PRIVATE ISSUER

PURSUANTTO RULE 13a-16 OR 15d-16 UNDER THE

THESECURITIES EXCHANGE ACT OF 1934

Date: April 30, 2024

Commission File No. 0-53646

GrownRogue International Inc. (formerly Novicius Corp.)

(Translation of Registrant’s name into English)

550 Airport Road

Medford, Oregon, United States 97504

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ☐ No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ☐ No ☒

TABLEOF CONTENTS

1.	Consolidated Financial Statements for the two months ended December 31, 2023 and the Year ended October 31, 2023, as originally filed on Sedar on April 29, 2024
2.	Form 13-501F1 Class 1 Reporting Issuers and Class 3B Reporting Issuers- Participation Fee, as originally filed on Sedar on April 29, 2024
3.	Form 13-501F1 Class 1 Reporting Issuers and Class 3B Reporting Issuers- Participation Fee, as originally filed on Sedar on April 29, 2024
4.	Form 51-102F1 Management Discussion & Analysis for the two months ended December 31, 2023, as originally filed on Sedar on April 29, 2024
5.	Form 52-109FV1 CEO Certification of Annual Filings Venture Issuer Basic Certificate, as originally filed on Sedar on April 29, 2024
6.	Form 52-109FV1 CFO Certification of Annual Filings Venture Issuer Basic Certificate, as originally filed on Sedar on April 29, 2024
7.	News Release- Grown Rogue Completes Fiscal Year Change, Reports Audited Financial Results for the Two Months Ending December 31, 2023, as originally filed on Sedar on April 30, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated April 30, 2024	GROWN ROGUE INTERNATIONAL INC.
	(FORMERLY: NOVICIUS CORP.)
	By:	/s/ Obie Strickler
	Name:	Obie Strickler
	Title:	President & Chief Executive Officer

Exhibit 1

GROWN ROGUE INTERNATIONAL INC.

Consolidated Financial Statements

For the Two months ended December 31, 2023

and the Year ended October 31, 2023

Expressed in United States Dollars

Table of Contents

Consolidated Statements of Financial Position		7
Consolidated Statements of Comprehensive Income (Loss)		8
Consolidated Statements of Changes in Equity		9
Consolidated Statements of Cash Flows		10
Notes to the Consolidated Financial Statements
1.	Corporate Information and Defined Terms	11
2.	Significant Accounting Policies and Judgments and Defined Terms	13
3.	Biological Assets	24
4.	Inventory	25
5.	Business Combinations	25
6.	Other Investments, Purchase Deposits and Notes Receivable	26
7.	Leases	27
8.	Property and Equipment	28
9.	Intangible Assets and Goodwill	28
10.	Long-Term Debt	29
11.	Convertible Debentures	31
12.	Share Capital and Shares Issuable	33
13.	Warrants	34
14.	Stock Options	36
15.	Changes in Non-Cash Working Capital	37
16.	Supplemental Cash Flow Disclosure	37
17.	Related Party Transactions	38
18.	Financial Instruments	40
19.	General and Administrative Expenses	44
20.	Income Taxes	44
21.	Capital Disclosures	47
22.	Segment Reporting	48
23.	Non-Controlling Interests	48
24.	Legal Matters	49
25.	Subsequent Events	49

Report of Independent Auditors

To the Stockholders and Directors

Grown Rogue International, Inc.

Toronto, Ontario

Opinion

We have audited the consolidated financial statements of Grown Rogue International, Inc. (the “Company”), which comprise the consolidated statements of financial position at December 31, 2023 and October 31, 2023, and the consolidated statements of comprehensive income (loss), changes in equity and cash flows for the two months ended December 31, 2023 and the year ended October 31, 2023, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2023 and October 31, 2023, and its consolidated financial performance and its cash flows for the two months ended December 31, 2023 and the year ended October 31, 2023 in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

●	Measurement of fair value of biological assets – as discussed in Note 4 of the notes to the consolidated financial statements, the Company measures biological assets at fair value less costs to sell in accordance with IAS 41, Agriculture, which we identified as a key audit matter. The Company uses an income approach to determine the fair value less costs to sell at a specific measurement date, based on the existing cannabis plant’s stage of completion up to the point of harvest.
Turner, Stone & Company, L.L.P.<br><br> <br>Accountants and Consultants<br><br> <br>12700 Park Central Drive, Suite 1400<br><br> <br>Dallas, Texas 75251<br><br> <br>Telephone: 972-239-1660 ⁄ Facsimile: 972-239-1665<br><br> <br>Toll Free: 877-853-4195<br><br> <br>Web site: turnerstone.com	<br><br> <br>INTERNATIONAL ASSOCIATION OF ACCOUNTANTS AND AUDITORS
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●

Measurement of fair value of biological assets – as discussed in Note 4 of the notes to the consolidated financial statements, the Company measures biological assets at fair value less costs to sell in accordance with IAS 41, Agriculture, which we identified as a key audit matter. The Company uses an income approach to determine the fair value less costs to sell at a specific measurement date, based on the existing cannabis plant’s stage of completion up to the point of harvest.

Turner, Stone & Company, L.L.P. Accountants and Consultants 12700 Park Central Drive, Suite 1400 Dallas, Texas 75251 Telephone: 972-239-1660 ⁄ Facsimile: 972-239-1665 Toll Free: 877-853-4195 Web site: turnerstone.com

INTERNATIONAL ASSOCIATION OF ACCOUNTANTS AND AUDITORS

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Key Audit Matters (continued)

The following are the primary procedures we performed to address this key audit matter. We evaluated the design and tested calculations, including the assumptions used, to determine the fair value of the biological assets. We tested allocation of indirect costs, which formed part of standard cost per unit to complete production, by assessing the allocation method, recalculating the allocations and on a selection basis comparing the underlying allocation to source documents.

Other Information

Management is responsible for the other information. The other information comprises the information included in Management’s Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audits, or otherwise appears to be materially misstated.

We obtained Managements’ Discussion and Analysis prior to the date of this report of independent auditors. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an report of independent auditors that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

A further description of our responsibilities for the audit of the consolidated financial statements is included in Appendix A to this report of independent auditors. Those descriptions form a part of our report of independent auditors.

The engagement partner on the audit resulting in this report of independent auditors is Ricky L. McBride.

Certified Public Accountants

April 29, 2024

Appendix A

Report of Independent Auditors

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

○	Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error; to design and perform audit procedures responsive to those risks; and to obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
○	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
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○	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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○	Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of independent auditors to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause an entity to cease to continue as a going concern.
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○	Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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○	Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Company’s consolidated group audit. We remain solely responsible for our audit opinion.
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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during the audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report of independent auditors unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Grown Rogue International Inc.

Consolidated Statements of Financial Position

Expressed in United States Dollars



ASSETS
Current assets
Cash and cash equivalents
Accounts receivable (Note 18)
Biological assets (Note 3)
Inventory (Note 4)
Prepaid expenses and other assets
Total current assets
Property and equipment (Note 8)
Notes receivable (Notes 6.2.1 and 6.2.2)
Warrants asset (Note 13.2)
Intangible assets and goodwill (Note 9)
Deferred tax asset (Note 20)
TOTAL ASSETS
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
Current portion of lease liabilities (Note 7)
Current portion of long-term debt (Note 10)
Business acquisition consideration payable (Note 5)
Derivative liability (Notes 11.1.1, 11.2 and 11.2.1)
Income tax payable
Total current liabilities
Lease liabilities (Note 7)
Long-term debt (Note 10)
Convertible debentures (Notes 11.1, 11.2 and 11.2.1)
TOTAL LIABILITIES
EQUITY
Share capital (Note 12)
Contributed surplus (Notes 13 and 14)
Accumulated other comprehensive loss	)	)
Accumulated deficit	)	)
Equity attributable to shareholders
Non-controlling interests (Note 23)
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY

All values are in US Dollars.

Commitments and contingencies (Note 24)

Subsequent events (Note 25)

Approved on behalf of the Board of Directors:

Signed “J. Obie Strickler”, Director	Signed “Stephen Gledhill”, Director

The accompanying notes form an integral part of these consolidated financial statements.

Page 7 of 50

Grown Rogue International Inc.

Consolidated Statements of Comprehensive Income (Loss)

Expressed in United States Dollars

****	Two months ended December 31,	****	Year ended October 31,
	2023		2023

Revenue
Product sales (Note 2.6.1)
Service revenue (Note 2.6.2)
Total revenue
Cost of goods sold
Cost of finished cannabis inventory sold		)		)
Costs of service revenue		)		)
Gross profit, excluding fair value items
Realized fair value loss amounts in inventory sold		)		)
Unrealized fair value gain amounts on growth of biological assets
Gross profit
Expenses
Accretion expense
Amortization of property and equipment (Note 8)
General and administrative (Note 19)
Share-based compensation
Total expenses
Income from operations
Other income and (expense)
Interest expense		)		)
Other income (expense)
Unrealized gain (loss) on derivative liability				)
Unrealized gain on warrants asset
Loss on disposal of property and equipment		)		)
Total other income (expense), net				)
Gain (loss) from operations before taxes				)
Income tax (Note 20)		)		)
Net income (loss)				)
Other comprehensive income (items that may be subsequently reclassified to profit & loss)
Currency translation gain (loss)				)
Total comprehensive income (loss)				)
Gain (loss) per share attributable to owners of the parent – basic				)
Weighted average shares outstanding – basic
Gain (loss) per share attributable to owners of the parent – diluted
Weighted average shares outstanding – diluted
Net income (loss) for the period attributable to:
Non-controlling interest				)
Shareholders				)
Net income (loss)				)
Comprehensive income (loss) for the period attributable to:
Non-controlling interest				)
Shareholders				)
Total comprehensive income (loss)				)

All values are in US Dollars.

The accompanying notes form an integral part of these consolidated financial statements.

Page 8 of 50

Grown Rogue International Inc.

Consolidated Statements of Changes in Equity

Expressed in United States Dollars

	Number of<br>common<br>shares
	#
Balance – October 31, 2023		182,005,886	)	)
Stock option vesting expense		-
Currency translation gain		-
Net income		-
Balance – December 31, 2023		182,005,886	)	)

All values are in US Dollars.

	Number of<br>common<br>shares
	#
Balance – October 31, 2022		170,632,611		)	)
Issuance of shares underlying shares issuable (Note 12.1)		200,000	)
Stock option vesting expense		-
Currency translation loss		-		)			)
Exercise of option to acquire 87% of Canopy membership units		-				)
Goodness Growth warrants swap		-
Settlement of convertible debentures for common shares (Note 11.1.1)		11,173,275
Net loss		-			)	)	)
Balance – October 31, 2023		182,005,886		)	)

All values are in US Dollars.

The accompanying notes form an integral part of these consolidated financial statements.

Page 9 of 50

Grown Rogue International Inc.

Consolidated Statements of Cash Flow

Expressed in United States Dollars

	Two months ended December 31,		Year ended October 31,
	2023		2023

Operating activities
Net income (loss)				)
Adjustments for non-cash items in net income (loss):
Amortization of property and equipment
Amortization of property and equipment included in costs of inventory sold
Unrealized fair value gain amounts on growth of biological assets		)		)
Realized fair value loss amounts in inventory sold
Deferred income taxes				)
Share-based compensation
Accretion expense
Loss on disposal of property and equipment
Unrealized (gain) loss on fair value of derivative liability		)
Unrealized gain on warrants asset		)		)
Currency translation gain (loss)				)

Changes in non-cash working capital (Note 15)		)		)
Net cash provided by operating activities
Investing activities
Purchase of property and equipment and intangibles		)		)
Cash advances and loans made to other parties		)		)
Net cash used in investing activities		)		)
Financing activities
Proceeds from convertible debentures
Repayment of long-term debt		)		)
Repayment of convertible debentures		)		)
Payments of lease principal		)		)
Net cash provided by (used in) financing activities		)
Change in cash and cash equivalents		)
Cash and cash equivalents, beginning
Cash and cash equivalents, ending

All values are in US Dollars.

Supplemental cash flow disclosures (Note 16)

The accompanying notes form an integral part of these consolidated financial statements.

Page 10 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

1.	CORPORATE INFORMATION AND DEFINED TERMS
1.1	Corporate Information
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These consolidated financial statements for the two months ended December 31, 2023, and the year ended October 31, 2023, include the accounts of Grown Rogue International Inc. and its subsidiaries. The registered office is located at 40 King St W Suite 5800, Toronto, ON M5H 3S1.

Grown Rogue International Inc.’s subsidiaries and ownership thereof are summarized in the table below.

Company	Ownership	Defined Term
Grown Rogue International Inc.	100% owner of GR Unlimited	The “Company”
Grown Rogue Unlimited, LLC	100% by the Company	“GR Unlimited”
Grown Rogue Gardens, LLC	100% by Grown Rogue Unlimited, LLC	“GR Gardens”
GRU Properties, LLC	100% by Grown Rogue Unlimited, LLC	“GRU Properties”
GRIP, LLC	100% by Grown Rogue Unlimited, LLC	“GRIP”
Grown Rogue Distribution, LLC	100% by Grown Rogue Unlimited, LLC	“GR Distribution”
GR Michigan, LLC	87% by Grown Rogue Unlimited, LLC	“GR Michigan”
Canopy Management, LLC	87% by Grown Rogue Unlimited, LLC	“Canopy”
Golden Harvests LLC	60% by Canopy Management, LLC	“Golden Harvests”

The Company is primarily engaged in the business of growing and selling cannabis products. The primary cannabis product produced and sold is cannabis flower.

1.2	Defined Terms

Following are certain defined terms used herein:

Term	Defined Term	Reference
General terms:
International Financial Reporting Standards	“IFRS”
International Accounting Standards	“IAS”
International Accounting Standards Board	“IASB”
International Financial Reporting Interpretations Committee	“IFRIC”
United States	“U.S.”
United States dollar	“U.S. dollar”
Fair value less costs to sell	“FVLCTS”
Fair value through profit or loss	“FVTPL”
Fair value through other comprehensive income	“FVOCI”
Other comprehensive income	“OCI”
Solely payments of principal and interest	“SPPI”
Expected credit loss	“ECL”
Cash generating unit	“CGU”
Internal Revenue Code	“IRC”
U.S. Securities and Exchange Commission	“SEC”
Securities Exchange Act of 1934	“1934 Act”
Federal Deposit Insurance Corporation	“FDIC”

Page 11 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Term	Defined Term	Reference
Terms related to the Company’s locations:
Outdoor grow property located in Trail, Oregon leased from CEO	“Trail”
Outdoor post-harvest facility located in Medford, Oregon leased from CEO	“Lars”
Terms related to officers and directors of the Company:
President & Chief Executive Officer	“CEO”
Chief Financial Officer	“CFO”
Senior Vice President of GR Unlimited	“SVP”
Chief Operating Officer (position eliminated in December 2021)	“COO”
Michigan General Manager	“GM”
Terms related to transactions with High Street Capital Partners, LLC:
High Street Capital Partners, LLC	“HSCP”	Note 6.1
Agreement of the Company to acquire substantially all of the assets of the growing and retail operations of HSCP	“HSCP Transaction”	Note 6.1
Management Services Agreement with HSCP	“HSCP MSA”	Note 6.1
Secured promissory note payable with a principal sum of $1,250,000	“Secured Promissory Note”	Notes 6.1, 10.1
Principal Payment of $500,000 due to HSCP on May 1, 2023	“First Principal Payment”	Note 10.1
Terms related to Convertible Debentures issued in December 2022:
Convertible debentures with aggregate principal amount of $2,000,000 issued in December 2022	“December Convertible Debentures”	Note 11.1
Purchasers of Convertible Debentures	“Purchasers”	Note 11.1
6,716,499 warrants issued to the Purchasers	“December Warrants”	Note 11.1
Terms related to Convertible Debentures issued in July 2023:
Convertible debentures with aggregate principal amount of $5,000,000 issued in July 2023	“July Convertible Debentures”	Note 11.2
Subscribers of Convertible Debentures	“Subscribers”	Note 11.2
13,737,500 warrants issued to the Subscribers	“July Warrants”	Note 11.2
Terms related to Convertible Debentures issued in August 2023:
Convertible debentures with aggregate principal amount of $1,000,000 issued in August 2023	“August Convertible Debentures”	Note 11.2.1
Subscribers of Convertible Debentures	“Subscribers”	Note 11.2.1
2,816,250 warrants issued to the Subscribers	“August Warrants”	Note 11.2.1
Terms related to December 2021 non-brokered private placement of common shares:
Non-brokered private placement of common shares (“Private Placement”) for total gross proceeds of $1,300,000	“Private Placement”	Note 12.3
Terms related to March 2021 brokered private placement of special warrants:
Agent for March 2021 brokered private placement of special warrants	“Agent”	Note 13.1
March 2021 brokered private placement of special warrants	“Offering”

Page 12 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Term	Defined Term	Reference
An aggregate of 1,127,758 broker warrants of the Company	“Broker Warrants”	Note 13.1
Compensation options, resulting from exercise of Broker Warrants	“Compensation Options”	Note 13.1
Warrants for consideration of advisory services issued to the Agent	“Advisory Warrants”	Note 13.1
The Broker Warrants and Advisory Warrants referred to collectively	“Agent Warrants”	Note 13.1
One unit of the Company resulting from exercise of a Compensation Option, comprised of one common share and one common share purchase warrant	“Compensation Unit”	Note 13.1
Warrant resulting from Compensation Option	“Compensation Warrant”	Note 13.1
Terms related to consulting agreement with Goodness Growth
Goodness Growth Holdings, Inc. (CSE: GDNS; OTCQX: GDNSF)	“Goodness Growth”	Note 13.2
The consulting agreement under which the Company provides services to Goodness Growth	“Consulting Agreement”	Note 13.2
Volume weighted average price	“VWAP”	Note 13.2
Terms related to Iron Flag, LLC secured draw down promissory note
Iron Flag, LLC	“Iron Flag”	Note 6.2.1
ABCO Garden State, LLC	“ABCO”	Note 6.2.1
New Jersey Cannabis Regulatory Commission	“CRC”	Note 6.2.1
Secured draw down promissory note	“Iron Flag Promissory Note”	Note 6.2.1
2.	SIGNIFICANT ACCOUNTING POLICIES AND JUDGMENTS AND DEFINED TERMS
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2.1	Statement of Compliance
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The Company’s consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB and interpretations of the IFRIC. These consolidated financials are filed on the system for electronic document analysis and retrieval (SEDAR+).

The Board of Directors authorized the issuance of these consolidated financial statements on April 29, 2024.

The principal accounting policies adopted in the preparation of these consolidated financial statements are set forth below.

Page 13 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

2.2	Basis of Consolidation

The subsidiaries are those companies controlled by the Company, as the Company is exposed, or has rights, to variable returns from its involvement with the subsidiaries and has the ability to affect those returns through its power over the subsidiaries by way of its ownership and rights pertaining to the subsidiaries. The financial statements of subsidiaries are included in these consolidated financial statements from the date that control commences until the date control ceases. All intercompany balances and transactions have been eliminated upon consolidation.

2.3	Basis of Measurement

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments and biological assets, which are measured at fair value, as described herein.

2.4	Change in Fiscal Year End

In January 2024, the Company’s board of directors approved a change in the Company’s fiscal year end from October 31 to December 31, effective immediately. As a result of this change, the Company is filing these accompanying consolidated financial statements for the two month transition period ended December 31, 2023.

2.5	Functional and Presentation Currency

The Company’s functional currency is the Canadian dollar, and the functional currency of its subsidiaries is the United States dollar. These consolidated financial statements are presented in U.S. dollars.

Transactions denominated in foreign currencies are initially recorded in the functional currency using exchange rates in effect at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using exchange rates prevailing at the end of the reporting period. All exchange gains and losses are included in the consolidated statements of comprehensive income (loss).

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company are expressed in U.S. Dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income (loss) and reported as currency translation reserve in shareholders’ equity.

Foreign exchange gains or losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which, in substance, is considered to form part of the net investment in the foreign operation, are recognized in other comprehensive income (loss).

Page 14 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

2.6	Revenue

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which is upon the transfer of control of the contracted goods or provision of contracted services. Control of goods is transferred when title and physical possession of the contracted goods have been transferred to the customer, which is determined by the shipping terms and certain additional considerations. The Company does not have performance obligations subsequent to the transfer of title and physical possession of the contracted goods.

2.6.1	Revenue From Sales of Goods

Revenues from sales of goods are recognized when the transfer of ownership to the customer has occurred and the customer has accepted the product.

2.6.2	Service Revenue

Revenues from services are recognized when services have been provided, the income is determinable, and collectability is reasonably assured. The Company’s contract terms do not include a provision for significant post-service delivery obligations. On May 24, 2023, GR Unlimited entered into the Consulting Agreement with Goodness Growth. Under the Consulting Agreement, GR Unlimited supports Goodness Growth in the optimization of its cannabis flower products, with a particular focus on improving the quality and yield of top-grade “A” cannabis flower across its various operating markets, starting with Maryland and Minnesota. The Consulting Agreement and amendments to the Consulting Agreement provide for service revenue earned to be calculated beginning January 2023. Also see Note 13.2 for further discussion on the terms of the Consulting Agreement.

2.7	Inventory

Inventory is valued at the lower of cost and net realizable value. The capitalized cost for produced inventory includes the direct and indirect costs initially capitalized to biological assets before the transfer to inventory. The capitalized cost also includes subsequent costs such as materials, labor, depreciation and amortization expense on equipment involved in packaging, labelling and inspection. The total cost of inventory also includes the fair value adjustment which represents the fair value of the biological asset at the time of harvest and which is transferred from biological asset costs to inventory upon harvest. All direct and indirect costs related to inventory are capitalized as they are incurred; these costs are recorded ‘Cost of finished cannabis inventory sold’ on the consolidated statements of comprehensive income (loss) at the time cannabis is sold. The realized fair value amounts included in inventory sold are recorded as a separate line on the consolidated statements of comprehensive income (loss).

2.8	Cost of Finished Cannabis Inventory Sold

Cost of finished cannabis inventory sold includes the value of inventory sold, excluding the fair value adjustment carried from biological assets into inventory. Cost of finished cannabis inventory sold also includes the value of inventory write downs.

Page 15 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

2.9	Biological Assets

Biological assets are measured at fair value. The Company’s biological assets consist of cannabis plants. The Company capitalizes all the direct and indirect costs as incurred related to the biological transformation of the biological assets between the point of initial recognition and the point of harvest, including direct costs, indirect costs, allocated fixed and variable overheads, and depreciation and amortization of equipment used to grow plants through the harvest of the plants. Before planting, the capitalized costs approximate fair value. After planting, fair value is estimated at the fair value of the market sales price of the finished product less costs to complete. Subsequent to harvest, the recognized biological asset amount becomes the cost basis of finished goods inventory. Unrealized gains or losses arising from changes in fair value less costs to sell during the period are included in the consolidated statements of comprehensive income (loss) as ‘Unrealized fair value gain on growth of biological assets’. After sale, the amount of ‘Unrealized fair value gain on growth of biological assets’ sold is recognized as ‘Realized fair value amounts in inventory sold’.

2.10	Income (Loss) per Share

Basic income (loss) per share is calculated by dividing the income (loss) attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the income (loss) attributable to common shareholders equals the reported income (loss) attributable to owners of the Company. Diluted income (loss) per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period.

2.11	Accounts Payable and Accrued Liabilities

Liabilities are recognized for amounts to be paid in the future for goods or services received, whether billed by the supplier or not. Provisions are recognized when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle this obligation are both probable and able to be reliably measured.

2.12	Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are members of key management, subject to common control, or can exert significant influence over the Company. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

2.13	Property and Equipment

Property and equipment are stated at cost less accumulated amortization and accumulated impairment losses, if any. Costs include borrowing costs for assets that require a substantial period of time to become ready for use.

Page 16 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Amortization is recognized so as to recognize the cost of assets less their residual values over their useful lives, using the straight-line method. Amortization begins when an asset is available for use, meaning that it is in the location and condition necessary for it to be used in the manner intended by management. The estimated useful lives, residual values and method of amortization are reviewed at each period end, with the effect of any changes in estimated useful lives and residual values accounted for on a prospective basis.

The Company capitalizes costs incurred to construct assets; when such assets are not available for use as intended by management, amortization expense is not recorded until constructed assets are placed into service.

Amortization is calculated applying the following useful lives:

Furniture and fixtures	7-10	years on a straight-line basis
Computer and office equipment	3-5	years on a straight-line basis
Production equipment and other	5-10	years on a straight-line basis
Leasehold improvements	1-40	years on a straight-line basis

The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists, and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs of disposal and their value in use. Fair value is the price at which the asset could be bought or sold in an orderly transaction between market participants. In assessing value in use, the estimated cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset.

Right-of-use leased assets are measured at cost, which is calculated as the amount of the initial measurement of lease liability plus any lease payments made at or before the commencement date, any initial direct costs and related restoration costs. The right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the useful life of the underlying asset. Depreciation is recognized from the commencement date of the lease.

2.14	Impairment of Long-lived Assets

For all long-lived assets, except for intangible assets with indefinite useful lives and intangible assets not yet available for use, the Company reviews its carrying amount at the end of each reporting period to determine whether there is any indication that those assets have suffered an impairment loss. Where such impairment exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the greater of fair value less costs of disposal and value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognized in profit or loss.

Page 17 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Impairment losses may be reversed in a subsequent period where the impairment no longer exists or has decreased. The carrying amount after a reversal must not exceed the carrying amount (net of depreciation) that would have been determined had no impairment loss been recognized. A reversal of impairment loss is recognized in profit or loss.

2.15	Share-based Compensation
2.15.1	Share-based Payment Transactions
---	---

Transactions with non-employees that are settled in equity instruments of the Company are measured at the fair value of the goods or services rendered. In situations where the fair value of the goods or services received by the entity as consideration cannot be reliably measured, transactions are measured at fair value of the equity instruments granted. The fair value of the share-based payments is recognized together with a corresponding increase in equity over a period that services are provided, or goods are received.

2.15.2	Equity Settled Transactions

The costs of equity settled transactions with employees are measured by reference to the fair value of the equity instruments at the date on which they are granted, using the Black Scholes option pricing model.

The costs of equity settled transactions are recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative cost is recognized for equity settled transactions at each reporting date until the vesting date reflects the Company’s best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and the corresponding amount is represented in contributed surplus. No expense is recognized for awards that do not ultimately vest.

2.15.3	Share Issuance Costs

Costs incurred in connection with the issuance of equity are netted against the proceeds received net of tax. Costs related to the issuance of equity and incurred prior to issuance are recorded as deferred equity issuance costs and subsequently netted against proceeds when they are received.

2.16	Income Taxes

Tax expense includes current and deferred tax. This expense is recognized in profit or loss, except for income tax related to the components of other comprehensive income (loss) or equity, in which case the tax expense is recognized in other comprehensive income (loss) or equity respectively.

Current tax assets and liabilities are obligations or claims for the current and prior periods to be recovered from (or paid to) taxation authorities that are still outstanding at the end of the reporting period. Current tax is computed on the basis of tax profit which differs from net profit. Income taxes are calculated using tax rates and laws enacted or substantively enacted at the end of the reporting period.

Page 18 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Deferred tax is recognized based on temporary differences between the carrying amount and the tax basis of the assets and liabilities. Any change in the net amount of deferred tax assets and liabilities is included in profit or loss. Deferred tax assets and liabilities are determined based on enacted or substantively enacted tax rates and laws that are expected to apply to taxable profit for the periods in which the assets and liabilities will be recovered or settled. Deferred tax assets are recognized when it is likely they will be realized. Deferred tax assets and liabilities are not discounted.

The Company recognizes a deferred tax asset or liability for all deductible temporary differences arising from equity securities of subsidiaries, unless it is probable that the temporary difference will not reverse in the foreseeable future and the Company is able to control the timing of the reversal.

2.17	Financial Instruments
2.17.1	Financial Assets
---	---

Initial Recognition

The Company initially recognizes financial assets at fair value on the date that the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.

Classification and Measurement

Under IFRS 9 Financial Instruments, financial assets are initially measured at fair value. In the case of a financial asset not categorized as FVTPL, transaction costs are included. Transaction costs of financial assets carried at FVTPL are expensed in net income (loss).

Subsequent classification and measurement of financial assets depends on the Company’s business objective for managing the asset and the cash flow characteristics of the asset:

-	Amortized cost – Financial assets held for collection of contractual cash flows that meet the SPPI test are measured at amortized cost. Interest income or expense is recognized as other income (expense) in the consolidated financial statements, and gains/losses are recognized in net income (loss) when the asset is derecognized or impaired.
-	FVOCI – Financial assets held to achieve a particular business objective other than short term trading are designated at FVOCI. IFRS 9 also provides the ability to make an irrevocable election at initial recognition of a financial asset, on an instrument by instrument basis, to designate an equity investment that would otherwise be classified as FVTPL and that is neither held for trading nor contingent consideration arising from a business combination to be classified as FVOCI. There is no recycling of gains or losses through net income (loss). Upon derecognition of the asset, accumulated gains or losses are transferred from OCI directly to Deficit.
---	---
-	FVTPL – Financial assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL.
---	---

Page 19 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

2.17.2	Financial Liabilities

The Company initially recognizes financial liabilities at fair value on the date at which the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The subsequent measurement of financial liabilities is determined based on their classification as follows:

-	FVTPL – Derivative financial instruments entered into by the Company that do not meet hedge accounting criteria are classified as FVTPL. Gains or losses on these types of financial liabilities are recognized in net income (loss).
-	Amortized cost – All other financial liabilities are classified as amortized cost using the effective interest method. Gains and losses are recognized in net income (loss) when the liabilities are derecognized as well as through the amortization process.
---	---

The following table summarizes the original measurement categories for each class of the Company’s financial assets and financial liabilities:

Asset/Liability	Classification
Accounts receivable	Amortized cost
Cash and cash equivalents	Amortized cost
Marketable securities	FVTPL
Warrants Asset	FVTPL
Accounts payable and accrued liabilities	Amortized cost
Long-term debt	Amortized cost
Interest payable	Amortized cost
Convertible debentures	Amortized cost
Derivative liabilities	FVTPL

Impairment

IFRS 9 introduces a three-stage ECL model for determining impairment of financial assets. The expected credit loss model does not require the occurrence of a triggering event before an entity recognizes credit losses. IFRS 9 requires an entity to recognize expected credit losses upon initial recognition of a financial asset and to update the quantum of expected credit losses at the end of each reporting period to reflect changes to credit risk of the financial asset. The adoption of the ECL model did not have a material impact on the Company’s consolidated financial statements.

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the loss allowance for the financial asset is measured at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the loss allowance is measured for the financial asset at an amount equal to twelve month expected credit losses. For trade receivables the Company applies the simplified approach to providing for expected credit losses, which allows the use of a lifetime expected loss provision. Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.

Page 20 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

2.18	Business Combinations

A business combination is a transaction or event in which the acquirer obtains control of one or more businesses and is accounted for using the acquisition method. The total consideration paid for the acquisition is the aggregate of the fair values of assets acquired, liabilities assumed, and equity instruments issued in exchange for control of the acquiree at the acquisition date. The acquisition date is the date when the Company obtains control of the acquiree. The identifiable assets acquired and liabilities assumed are recognized at their acquisition date fair values, except for deferred taxes and share-based payment awards where IFRS provides exceptions to recording the amounts at fair values. Goodwill represents the difference between total consideration paid and the fair value of the net identifiable assets acquired. Acquisition costs incurred are expensed within the consolidated statements of comprehensive income (loss).

Contingent consideration is measured at its acquisition date fair value and is included as part of the consideration transferred in a business combination, subject to the applicable terms and conditions. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 9 with the corresponding gain or loss recognized in profit or loss.

Based on the facts and circumstances that existed at the acquisition date, management will perform a valuation analysis to allocate the purchase price based on the fair values of the identifiable assets acquired and liabilities assumed on the acquisition date. Management has one year from the acquisition date to confirm and finalize the facts and circumstances that support the finalized fair value analysis and related purchase price allocation. Until such time, these values are provisionally reported and are subject to changed. Changes to fair values and allocations are retrospectively adjusted in subsequent periods.

In determining the fair value of all identifiable assets acquired and liabilities assumed, the most significant estimates generally relate to contingent consideration and intangible assets. Management exercises judgment in estimating the probability and timing of when earn-out milestones are expected to be achieved, which is used as the basis for estimating fair value. Identified intangible assets are fair valued using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows of the acquiree. Valuations are highly dependent on the inputs used and assumptions made by management regarding the future performance of these assets and any changes in the discount rate applied.

Acquisitions that do not meet the definition of a business combination are accounted for as asset acquisitions. Consideration paid for an asset acquisition is allocated to the individual identifiable assets acquired and liabilities assumed based on their relative fair values. Asset acquisitions do not give rise to goodwill.

Management exercises judgment in determining the entities that it controls for consolidation and associated non-controlling interests. For financial reporting purposes, an entity is considered controlled when the Company has power over an entity and its ability to affect its economic return from the entity. The Company has power over an entity when it has existing rights that give it the ability to direct the relevant activities which can significantly affect the investee’s returns. Such power can result from contractual arrangements. However, certain contractual arrangements contain rights that are designed to protect the Company’s interest, without direct equity ownership in the entity, in which case non-controlling interests are recognized.

Page 21 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

2.19	Intangible Assets and Goodwill

Intangible assets are recorded at cost less accumulated amortization and any impairment losses. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization of definite life intangibles is calculated on a straight-line basis over their estimated useful lives.

Goodwill represents the excess of the purchase price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets acquired. Goodwill is allocated to the CGU or group of CGUs which are expected to benefit from the synergies of the combination. Goodwill is not subject to amortization.

Goodwill and intangible assets with an indefinite life or not yet available for use are tested for impairment annually at year-end, and whenever events or circumstances that make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell or dispose all or a portion of a reporting unit. Finite life intangible assets are tested whenever there is an indication of impairment.

Goodwill and indefinite life intangible assets are tested for impairment by comparing the carrying value of each CGU containing the assets to its recoverable amount. Indefinite life intangible assets are tested for impairment by comparing the carrying value of each CGU containing the assets to its recoverable amount. Goodwill is tested for impairment based on the level at which it is monitored by management, and not at a level higher than an operating segment. The Company’s goodwill is allocated to the cannabis operating segment and the U.S. cannabis and hemp-derived market CGU. The allocation of goodwill to the CGUs or group of CGUs requires the use of judgment.

An impairment loss is recognized for the amount by which the CGU’s carrying amount exceeds its recoverable amount. The recoverable amounts of the CGUs’ assets are determined based on either fair value less costs of disposal or value-in-use method. There is a material degree of uncertainty with respect to the estimates of the recoverable amounts of the CGU, given the necessity of making key economic assumptions about the future. Impairment losses recognized in respect of a CGU are first allocated to the carrying value of goodwill, and any excess is allocated to the carrying value of assets in the CGU. Any impairment is recorded in profit and loss in the period in which the impairment is identified. A reversal of an asset impairment loss is allocated to the assets of the CGU on a pro rata basis. In allocating a reversal of an impairment loss, the carrying amount of an asset shall not be increased above the lower of its recoverable amount and the carrying amount that would have been determined had no impairment loss been recognized for the asset in the prior period. Impairment losses on goodwill are not subsequently reversed.

2.20	Adoption of New Accounting Pronouncements

Amendments to IAS 41: Agriculture

As part of its 2018-2020 annual improvements to the standards process of IFRS, the IASB issued amendments to IAS 41 Agriculture. The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flow when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13 Fair Value Measurement. The amendment is effective for annual reporting periods beginning on or after January 1, 2022. The Company adopted the amendments to IAS 41 effective November 1, 2022, which did not have a material impact to the Company’s consolidated financial statements.

Page 22 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Amendments to IFRS 9: Financial Instruments

As part of its 2018-2020 annual improvements to the standards process of IFRS, the IASB issued amendments to IFRS 9 Financial Instruments. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption permitted. The Company adopted the Amendments to IFRS 9 effective November 1, 2022, which did not have a material impact to the Company’s consolidated financial statements.

Amendments to IAS 37: Onerous Contracts — Cost of Fulfilling a Contract

The amendment specifies that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. The amendment is effective for annual periods beginning on or after January 1, 2022 with early application permitted. The Company adopted the amendments to IAS 37 effective November 1, 2022, which did not have a material impact to the Company’s consolidated financial statements.

2.21	New Accounting Pronouncements

Amendments to IAS 1: Classification of Liabilities as Current or Non-current

The amendment clarifies the requirements relating to determining if a liability should be presented as current or non-current in the statement of financial position. Under the new requirement, the assessment of whether a liability is presented as current or non-current is based on the contractual arrangements in place as at the reporting date and does not impact the amount or timing of recognition. The amendment applies retrospectively for annual reporting periods beginning on or after January 1, 2024. The Company is evaluating the potential impact of these amendments on the Company’s consolidated financial statements.

IFRS 17 – Insurance Contracts

IFRS 17 Insurance Contracts establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. The standard is effective for annual periods beginning on or after January 1, 2023. The Company is evaluating the potential impact of this standard on the Company’s consolidated financial statements.

Page 23 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

3.	BIOLOGICAL ASSETS

Biological assets consist of cannabis plants, which reflect measurement at FVLCTS. Changes in the carrying amounts of biological assets for the two months ended December 31, 2023, and the year ended October 31, 2023, are as follows:


****	****	****
Beginning balance
Increase in biological assets due to capitalized costs
Change in FVLCTS due to biological transformation
Transferred to inventory upon harvest	)	)
Ending balance

All values are in US Dollars.

FVLCTS is determined using a model which estimates the expected harvest yield for plants currently being cultivated, and then adjusts that amount for the expected selling price and also for any additional costs to be incurred, such as post-harvest costs.

The following significant unobservable inputs, all of which are classified as level 3 on the fair value hierarchy, were used by management as part of this model:

-	Expected costs required to grow the cannabis up to the point of harvest
-	Estimated selling price per pound
---	---
-	Expected yield from the cannabis plants
---	---
-	Estimated stage of growth – the Company applied a weighted average number of days out of the approximately 62-day growing cycle that biological assets have reached as of the measurement date based on historical evidence. The Company assigns fair value according to the stage of growth and estimated costs to complete cultivation.
---	---
							Impact of 20% change
---	---	---	---	---	---	---	---	---	---	---
	December 31,<br>2023			October 31,<br>2023			December 31, 2023		October 31,<br>2023
Estimated selling price per (pound)	$	938		$	945		$	335,193	$	340,390
Estimated stage of growth		55	%		51	%	$	285,243	$	280,663
Estimated flower yield per harvest (pound)		2,972			3,283		$	285,243	$	280,663

Page 24 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

4.	INVENTORY

The Company’s inventory composition is as follows:

	December 31,2023	October 31,2023

Raw materials
Work in process
Finished goods
Ending balance

All values are in US Dollars.

The cost of inventories, excluding changes in fair value, included as an expense and included in cost of goods sold for the two months ended December 31, 2023 was $1,404,323 (For the year ended October 31, 2023 - $11,155,676).

5.	BUSINESS COMBINATIONS
5.1	Golden Harvests
---	---

On May 1, 2021, the Company acquired a controlling 60% interest in Golden Harvests for aggregate consideration of $1,007,719 comprised of 1,025,000 common shares of the Company with a fair value of $158,181 and cash payments of $849,536. Consideration remaining to be paid at the date of these consolidated financial statements included cash payments of $360,000. During the year ended October 31, 2023, 200,000 common shares issuable since May 1, 2021, with an aggregate fair value of $35,806, were issued.

On December 1, 2021, the Company and the seller of the 60% controlling interest in Golden Harvests agreed to extend the due date of the cash portion of business acquisition consideration payable until December 31, 2024, in exchange for monthly payments at a rate of 18% per annum. The Company may pay all or part of the cash portion of the business acquisition consideration payable prior to December 31, 2024. The following table summarizes the movement in business acquisition consideration payable.

Business acquisition consideration payable
Acquisition date fair value
Payments		)
Application of prepayments		)
Accretion
Balance – December 31 and October 31, 2023

All values are in US Dollars.

Page 25 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

6.	OTHER INVESTMENTS, PURCHASE DEPOSITS AND NOTES RECEIVABLE
6.1	Investment in Assets Sold by HSCP
---	---

On February 5, 2021, the Company agreed to acquire substantially all of the assets of the growing and retail operations pursuant to the HSCP Transaction, for an aggregate total of $3,000,000 in consideration, payable in a series of tranches, subject to receipt of all necessary regulatory and other approvals. A payment of $250,000 was to be due at closing and the payment of the remaining purchase price was to depend on the timing of the closing. The Company also executed the HSCP MSA, a management services agreement, pursuant to which the Company agreed to pay $21,500 per month as consideration for services rendered thereunder, until the completion of the HSCP Transaction. In accordance with the MSA, the Company owned all production from the growing assets derived from the growing operations of HSCP, and the Company operated the growing facility of HSCP under the MSA until receipt of the necessary regulatory approvals relating to the acquisition by the Company of HSCP’s growing assets. The Company had no involvement with the retail operations contemplated in the agreement until the HSCP Transaction was completed.

On April 14, 2022, the HSCP Transaction closed with modifications to the original terms: the retail purchase was mutually terminated, and total consideration for the acquisition was reduced to $2,000,000. Upon closing, the Company had paid $750,000 towards the acquisition, and owed a principal sum of $1,250,000 as a Secured Promissory Note, which was fully paid during the two months ended December 31, 2023.

6.2	Notes Receivable

Transactions related to the Company’s long-term notes receivable for the two months ended December 31, 2023, and the year ended October 31, 2023, include the following:

	Note
Movement in notes receivable	6.2.1		6.2.2		Total
Balance – October 31, 2022		-		-
Advances		1,170,101		250,000
Accrued interest		8,758		1,667
Balance – October 31, 2023		1,178,859		251,667
Advances		982,757		-
Accrued interest		30,755		5,083
Balance – December 31, 2023		2,192,372		256,750
Current portion		-		-
Non-current portion		2,192,372		256,750

All values are in US Dollars.

6.2.1	Iron Flag Promissory Note

On October 4, 2023, the Company announced that it signed a definitive agreement with an option to acquire 70% of ABCO, pending regulatory approval from the CRC. ABCO was granted a conditional cultivation and manufacturing license by the CRC and will receive its annual cultivation license soon. GR Unlimited executed the Iron Flag Promissory Note with ABCO’s affiliate, Iron Flag, to fund tenant improvements and for general working capital at the 50,000 square foot facility leased by ABCO for use in ABCO’s cannabis cultivation operations under construction and estimated to be completed in the second quarter of 2024.

Page 26 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Pursuant to the Iron Flag Promissory Note, GR Unlimited shall make the maximum amount available to Iron Flag in one or more advances in an aggregate amount not to exceed $4,000,000. Interest on the outstanding principal borrowed shall accrue at a rate of 12.5% per annum commencing with respect to each advance and accruing until the date the standing advances and all accrued interest is paid in full.

As at December 31, 2023, the outstanding balance of the Iron Flag Promissory Note was $2,152,859 (October 31, 2023 - $1,170,101) and the accrued interest was $39,513 (October 31, 2023 - $8,758).

6.2.2	New Jersey Retail Promissory Note

On October 3, 2023, GR Unlimited executed a promissory note and advanced $250,000 to an individual representing the principal amount of the note. Pursuant to the promissory note agreement, interest on the outstanding principal borrowed shall accrue at a rate of 12% per annum provided that, if the extended maturity date of the note is triggered, interest shall accrue on the outstanding balance commencing on the maturity date and ending on the extended maturity date of the promissory note.

As at December 31, 2023, the outstanding balance of the promissory note was $250,000 (October 31, 2023 - $250,000), and the accrued interest was $6,750 (October 31, 2023 - $1,667).

Subsequent to the consolidated statement of financial position dated December 31, 2023, the Company signed a related definitive agreement on January 16, 2024 to invest in the development of an adult-use dispensary in West New York, New Jersey. Also see subsequent event in note 25.2.

7.	LEASES

The following is a continuity schedule of lease liabilities.



Balance - beginning
Additions
Disposals	)	)
Interest expense on lease liabilities
Payments	)	)
Balance - ending
Current portion
Non-current portion

All values are in US Dollars.

Set out below are undiscounted minimum future lease payments after December 31, 2023.

	Total future minimum leasepayments ()
Less than one year
Between one and five years
Total minimum lease payments
Less amount representing interest		)
Present value of minimum lease payments

All values are in US Dollars.

Page 27 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

8.	PROPERTY AND EQUIPMENT
	Computer and Office<br>Equipment		Production Equipmentand Other		LeaseholdImprovements		Right-of-use Assets		Total
---	---	---	---	---	---	---	---	---	---	---

COST
Balance - October 31, 2022		16,283
Additions		-
Disposals		-		)		)		)		)
Balance - October 31, 2023		16,283
Additions		-
Disposals		-		)		)		)		)
Balance - December 31, 2023		16,283
ACCUMULATED AMORTIZATION
Balance - October 31, 2022		16,283
Amortization for the period		-
Disposals		-		)		)		)		)
Balance - October 31, 2023		16,283
Amortization for the period		-
Disposals		-		)		)		)		)
Balance - December 31, 2023		16,283
NET BOOK VALUE
Balance - October 31, 2023		-
Balance - December 31, 2023		-

All values are in US Dollars.

For the two months ended December 31, 2023, amortization capitalized into inventory was $323,007 (October 31, 2023 - $1,937,073) and expensed amortization was $186,415 (October 31, 2023 - $578,641).

9.	INTANGIBLE ASSETS AND GOODWILL
Indefinite lived intangible assets and goodwill	December 31, 2023	October 31,2023
---	---	---

Balance – beginning
Additions – grower licenses
Balance – ending

All values are in US Dollars.

Page 28 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

10.	LONG-TERM DEBT

Transactions related to the Company’s long-term debt for the two months ended December 31, 2023, and year ended October 31, 2023, include the following:

	Note
Movement in long-term debt	10.1			10.2			10.3			10.4			10.5			Total
Balance - October 31, 2022		1,250,000			303,110			327,010			167,091			561,611
Interest accretion		-			96,985			83,752			43,006			187,782
Debt payments		(900,000	)		(25,000	)		(25,000	)		(12,500	)		(669,330	)		)
Balance - October 31, 2023		350,000			375,095			385,762			197,597			80,063
Interest accretion		-			18,355			15,418			3,811			4,769
Debt payments		(350,000	)		(4,167	)		(4,167	)		(125,000	)		(84,832	)		)
Balance – December 31, 2023		-			389,283			397,013			76,408			-
Current portion		-			348,581			355,369			76,408			-
Non-current portion		-			40,702			41,644			-			-

All values are in US Dollars.

****	Note
Undiscounted future payments at:	10.1		10.2		10.3		10.4		10.5		Total
October 31, 2023		350,000		431,250		432,991		213,298		84,820
December 31, 2023		-		427,083		428,824		88,298		-
Current portion		-		383,333		384,639		88,298		-
Non-current portion		-		43,750		44,185		-		-

All values are in US Dollars.

10.1	12.5% Note Payable Owed by GR Distribution to HSCP with Original Principal Amount of $1,250,000

On April 14, 2022, the Company purchased indoor growing assets from HSCP (Note 6.1). Purchase consideration included a secured promissory note payable with a principal sum of $1,250,000, of which $500,000 was due on August 1, 2022 and $750,000 was due on May 1, 2023, before amendment of the agreement, which is described below. Collateral for the secured promissory note payable is comprised of the assets purchased.

On August 1, 2022, the terms of the Secured Promissory Note between GR Distribution and HSCP, were amended. As amended, the Secured Promissory Note will be fully settled by two principal amounts of $500,000 and $750,000 due on May 1, 2023. Beginning on August 1, 2022, and continuing until repaid in full, the unpaid portion of the First Principal Amount will accrue simple interest at a rate per annum of 12.5%, payable monthly. In the event the Company raises capital, principal payments shall be made as follows. If the capital raise is less than or equal to $2 million, then 25% of the capital raise shall be paid against the First Principal Payment; if the capital raise is greater than $2 million and less than or equal to $3 million, then $250,000 shall be paid against the First Principal Payment; and if the capital raise is greater than $3 million, then $500,000 shall be paid against the First Principal Payment.

On May 1, 2023, the terms of the Secured Promissory Note were amended for a second. Under the second amendment, the Secured Promissory Note will be fully settled in two principal amounts. On May 1, 2023, the $500,000 principal payment plus all accrued but unpaid interest under the first amendment was due and payable. The remaining principal balance of $500,000, which bears no interest, is due and payable as follows: $150,000 due and payable on August 1, 2023; $150,000 due and payable on November 1, 2023; and $200,000 due and payable on December 31, 2023. The balance was fully paid during the two months ended December 31, 2023.

Page 29 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

10.2	10% Note Payable Owed by Golden Harvests with Original Principal Amount of $250,000

On May 1, 2021, the Company assumed a note payable owed by Golden Harvests (Note 5) with a carrying value of $227,056. The note is for a principal amount of $250,000, interest paid monthly at 10% per annum, and a maturity date of January 14, 2024. After the maturity date, additional interest payments are due quarterly, at amounts that cause total interest paid over the life of the debt to equal $250,000. The note is reported at amortized cost using an effective interest rate of approximately 33%. During the two months ended December 31, 2023, and the year ended October 31, 2023, the Company made principal payments of $4,167 and $25,000 respectively.

10.3	10% Note Payable Owed by GR Distribution with Original Principal Amount of $250,000

On January 27, 2021, debt was issued by GR Distribution with a principal amount of $250,000, interest paid monthly at 10% per annum, and a maturity date of January 27, 2024. After the maturity date, additional interest payments are due quarterly, at amounts that cause total interest paid over the life of the debt to equal $250,000. The note is reported at amortized cost using an effective interest rate of approximately 27%. During the two months ended December 31, 2023, and the year ended October 31, 2023, the Company made principal payments of $4,167 and $25,000 respectively.

10.4	10% Note Payable Owed by GR Distribution with Original Principal Amount of $125,000

On November 23, 2020, debt was issued by GR Distribution with a principal amount of $125,000, interest paid monthly at 10% per annum, and a maturity date of November 23, 2023. After the maturity date, additional interest payments are due quarterly, at amounts that cause total interest paid over the life of the debt to equal $125,000. The note is reported at amortized cost using an effective interest rate of approximately 27%. During the two months ended December 31, 2023, and the year ended October 31, 2023, the Company made principal payments of $125,000 and $12,500 respectively.

10.5	0% Stated Rate Note Payable by Canopy with Original Principal Amount of $600,000 and Royalty Payments to Lenders

On March 20, 2020, debt with a principal amount of $600,000 was received under a secured debt investment of $600,000. It carries a two-year term, with monthly payments of principal commencing June 15, 2020, and with payments calculated at 1% of cash sales receipts of Golden Harvests. Once the principal is repaid, each investor receives a monthly royalty of 1% per $100,000 invested of cash receipts for sales by Golden Harvests. The royalty commenced in December 2021, at which time principal was repaid, and is payable monthly a period of two years. The royalty maximum is two times the amount of principal invested, and the royalty minimum is equal to the principal loaned. The Company has the right, but not the obligation, to terminate royalty payments from any lender by paying an amount equal to the original principal invested by such lender. The debt is reported at the carrying value of the probability-weighted estimated future cash flows of all payments under the agreement at amortized cost using the effective interest method, at an effective interest rate of approximately 73%. A portion of this debt is due to related parties (Note 17.4). During the two months ended December 31, 2023, the balance was fully paid.

10.6	Accrued Interest Payable

Accrued interest payable on long-term debt at December 31, 2023 was $Nil (October 31, 2023 - $Nil).

Page 30 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

11.	CONVERTIBLE DEBENTURES

Transactions relating to the Company’s convertible debentures for the two months ended December 31, 2023, and the year ended October 31, 2023, include the following:

	Note
Movement in convertible debt	11.1			11.2			Total
Balance – October 31, 2022		-			-
Additions to debt		2,000,000			6,000,000
Derivative liability recognition		(783,856	)		(3,982,944	)		)
Debt settlement through conversion of shares (Note 11.1.1)		(1,174,639	)		-			)
Interest accretion		343,556			271,651
Debt payments		(137,745	)		(123,261	)		)
Balance – October 31, 2023	$	247,316		$	2,165,446
Interest accretion		11,672			162,468
Debt payments		(7,875	)		(119,103	)		)
Balance – December 31, 2023	$	251,113		$	2,208,811
Current portion		-			-
Non-current portion		251,113			2,208,811

All values are in US Dollars.

11.1	9% Convertible Debentures with Original Principal Amount of $2,000,000

On December 5, 2022, the Company announced the closing of a non-brokered private placement of the December Convertible Debentures with an aggregate principal amount of $2,000,000. The December Convertible Debentures accrue interest at 9% per year, paid quarterly, and mature 36 months from the date of issue. The December Convertible Debentures are convertible into common shares of the Company at a conversion price of CAD$0.20 per common share. Additionally, on closing, the Company issued to the Purchasers of the December Convertible Debentures an aggregate of 6,716,499 warrants, that represents 50% coverage of each Purchaser’s Convertible Debenture investment. The December Warrants are exercisable for a period of three years from issuance into common shares at an exercise price of $0.25 CAD per common share. The Company has the right to accelerate the warrants if the closing share price of the common shares on the Canadian Securities Exchange is CAD$0.40 or higher for a period of 10 consecutive trading days. Subsequent to the consolidated statement of financial position dated December 31, 2023, the Company issued the notice of acceleration dated March 1, 2024 required by the warrant certificates governing the December Warrants, which accelerated the expiry date to 90 days from the date of notice. See subsequent event in note 25.3.

11.1.1	Debt Settlement Through Conversion of Shares

During the year ended October 31, 2023, Purchasers of the December Convertible Debentures converted an aggregate total of convertible debenture principal of $1,040,662 and $133,977 at CAD$0.20 per share into 10,151,250 and 1,022,025 common shares respectively.

The conversion feature of the December Convertible Debentures gives rise to the derivative liability reported on the consolidated statement of financial position at December 31, 2023. The derivative liability is remeasured at fair value through profit and loss at each reporting period using the Black-Scholes option pricing model. The fair value of the derivative liability at December 31, 2023 was estimated to be $439,860 (October 31, 2023 - $490,195) using the following assumptions:

Page 31 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Expected dividend yield	Nil
Risk-free interest rate	3.91%
Expected life	1.92 years
Expected volatility	94%
11.2	9% Convertible Debentures with Original Principal Amount of $5,000,000
---	---

On July 13, 2023, the Company announced the closing of a non-brokered private placement of unsecured the July Convertible Debentures with an aggregate principal amount of $5,000,000. The Convertible Debentures accrue interest at 9% per year, paid quarterly, and mature 48 months from the date of issue. The July Convertible Debentures are convertible into common shares of the Company at a conversion price of CAD$0.24 per common share, at any time on or prior to the maturity date. Additionally, on closing, the Company issued to the Subscribers of the July Convertible Debentures an aggregate of 13,737,500 July Warrants, that represents one-half of one warrant for each CAD$0.24 of Principal amount subscribed. The July Warrants are exercisable for a period of three years from issuance into common shares at an exercise price of CAD$0.28 per common share. The Company has the right to accelerate the warrants if the closing share price of the common shares on the Canadian Securities Exchange is CAD$0.40 or higher for a period of 10 consecutive trading days. Subsequent to the consolidated statement of financial position dated December 31, 2023, the Company issued the notice of acceleration dated March 1, 2024 required by the warrant certificates governing the July Warrants, which accelerated the expiry date to 90 days from the date of notice. See subsequent event in note 25.3.

The conversion feature of the July Convertible Debentures gives rise to the derivative liability reported on the consolidated statement of financial position at December 31, 2023. The derivative liability is remeasured at fair value through profit and loss at each reporting period using the Black-Scholes option pricing model. The fair value of the derivative liability at December 31, 2023, was estimated to be $5,824,496 (October 31, 2023 - $6,053,927) using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	3.25%
Expected life	3.53 years
Expected volatility	98%
11.2.1	9% Convertible Debentures with Original Principal Amount of $1,000,000
---	---

On August 17, 2023, the Company announced that it had closed the second and final tranche of a non-brokered private placement of unsecured convertible debentures for gross proceeds of $1,000,000 (the August Convertible Debentures), for a total aggregate principal amount under both tranches of $6,000,000 with the July Convertible Debentures. Additionally, on closing, the Company issued to Subscribers under the second tranche an aggregate of 2,816,250 common share purchase warrants. The terms of the August Convertible Debentures and August Warrants issued as part of this second tranche are the same as those issued in the July Convertible Debentures and July Warrants.

Subsequent to the consolidated statement of financial position dated December 31, 2023, the Company issued the notice of acceleration dated March 1, 2024 required by the warrant certificates governing the August Warrants, which accelerated the expiry date to 90 days from the date of notice. See subsequent event in note 25.3.

Page 32 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

The conversion feature of the August Convertible Debentures gives rise to the derivative liability reported on the consolidated statement of financial position at December 31, 2023. The derivative liability is remeasured at fair value through profit and loss at each reporting period using the Black-Scholes option pricing model. The fair value of the derivative liability at December 31, 2023, was estimated to be $1,207,163 (October 31, 2023 - $1,264,378) using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	3.25%
Expected life	3.63 years
Expected volatility	99%
12.	SHARE CAPITAL AND SHARES ISSUABLE
---	---

The Company is authorized to issue an unlimited number of common shares at no par value and an unlimited number of preferred shares issuable in series.

During the two months ended December 31, 2023, no share transactions occurred.

During the year ended October 31, 2023, the following share transactions occurred:

12.1	200,000 Common Shares Issued to Settle Shares Issuable

On January 10, 2023, the Company issued 200,000 common shares with an aggregate fair value of $35,806, which was reported as issuable as at October 31, 2022, which represented a portion of consideration for the acquisition of Golden Harvests (Note 5).

12.2	10,151,250 Common Shares Issued to Settle Convertible Debentures

On July 13, 2023, the Company issued 10,151,250 common shares with an aggregate fair value of $2,428,656, as holders opted to convert their convertible debentures (Note 11.1.1).

12.3	1,022,025 Common Shares Issued to Settle Convertible Debentures

On August 30, 2023, the Company issued 1,022,025 common shares with an aggregate fair value of $270,133, as holders opted to convert their convertible debentures.

Page 33 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

13.	WARRANTS

The following table summarizes the warrant activities for the two months ended December 31, 2023, and the year ended October 31, 2023:


Balance – October 31, 2022	33,510,696
Issuance pursuant to the December Convertible Debentures (Note 11.1)	6,716,499
Issuance pursuant to the July Convertible Debentures (Note 11.2)	13,737,500
Issuance pursuant to the August Convertible Debentures (Note 11.2.1)	2,816,250
Issued pursuant to the Consulting Agreement with Goodness Growth (Note 13.2)	8,500,000
Expiration of warrants pursuant to Feb 2021 subscriptions	(8,200,000	)
Expiration of warrants pursuant to the Offering (Special warrant issue)	(23,162,579	)
Expiration of warrants to terminate purchase agreement	(2,148,117	)
Balance – December 31 and October 31, 2023	31,770,249

All values are in US Dollars.

As at December 31, 2023, the following warrants were issued and outstanding:

		Expiry date
6,716,499	1.92	December 2, 2025
13,737,500	2.53	July 13, 2026
2,816,250	2.63	August 17, 2026
8,500,000	4.77	October 05, 2028
31,770,249	3.01

All values are in US Dollars.

13.1	Agent Warrants

On March 5, 2021, as consideration for the services rendered the Agent to the Offering (a brokered private placement of special warrants), the Company issued to the Agent an aggregate of 1,127,758 Broker Warrants of the Company exercisable to acquire 1,127,758 Compensation Options for no additional consideration. As consideration for certain advisory services provided in connection with the Offering, the Company issued to the Agent an aggregate of 113,500 Advisory Warrants exercisable to acquire 113,500 Compensation Options for no additional consideration. The Broker Warrants and Advisory Warrants are collectively referred to as the Agent Warrants.

Each Compensation Option entitled the holder thereof to purchase one Compensation Unit of the Company at the Issue Price of CAD$0.225 for a period of twenty-four (24) months. Each Compensation Unit was comprised of one common share and one Compensation Warrant. Each Compensation Warrant entitled the holder thereof to purchase one common share in the capital of the Company at a price of CAD$0.30 for twenty-four (24) months. The Agent Warrants expired on March 5, 2023.

Page 34 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

13.2	Goodness Growth Consulting Agreement

The Consulting Agreement with Goodness Growth was executed as of May 24, 2023, whereby GR Unlimited will support Goodness Growth in the optimization of its cannabis flower products, with a particular focus on improving the quality and yield of top-grade “A” cannabis flower across its various operating markets, starting with Maryland and Minnesota (Note 2.5.1).

As part of this strategic agreement, Goodness Growth is obligated to issue 10,000,000 warrants to purchase 10,000,000 subordinate voting shares of Goodness Growth to the Company, with a strike price equal to CAD$0.317 (US$0.233), being a 25.0 percent premium to the 10-day VWAP of Goodness Growth’s subordinate voting shares prior to the effective date of the Consulting Agreement. Similarly, the Company will issue 8,500,000 warrants to purchase 8,500,000 common shares of the Company to Goodness Growth, with a strike price equal to CAD$0.225 (US$0.166), being a 25.0 percent premium to the 10-day VWAP of the Company’s common shares prior to the effective date of the Consulting Agreement.

The Company first measured and recognized the fair value ($1,232,253) of the warrants using a Black-Scholes option pricing model as of the warrants’ deemed issuance date, which was the effective date of the Consulting Agreement (May 24, 2023). The Company and Goodness Growth issued and exchanged the warrants on October 5, 2023, at which time the carrying value ($1,232,253) of the warrants issued and received was recorded to equity and Warrants Asset, respectively.

The Warrants Asset is remeasured at fair value through profit and loss at each reporting period using the Black-Scholes option pricing model. The fair value of the Warrants Asset at December 31, 2023, was estimated to be $1,761,382 (October 31, 2023 - $1,361,366) using the following assumptions:

Expected (strike) price	0.317
Risk-free interest rate	3.25%
Expected life	4.77 years
Expected volatility	99%

Page 35 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

14.	STOCK OPTIONS

The following table summarizes the stock option movements for the two months ended December 31, 2023 and the year ended October 31, 2023:


Balance – October 31, 2022	4,910,000
Granted to employees	3,650,000
Granted to employees	400,000
Granted to service providers	2,750,000
Expiration of options to employees	(430,000	)
Expiration of options to employees	(75,000	)
Balance – October 31, 2023	11,205,000
Granted to employees	100,000
Granted to service providers	500,000
Expiration of options to employees	(5,000	)
Balance – December 31, 2023	11,800,000

All values are in US Dollars.

14.1	Stock Options Granted

During the two months ended December 31, 2023, 600,000 options were granted to employees and service providers (for the year ended October 31, 2023 – 6,800,000).

The fair value of the options granted during the two months ended December 31, 2023, was approximately $112,078 (CAD$148,466), which was estimated at the grant dates based on the Black-Scholes option pricing model, using the following assumptions:

Expected dividend yield	Nil%
Risk-free interest rate	4.56%
Expected life	4.0 years
Expected volatility	86%

The vesting terms of options granted during the two months ended December 31, 2023, are set out in the table below:

Number granted		Vesting terms
	100,000	50% on one year anniversary of grant date, 50% on second anniversary of grant date
	500,000	Monthly over a year
	600,000

The vesting terms of options granted during the year ended October 31, 2023, are set out in the table below:

Number granted		Vesting terms
	200,000	1/3 on each anniversary of grant date
	200,000	50% on one year anniversary of grant date, 50% on second anniversary of grant date
	400,000	Fully vested on grant date
	6,000,000	Vest on one year anniversary of grant date
	6,800,000

Page 36 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

14.2	Stock Options Issued and Outstanding

As at December 31, 2023, the following stock options were issued and outstanding:

			Expiry period
1,840,000	1,777,500	0.5	July 2024
200,000	200,000	0.9	November 2024
1,000,000	850,000	1.3	April 2025
1,150,000	1,150,000	1.4	May 2025
85,000	85,000	1.8	November 2025
300,000	150,000	2.3	April 2026
6,225,000	400,000	3.0	January 2027
400,000	-	3.7	September 2027
600,000	41,666	3.9	November 2027
11,800,000	4,654,166	2.3

All values are in US Dollars.

15.	CHANGES IN NON-CASH WORKING CAPITAL

The changes to the Company’s non-cash working capital for the two months ended December 31, 2023, and the year ended October 31, 2023, are as follows:



Accounts receivable		)
Inventory and biological assets	)	)
Prepaid expenses and other assets	)	)
Accounts payable and accrued liabilities	)
Income tax payable
Unearned revenue		)
Total	)	)

All values are in US Dollars.

16.	SUPPLEMENTAL CASH FLOW DISCLOSURE
	Two months ended December 31, 2023	Year ended October 31, 2023
---	---	---

Interest paid
Fair value of common shares issued to settle convertible debentures
Right-of-use assets acquired through leases (Note 7)
Note payable to HSCP used to acquire assets (Note 10.1)

All values are in US Dollars.

Page 37 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

17.	RELATED PARTY TRANSACTIONS

During the two months ended December 31, 2023 and the year ended October 31, 2023, the Company incurred the following related party transactions.

17.1	Transactions with CEO

Through its wholly owned subsidiary, GRU Properties, the Company leases Trail, owned by the Company’s President and CEO. The lease was extended during the year ended October 31, 2021, with a term through December 31, 2025. Lease charges of $24,000 (October 31, 2023 – 72,000) were incurred for two months ended December 31, 2023. The lease liability for Trail at December 31, 2023, was 129,401 (October 31, 2023 - $139,014).

During the year ended October 31, 2021, the Company leased Lars, a facility which is beneficially owned by the CEO, and is located in Medford, Oregon with a term through June 30, 2026. Lease charges for Lars of $31,827 (October 31, 2023 - $190,035) were incurred for the two months ended December 31, 2023. The lease liability for Lars at December 31, 2023, was $445,708 (October 31, 2023 - $470,134).

During the year ended October 31, 2021, the CEO leased equipment to the Company, which had a balance due of $Nil at December 31, 2023 (October 31, 2023 - $Nil). Lease payments of $nil were made against the equipment leases during the two months ended December 31, 2023 (October 31, 2023 - $9,971).

Leases liabilities payable to the CEO were $575,109 in aggregate at December 31, 2023 (October 31, 2023 - $609,148).

During the year ended October 31, 2023, the Company, through GR Unlimited, acquired 87% of the membership units of Canopy from the CEO. All payments necessary for GR Unlimited to exercise its option to acquire 87% of Canopy were equal to payments made by Canopy to purchase a controlling 60% interest of Golden Harvests.

17.2	Transactions with Spouse of CEO

During the two months ended December 31, 2023, the Company incurred expenses of $24,039 (October 31, 2023 - $98,846) for salary paid to the spouse of the CEO. At December 31, 2023, accounts and accrued liabilities payable to this individual were $3,846 (October 31, 2023 - $2,692). The spouse of the CEO was granted 500,000 options during the year ended October 31, 2023.

17.3	Transactions with Key Management Personnel

Key management personnel consist of the President and CEO; the CFO, the COO, GM and the SVP of the Company. The compensation to key management is presented in the following table:

	Two months ended December 31, 2023	Year ended October 31, 2023

Salaries and consulting fees
Stock option expense
Total

All values are in US Dollars.

Page 38 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Stock options granted to key management personnel and close family members of key management personnel include the following. During the two months ended December 31, 2023, no options were granted to key management personnel. During the year ended October 31, 2023, 1,500,000 options were granted to the CEO; 750,000 options were granted to the CFO; 750,000 options were granted to the SVP; and 175,000 options to the GM. Subsequent to the two months ended December 31, 2023, options of 1,500,000 were exercised into common shares by the SVP.

During the year ended October 31, 2023, 1,250,000 stock options were granted to three board of directors.

During the year ended October 31, 2023, the SVP purchased December 2022 Convertible Debentures with a principal balance of $50,000 and was issued 167,912 December Warrants. Subsequent to the two months ended December 31, 2023, the SVP converted the $50,000 convertible debentures and exercised the 167,912 December Warrants. This resulted in the issuance of 336,775 common shares at a price of CAD$0.20 per share in accordance with the December Convertible Debentures, in addition to the issuance of 167,912 common shares at an exercise price of $0.25 CAD per common share upon the exercise of the December Warrants.

During the year ended October 31, 2023, the Company issued 200,000 shares to the GM, which represented a portion of consideration for the acquisition of Golden Harvests (Notes 5 and 12.1).

Compensation to the board of directors during the two months ended December 31, 2023, was $3,000, (October 31, 2023 – $18,000).

Through its subsidiary, Golden Harvests, the Company leased Morton, owned by the Company’s GM, that is located in Michigan, with a lease term through January 2026. Lease charges of $32,000 (October 31, 2023 - $180,000) were incurred during the two months ended December 31, 2023. The lease liability of Morton at December 31, 2023 was $350,668 (October 31, 2023 - $377,043).

Through its subsidiary, Golden Harvests, the Company also leased Morton Annex located in Michigan, which is owned by the Company’s GM. The lease term was extended during the two months ended December 31, 2023, through November 2024. Lease charges of $330,000 (October 31, 2023 - $740,000) were incurred during the two months ended December 31, 2023. The lease liability of Morton Annex at December 31, 2023, was $239,871 (October 31, 2023 - $29,774).

Accounts payable, accrued liabilities, and lease liabilities due to key management at December 31, 2023, totaled $1,230,808 (October 31, 2023 - $1,118,763).

Page 39 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

17.4	Debt Balances and Movements with Related Parties

The following table sets out portions of debt pertaining to related parties:



Balance - October 31, 2022
Interest
Payments	)	)	)	)	)
Balance – October 31, 2023	****	****	****	****	****
Interest
Payments	)	)	)	)	)
Balance – December 31, 2023

All values are in US Dollars.

Pursuant to the loan and related agreements transacted during the year ended October 31, 2020, the CEO, SVP, and a director obtained 5.5%; 1%; and 2.5% of GR Michigan, respectively; third parties obtained 4% as part of the agreements, such that GR Michigan has a 13% non-controlling interest (Note 23.1). These parties, except the CEO, obtained the same interests in Canopy; the CEO obtained 92.5% of Canopy Management, of which 87% was acquired by the Company in January 2023 (Note 23.2); all payments necessary for the Company to exercise its option to acquire 87% of Canopy were equal to payments made by Canopy to purchase a controlling 60% interest of Golden Harvests. Interest payments of $10,800 were made on the business acquisition consideration payable of $360,000 for the two months ended December 31, 2023 ($59,400 for the year ended October 31, 2023). (Alse see Note 5.1).

18.	FINANCIAL INSTRUMENTS
18.1	Market Risk (Including Interest Rate Risk, Currency Risk and Other Price Risk)
---	---

Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risks.

18.1.1	Interest Rate Risk

At December 31, and October 31, 2023, the Company’s exposure to interest rate risk relates to long term debt and finance lease obligations; each of these items bear interest at a fixed rate.

18.1.2	Currency Risk

As at December 31, 2023, the Company had a portion of its accounts payable and accrued liabilities denominated in Canadian dollars which amounted to CAD$155,679 (CAD $190,169 at October 31, 2023). The Company is exposed to the risk of fluctuation in the rate of exchange between the Canadian Dollar and the United States Dollar.

18.1.3	Other Price Risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from interest rate risk or foreign currency risk and a change in the price of cannabis. The Company is not exposed to significant other price risk.

Page 40 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

18.2	Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a loss for the other party by failing to pay for its obligation.

Credit risk to the Company is derived from cash and trade accounts receivable. The Company places its cash in deposit with United States financial institutions. The Company has established a policy to mitigate the risk of loss related to granting customer credit by primarily selling on a cash-on-delivery basis.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the FDIC up to $250,000. At December 31, 2023 and October 31, 2023, the Company had $6,054,579 and $8,108,247 in excess of the FDIC insured limit, respectively.

Accounts receivable primarily consist of trade accounts receivable and sales tax receivable. The Company provides credit to certain customers in the normal course of business and has established credit evaluation and monitoring processes to mitigate credit risk. Credit risk is assessed on a case-by-case basis and a provision is recorded where required.

The carrying amount of cash, accounts receivable, and notes receivables represent the Company’s maximum exposure to credit risk; the balances of these accounts are summarized in the following table:

	December 31, 2023	October 31, 2023

Cash
Accounts receivable
Notes receivable
Total

All values are in US Dollars.

The allowance for doubtful accounts at December 31, 2023, was $373,393 (October 31, 2023 - $165,347).

As at December 31, 2023 and October 31, 2023, the Company’s trade accounts receivable were aged as follows:



Current
1-30 days
31 days older
Total trade accounts receivable
GST /HST
Provision for bad debt	)	)
Total accounts receivable

All values are in US Dollars.

Page 41 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

Major customers are defined as customers that each individually account for greater than 10% of the Company’s annual revenues. During the two months ended December 31, 2023, there was no major customer that accounted for greater than 10% of revenues (October 31, 2023 – no major customer accounted for over 10% of revenues). There was one customer with an accounts receivable balance greater than 10% at December 31, 2023, in which the balance of the customer comprised 11% of the total accounts receivable balance (October 31, 2023 – nil).

18.3	Liquidity Risk

Liquidity risk is the risk that an entity will have difficulties in paying its financial liabilities.

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when they become due. At December 31, and October 31, 2023, the Company’s working capital accounts were as follows:



Cash
Current assets excluding cash
Total current assets
Current liabilities	)	)
Working capital

All values are in US Dollars.

The contractual maturities of the Company’s liabilities occur over the next five years are as follows:

	Year 1	Over 1 Year- 3 Years	Over 3 Years- 5 Years

Accounts payable and accrued liabilities
Lease liabilities
Convertible debentures
Debt
Business acquisition consideration payable
Total

All values are in US Dollars.

18.4	Fair Values

The carrying amounts for the Company’s cash, accounts receivable, prepaid and other assets, accounts payable and accrued liabilities, current portions of debt and debentures payable, unearned revenue, and interest payable approximate their fair values because of the short-term nature of these items.

Page 42 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

18.5	Fair Value Hierarchy

A number of the Company’s accounting policies and disclosures require the measurement of fair value for both financial and nonfinancial assets and liabilities. The Company has an established framework, which includes team members who have overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values. When measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. The Company regularly assesses significant unobservable inputs and valuation adjustments. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; or

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The carrying values of the financial instruments at December 31, 2023, are summarized in the following table:

	Level in fair<br>value hierarchy	Amortized Cost	FVTPL

Financial Assets
Cash	Level 1
Accounts receivable	Level 2
Warrants asset	Level 2
Financial Liabilities
Accounts payable and accrued liabilities	Level 2
Debt	Level 2
Convertible debentures	Level 2
Business acquisition consideration payable	Level 2
Derivative liabilities	Level 2

All values are in US Dollars.

During the two months ended December 31, 2023, there were no transfers of amounts between levels.

Page 43 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

The carrying values of the financial instruments at October 31, 2023, are summarized in the following table:

	Level in fair
	value hierarchy	Amortized Cost	FVTPL
****	****
Financial Assets
Cash	Level 1
Accounts receivable	Level 2
Warrants asset	Level 2
Financial Liabilities
Accounts payable and accrued liabilities	Level 2
Debt	Level 2
Convertible debentures	Level 2
Business acquisition consideration payable	Level 2
Derivative liabilities	Level 2

All values are in US Dollars.

During the year ended October 31, 2023, there were no transfers of amounts between levels.

19.	GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the two months ended December 31, 2023 and the year ended October 31, 2023, are as follows:

	Two months ended December 31, 2023	Year ended October 31, 2023

Office, banking, travel, and overheads
Professional services
Salaries and benefits
Total

All values are in US Dollars.

20.	INCOME TAXES

As the Company operates in the legal cannabis industry, certain subsidiaries of the Company are subject to the limits of IRC Section 280E for U.S. federal income tax purposes. Under IRC Section 280E, these subsidiaries are generally 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. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income or loss recognized for financial reporting purposes.

The Company is treated as a U.S. corporation for U.S. federal income tax purposes under IRC Section 7874 and is subject to U.S. federal income tax on its worldwide income. However, for Canadian tax purposes, the Company, regardless of any application of IRC Section 7874, is treated as a Canadian resident company for Canadian income tax purposes as defined in the Income Tax Act (Canada). As a result, the Company is subject to taxation both in Canada and the United States. The Company is also subject to state income taxation in various state jurisdictions in the United States. The Company’s income tax is accounted for in accordance with IAS 12 Income Taxes.

Page 44 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

For the two months ended December 31, 2023, and year ended October 31, 2023, income taxes expense consisted of:

	Two months ended December 31, 2023	Year ended October 31, 2023

Current expense:
Federal
State
Adjustment to prior years provision versus statutory tax returns
Total current expense:
Deferred expense (benefit):
Federal			)
State			)
Change in unrecognized deductible temporary differences
Total deferred (benefit):			)
Total income tax expense:

All values are in US Dollars.

The difference between the income tax expense for the two months ended December 31, 2023, and year ended October 31, 2023, and the expected income taxes based on the statutory tax rate applied to gain (loss) from operations before taxes are as follows:



Gain (loss) from operations before taxes		)
Statutory tax rates	%	%
Expected income tax (recovery)		)
Change in statutory tax rates and FX rates	)
Nondeductible expenses	)
Deferral adjustments		)
Change in unrecognized deductible temporary differences
Net operating loss		)
Fiscal year to calendar year adjustment
Adjustment to prior years provision versus statutory tax returns
Total income tax expense:

All values are in US Dollars.

Page 45 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

The following tax assets arising from temporary differences and non-capital losses have been recognized in the consolidated financial statements for the two months ended December 31, 2023, and the year ended October 31, 2023:



Property, plant and equipment
Inventory
ROU Leases	)	)
Net Operating Loss Carryforward (federal)
Net Operating Loss Carryforward (state)
Net deferred tax assets

All values are in US Dollars.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income tax liabilities result primarily from amounts not taxable until future periods. Deferred income tax assets result primarily from operating tax loss carry forwards and temporary differences related to property, plant and equipment and inventory, and have been offset against deferred income tax liabilities. As of December 31, 2023, the Company has estimated Canadian non-capital losses of CAD$9,000,490. These Canadian non-capital losses are available to be carried forward, to be applied against the Company’s taxable income earned in Canada over the next 20 years and expire between 2030 and 2042. The deferred tax benefit of these Canadian tax losses has not been set up as an asset as it is not probable that sufficient taxable profits will be available for Canadian tax purposes to realize the carryforward of unused tax losses. Additionally, the deferred tax benefit of capitalized transaction costs and startup costs have not been setup as a deferred tax asset since it is not probable that the Company would be able to realize these deductible temporary differences for U.S. tax purposes.

The Company operates in various U.S. state tax jurisdictions and is subject to examination of its income tax returns by tax authorities in those jurisdictions who may challenge any item on these returns. Because the tax matters challenged by tax authorities are typically complex, the ultimate outcome of these challenges is uncertain. In accordance with IAS 12, the Company recognizes the benefits of uncertain tax positions in our consolidated financial statements only after determining that it is more likely than not that the uncertain tax positions will be sustained. For the two months ended December 31, 2023 and the year ended October 31, 2023, the Company did not record an accrual for uncertain tax positions.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. There are no positions for which it is reasonably possible that the uncertain tax benefit will significantly increase or decrease within twelve months. The Company files income tax returns in the United States, including various state jurisdictions, and in Canada, which remain open to examination by the respective jurisdictions starting with the 2018 tax year to the present.

U.S. Federal and state tax laws impose restrictions on net operating loss carryforwards in the event of a change in ownership of the Company, as defined by the IRC Section 382. The Company does not believe that a change in ownership, as defined by IRC Section 382, has occurred but a formal study has not been completed.

U.S. Congress passed the Inflation Reduction Act in August 2022. The Company does not anticipate any impact to its income tax provision as a result of the new U.S. legislation.

Page 46 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

21.	CAPITAL DISCLOSURES

The Company includes equity, comprised of share capital, contributed surplus (including the fair value of equity instruments to be issued), equity component of convertible promissory notes and deficit, in the definition of capital.

The Company’s objectives when managing capital are as follows:

-	to safeguard the Company’s assets and ensure the Company’s ability to continue as a going concern.
-	to raise sufficient capital to finance the construction of its production facility and obtain license to produce recreational marijuana; and
---	---
-	to raise sufficient capital to meet its general and administrative expenditures.
---	---

The Company manages its capital structure and makes adjustments to, based on the general economic conditions, the Company’s short-term working capital requirements, and its planned capital requirements and strategic growth initiatives.

The Company’s principal source of capital is from the issuance of common shares and debt. In order to achieve its objectives, the Company expects to spend its working capital, when applicable, and raise additional funds as required.

The Company does not have any externally imposed capital requirement.

Page 47 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

22.	SEGMENT REPORTING

Geographical information relating to the Company’s activities is as follows:

Segments	Oregon	Michigan	Other	Services	Total
****
Non-current assets other than financial instruments:
As at December 31, 2023
As at October 31, 2023
Two months ended December 31, 2023:
Net revenue
Gross profit
Gross profit before fair value adjustments
Year ended October 31, 2023:
Net revenue
Gross profit
Gross profit before fair value adjustments

All values are in US Dollars.

23.	NON-CONTROLLING INTERESTS

The changes to the non-controlling interest for the two months ended December 31, 2023, and the year ended October 31, 2023, are as follows:

	December 31, 2023	October 31,2023

Balance, beginning of period
Non-controlling interest’s 100% share of Canopy			)
Acquisition of 87% of Canopy			)
Balance, end of period

All values are in US Dollars.

23.1	Non-controlling Interest in GR Michigan
	December 31, 2023	October 31, 2023
---	---	---

Current assets
Net loss for the period

All values are in US Dollars.

Nine percent (9%) of GR Michigan is owned by officers and directors of the Company; this ownership is pursuant to an agreement that included their loans made to GR Michigan (Note 17.4), and 4% of GR Michigan owned by a third party. The total non-controlling ownership, including ownership by officers and directors, is 13%.

Page 48 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

23.2	Non-controlling Interest in Canopy
	December 31, 2023	October 31,2023
---	---	---	---

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net loss for the period attributed to non-controlling interest			)

All values are in US Dollars.

In January of 2023, GR Unlimited exercised its option to acquire 87% of the membership units of Canopy from the CEO. Prior to this, ninety-six percent (96%) of Canopy was owned by officers and directors of the Company, and four percent (4%) was owned by a third party. Ownership by officers and directors, excluding the CEO, was pursuant to agreements which caused their ownership of Canopy to be equal to their ownership in GR Michigan (Note 23.2), which total 3.5%. The CEO owned 92.5% of Canopy, which was analogous to the CEO’s 5.5% ownership of GR Michigan, and an additional 87% of Canopy, which was and is equal to the Company’s 87% ownership of GR Michigan. Following GR Unlimited’s acquisition of 87% of the membership units of Canopy in January of 2023, Canopy became owned 87% by GR Unlimited; 7.5% by officers and directors; and 5.5% by the CEO.

24.	LEGAL MATTERS

On September 22, 2022, the SEC issued an Order Instituting Proceedings pursuant to Section 12(j) of 1934 Act, against the Company alleging violations of the 1934 Act, as amended, and the rules promulgated thereunder, by failing to timely file periodic reports. Section 12(j) authorizes the SEC as it deems necessary or appropriate for the protection of investors to suspend for a period not exceeding 12 months, or to revoke, the registration of a security if the SEC finds, on the record after notice and opportunity for hearing, that the issuer of such security has failed to comply with any provision of the 1934 Act, as amended, or the rules promulgated thereunder. The Company has filed an answer to the Order Instituting Proceedings and is seeking a hearing in the matter. The Company is currently fully compliant with all of their filings, is vigorously defending itself in the matter, and is preparing to re-register its security if necessary.

25.	SUBSEQUENT EVENTS
25.1	Purchase of Ross Lane, Oregon Farm Property
---	---

On January 12, 2024, the Company executed the option to purchase the Ross Lane property located in Central Point, Oregon for total consideration of $1,525,000.

25.2	New Jersey Retail Investment

On January 17, 2024, the Company announced that it formed Grown Rogue Retail Ventures LLC and signed a definitive agreement on January 16, 2024, to invest in and support Nile of NJ LLC, a company that is developing an adult-use dispensary in West New York, New Jersey. The investment is in the form of a secured note, in which the Company advanced $500,000 pursuant to this secured note on February 13, 2024. These retail operations will be supported with products from a cultivation facility under development.

Page 49 of 50

Grown Rogue International Inc.

Notes to the Consolidated Financial Statements

For the Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Expressed in United States Dollars, unless otherwise indicated

25.3	Warrants Acceleration

On March 1, 2024, the Company announced it has accelerated the expiry date of an aggregate of 23,270,249 common share purchase warrants comprised of the December Warrants, July Warrants and August Warrants. The Company issued the notice of acceleration required by the warrant certificates governing these warrants on March 1, 2024, thereby accelerating the expiry date to 90 days from the date of notice. As of April 10, 2024, all 23,270,249 common share purchase warrants were exercised for an aggregate of 23,270,249 common shares for aggregate gross proceeds of approximately US$4.7 million.

25.4	Illinois Expansion

On March 5, 2024, the Company announced it signed a definitive agreement to form Rogue EBC, LLC, a joint venture with EBC Ventures. The joint venture has entered into a definitive agreement to acquire 100% of CannEquality, LLC, which holds a craft growers license with the Illinois Department of Agriculture. Grown Rogue will own 70% of the joint venture and has agreed to contribute up to US$6,000,000 to support the development of the facility. The joint venture agreement includes multiple purchase options, which ultimately give Grown Rogue the ability to acquire 100% of the membership interests of the joint venture.

25.5	Canopy Buyout

On April 25, 2024, the Company announced that it has increased ownership in its Michigan operations from 52.2% to 80% in two transactions for total consideration of US$2.8M, with US$0.2M paid in cash and US$2.6M paid by way of 4 year sellers’ notes. Grown Rogue increased its ownership in Golden Harvests, the entity that controls its Michigan operations, operating out of an 80,000 sq ft facility that contains approximately 15,000 square feet of flowering bench space. We purchased the total remaining minority interest in Canopy for US$0.8M, which includes a 20% down payment in cash and monthly payments for a period of 4 years with an interest rate of 5.2% per annum. Additionally, the Company purchased 20% of the minority interest in Golden Harvests for US$2.0M, which includes minimum quarterly payments in cash for a period of 4 years. The transaction provides for a valuation of Golden Harvests at US$10.0M. All payments owing to the sellers are expected to be completed with cash on hand and cash generated from operations. The Company retains the option to acquire the remaining 20% of Golden Harvests at a fair market valuation.

Page 50 of 50

Exhibit 2

FORM 13-502F1

CLASS 1 AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE

MANAGEMENT CERTIFICATION
I, KEE, Ryan, an officer of the reporting issuer noted below have examined this Form 13-502F1 (the Form) being submitted hereunder to the Ontario Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate.
(s) KEE, Ryan		29 Apr 2024
Name:	KEE, Ryan	Date:
Title:	Chief Financial Officer
	and Corporate Secretary
Reporting Issuer Name:	Grown Rogue International Inc. / Grown Rogue International Inc. (000008380)
---	---
End date of previous financial year:	31 Dec 2023
Type of Reporting Issuer:	☒ Class 1 reporting issuer ☐ Class 3B reporting issuer
Highest Trading Marketplace:	Canadian Securities Exchange (CSE)

(refer to the definition of “highest trading marketplace” under OSC Rule 13-502 Fees)

Market value of listed or quoted equity securities:

(in Canadian Dollars - refer to section 36 of OSC Rule 13-502 Fees)

Equity Symbol	GRIN
1st Quarterly Trading Period (dd/mm/yy)<br> (refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)	01/11/23	to	31/12/23
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace		$	0.3800	(i)
---	---	---	---	---
Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period			182005886.00	(ii)
Market value of class or series	(i) x (ii)	$	69162236.68	(A)
2nd Quarterly Trading Period (dd/mm/yy)<br> (refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)			N/A
---	---	---	---	---
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace		$	N/A	(iii)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period		****	N/A	(iv)
Market value of class or series	(iii) x (iv)	$	N/A	(B)
3rd Quarterly Trading Period (dd/mm/yy)<br> (refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)			N/A
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace		$	N/A	(v)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period		****	N/A	(vi)
Market value of class or series	(v) x (vi)	$	N/A	(C)
4th Quarterly Trading Period (dd/mm/yy)<br> (refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)			N/A
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace		$	N/A	(vii)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period		****	N/A	(viii)
Market value of class or series	(vii) x (viii)	$	N/A	(D)

Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable quarterly period (i.e. A through D above))		$	69162236.68	(1)
(Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary pursuant to paragraph 9(1)(b) of OSC Rule 13-502 Fees, if applicable) that was listed or quoted on a marketplace at the end of the last trading day of each quarterly period in the previous financial year of the reporting issuer)
Fair value of outstanding debt securities:
(See paragraph 9(1)(c), and if applicable, paragraphs 9(1)(d) and (e) of OSC Rule 13-502 Fees)
(Provide details of how value was determined)		$	0.00	(2)
Capitalization for the previous financial year	(1) + (2)	$	69,162,236.68
Participation Fee
(For Class 1 reporting issuers, from Appendix A of OSC Rule 13-502 Fees, select the participation fee)		$	6,100.00
(For Class 3B reporting issuers, from Appendix B of OSC Rule 13-502 Fees, select the participation fee)
Late Fee, if applicable<br> (As determined under section 8 of OSC Rule 13-502 Fees)		$	0.00
Total Fee Payable (Participation Fee plus Late Fee)		$	6,100.00

Exhibit 3

Note: [01 Mar 2017] – The following is a consolidation of 13-501F1. It incorporates amendments to this document that came into effect on March 1, 2017. This consolidation is provided for your convenience and should not be relied on as authoritative.

FORM 13-501F1

CLASS 1 REPORTING ISSUERS AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE

MANAGEMENT CERTIFICATION
I, KEE, Ryan, an officer of the reporting issuer noted below have examined this Form 13-501F1 (the For m) being submitted hereunder to the Alberta Securities Commission and certify that to my knowledge, ha ving exercised reasonable diligence, the information provided in the Form is complete and accurate.
(s) KEE, Ryan		29 Apr 2024
Name:	KEE, Ryan	Date:
Title:	Chief Financial Officer
	and Corporate Secretary
Reporting Issuer Name:	Grown Rogue International Inc. / Grown Rogue International Inc. (000008380)
---	---
End date of previous financial year:	31 Dec 2023
Type of Reporting Issuer:	☒ Class 1 reporting issuer ☐ Class 3B reporting issuer
Highest Trading Marketplace:	Canadian Securities Exchange (CSE)

Market value of listed or quoted equity securities:

Equity Symbol	GRIN
1st Specified Trading Period (dd/mm/yy)	01/11/23	to	31/12/23
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace		$	0.3800	(i)
---	---	---	---	---
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period			182005886.00	(ii)
Market value of class or series	(i) x (ii)	$	69162236.68	(A)
2nd Specified Trading Period (dd/mm/yy)			N/A
---	---	---	---	---
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace		$	N/A	(iii)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period		****	N/A	(iv)
Market value of class or series	(iii) x (iv)	$	N/A	(B)
3rd Specified Trading Period (dd/mm/yy)			N/A
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace		$	N/A	(v)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period		****	N/A	(vi)
Market value of class or series	(v) x (vi)	$	N/A	(C)
4th Specified Trading Period (dd/mm/yy)			N/A
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace		$	N/A	(vii)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period		****	N/A	(viii)
Market value of class or series	(vii) x (viii)	$	N/A	(D)

5th Specified Trading Period (dd/mm/yy)			N/A
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace		$	N/A	(ix)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period		****	N/A	(x)
Market value of class or series	(ix) x (x)	$	N/A	(E)
Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable specified<br> trading period (i.e. A through E above))		$	69162236.68	(1)
(Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year)
Fair value of outstanding debt securities:
(Provide details of how value was determined)		$	0.00	(2)
Capitalization for the previous financial year	(1) + (2)	$	69,162,236.68
Participation Fee
		$	3,000.00
Late Fee, if applicable		$	N/A
Total Fee Payable (Participation Fee plus Late Fee)		$	3,000.00

Exhibit 4

GROWNROGUE INTERNATIONAL INC.

FORM 51-102F1

MANAGEMENT DISCUSSION & ANALYSIS

FOR THE TWO MONTHS ENDED DECEMBER 31, 2023

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TABLE OF CONTENTS

Management’s Responsibilities for Financial Reporting	3
Forward-Looking Statements	4
Description of Business	4
Selected Financial Information	10
Results of Operations	11
Summary of Quarterly Results	15
Liquidity	15
Capital Resources	19
Off-Balance Sheet Arrangements	20
Transactions with Related Parties	20
Other Selected Financial Information	23
Outstanding Share Data	25
Critical Accounting Judgments and Estimation Uncertainties	26
Newly Adopted Accounting Pronouncements	26
Financial Instruments and Other Risk Factors	27
Subsequent Events	30
Regulatory Disclosure	31
Internal Control over Financial Reporting and Disclosure Controls	41

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This Management Discussion and Analysis (“MD&A”) made as of April 29, 2024, should be read in conjunction with the consolidated financial statements of Grown Rogue International Inc. (the “Company”, “Grown Rogue”, (“we”, “our”, or “us”) for the two months ended December 31, 2023, and the year ended October 31, 2023 (the “Reporting Period”), and the related notes thereto (the “Financial Statements”). The Company’s Financial Statements are presented on a consolidated basis with its wholly-owned subsidiary, Grown Rogue Unlimited, LLC (“GR Unlimited”), and GR Unlimited’s wholly-owned subsidiaries: Grown Rogue Gardens, LLC (“GR Gardens”), GRU Properties, LLC (“GRU Properties”), GRIP, LLC (“GRIP”), and Grown Rogue Distribution, LLC (“GR Distribution”); as well as GR Unlimited’s 87% interest in GR Michigan, LLC (“GR Michigan”), and GR Unlimited’s 87% interest in Canopy Management, LLC (“Canopy”), which owns 60% of Golden Harvests, LLC (“Golden Harvests”). During the year ended October 31, 2023, the Company announced that it had exercised its option to obtain 87% of the membership units of Canopy (through GR Unlimited). Grown Rogue’s reporting currency is the United States dollar and all amounts in this MD&A are expressed in United States dollars unless otherwise noted. The Company’s functional currency is the Canadian dollar while all subsidiaries use USD as the functional currency. The use of “CAD$” refers to Canadian dollars.

The Company’s comparative information included in this MD&A has been prepared in accordance with International Financial Reporting Standards (“IFRS”).

Additional information relating to the Company is also available on the System for Electronic Document Analysis and Retrieval (SEDAR+) at www.sedarplus.ca. The common shares of GRIN are listed on the Canadian Securities Exchange under the symbol “GRIN”.

MANAGEMENT’S RESPONSIBILITIES FOR FINANCIAL REPORTING

The Financial Statements have been prepared by management in accordance with IFRS and have been approved by the Company’s board of directors (the “Board”). The integrity and objectivity of the Financial Statements are the responsibility of management. In addition, management is responsible for ensuring that the information contained in the MD&A is consistent where appropriate, with the information contained in the Financial Statements.

The Financial Statements may contain certain amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis to ensure that the Financial Statements are presented fairly in all material respects.

As the Company is a Venture Issuer (as defined under under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) (“NI 52-109”), the Company and Management are not required to include representations relating to the evaluation, design, establishment and/or maintenance of disclosure controls and procedures (“DC&P”) and/or Internal Controls over Financial Reporting (“ICFR”), as defined in NI 52-109, nor has it completed such an evaluation. Inherent limitations on the ability of the certifying officers to design and implement on a cost-effective basis DC&P and ICFR for the issuer may result in additional risks of quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

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FORWARD-LOOKING STATEMENTS

This MD&A contains information and projections based on current expectations. Certain statements herein may constitute “forward-looking” statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this MD&A, such statements use such words as “will”, “may”, “could”, “intends”, “potential”, “plans”, “believes”, “expects”, “projects”, “estimates”, “anticipates”, “continue”, “potential”, “predicts” or “should” and other similar terminology. These statements reflect expectations regarding future events and performance but speak only as of the date of this MD&A. Forward-looking statements include statements with respect to planned acquisitions, strategic partnerships or other transactions and expansions not yet concluded, including the timing thereof; plans to market, sell and distribute products; market competition; plans to retain and recruit personnel; the ability to secure funding; and the ability to obtain regulatory and other approvals are all forward-looking information.

These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements.

There can be no assurance that any intended or proposed activity or transaction will occur or that, if any such action or transaction is undertaken, it will be completed on terms currently intended by the Company. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law.

Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The forward-looking statements herein speak only as of the date hereof. Actual results could differ materially from those anticipated due to a number of factors and risks including those described in this MD&A under “Risk Factors” and in section 17 of the Company’s Listing Statement dated November 15, 2018, which can be found under the Company’s profile on www.sedarplus.ca.

DESCRIPTION OF BUSINESS

Grown Rogue, headquartered in Medford, Oregon, is a craft cannabis^1^ company focused on delighting customers with premium flower and flower-derived products at fair prices. Our roots are in Southern Oregon where we have demonstrated our capabilities in the highly competitive and discerning Oregon market by becoming the number one flower producer in Oregon in 2022, which we have maintained year-to-date in 2023, and we have successfully expanded our platform to Michigan, where we quickly became a top 5 indoor wholesaler in that state in 2022, which we have maintained year-to-date in 2023. We combine our passion for product and value with a disciplined approach to growth, prioritizing profitability and return on capital.

Grown Rogue’s strategy is built to win now and, in the future, as the Company profitably delivers craft cannabis at appropriate scale and continues building out indoor cultivation in new markets, while scaling sungrown capabilities to support eventual interstate commerce.

^1^	The terms cannabis and marijuana are used interchangeably throughout this MD&A.

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Grown Rogue’s competitive advantage is efficiently cultivating and delivering craft cannabis at accessible prices, having a healthy balance sheet and the access to capital to accelerate the growth with new market opportunities.

OREGON

Grown Rogue, through its wholly owned subsidiary, GR Gardens, operates four cultivation facilities in Oregon, comprising approximately 95,000 square feet of flowering cultivation canopy, that currently service the Oregon recreational marijuana market: two outdoor, sungrown farms called “Foothill” and “Ross Lane,” and two state-of-the-art indoor facilities (“Rossanley” and “Airport”). GR Gardens currently holds five producer licenses in Oregon from the Oregon Liquor Control Commission (“OLCC”), two wholesaler licenses, and two processor licenses.

During the year ended October 31, 2023, we executed a two-year lease which includes an option to purchase Ross Lane, an Oregon property which includes 35 acres, 3 tax lots and an additional OLCC producer license. Subsequent to the statement of financial position dated December 31, 2023, the Company executed on this purchase option on January 12, 2024 for total consideration of $1,525,000 comprised of a promissory note for $1,285,000 with the remaining consideration consisting of a down payment and a credit for prepaid rents.

Grown Rogue’s Oregon business is headquartered in the world-renowned Emerald Triangle, which is known world-wide for the quality of its cannabis. The Emerald Triangle includes the southern part of Oregon and northern part of California. The Company capitalizes on this ideal outdoor growing environment to produce high-quality, low-cost cannabis flower. The two sungrown farms produce one crop each year per farm, which is planted in June and harvested in October.

GR Gardens is responsible for production of recreational marijuana using outdoor and indoor production methodologies. Foothill and Ross Lane are outdoor farms with 40,000 square feet of flowering canopy each, for a total of 80,000 square feet, sitting on a combined land package of approximately 135 acres. Our “Trail’s End” outdoor property will not be cultivated in 2023, and the Company will transfer the Trail’s End license to Ross Lane for production in 2024 to streamline operational efficiencies by centralizing production facilities.

Rossanley, an approximately 17,000 square-foot indoor facility, with approximately 5,600 square feet of flowering bench space, produces high-quality indoor flower through controlled environment agriculture (“CEA”) operations. By carefully controlling temperature, humidity, carbon dioxide levels, and other criteria, we produce a year-round supply of high-quality cannabis flower with multiple harvests per month. Rossanley has eight dedicated flower rooms, which allows for an average of nearly four harvests per month resulting in approximately 4,000 pounds annually.

Airport, acquired in 2022 is a 30,000 square-foot indoor growing facility adding 30,000 square feet of CEA indoor production space and 9,152 square feet of flowering bench space. Airport is a short distance from Rossanley, which is a benefit to operating efficiency, and it is equipped with state-of-the-art equipment which facilitates the implementation of best practices developed at Rossanley.

The total annual production capacity for Grown Rogue’s Oregon operations, based on the current constructed capacity, will range between 20,000 and 24,000 pounds, depending upon various factors including sungrown growing conditions and strain performance.

MICHIGAN

In May 2021, we acquired, through Canopy, a controlling 60% interest in our Michigan operation called Golden Harvests.

The Golden Harvests facility is approximately 65% constructed, with approximately 50,000 square feet in operation, including approximately 14,550 square feet of flowering bench space, in addition to all the ancillary support space, including office and administration to support the operations. The facility produces high quality indoor flower through

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CEA, with fourteen individual flowering rooms in operation. Harvested pounds in Michigan in 2023 totaled approximately 10,000 pounds. Golden Harvests produces bulk flower, packaged flower, and manufactures pre-rolls on site.

SERVICES

On May 24, 2023, GR Unlimited entered into an independent contractor consulting agreement (the “Consulting Agreement”) with Goodness Growth Holdings, Inc. (CSE: GDNS; OTCQX: GDNSF) (“Goodness Growth”). Under the Consulting Agreement, GR Unlimited will support Goodness Growth in the optimization of its cannabis flower products, with a particular focus on improving the quality and yield of top-grade “A” cannabis flower across its various operating markets, starting with Maryland and Minnesota.

Under the initial term of the Consulting Agreement, which expires on June 30, 2025, Goodness Growth will provide compensation to GR Unlimited for sustained consulting support, including input on systems and processes, and recommendations to improve Goodness Growth’s cultivation operations. GR Unlimited will be entitled to receive additional incentive compensation if our services result in improved cash flow performance as compared to Goodness Growth’s baseline expectations over the term of the agreement. Our cooperation in the agreement will be on an exclusive basis to Goodness Growth within the markets in which Goodness Growth operates. The agreement will automatically extend for up to two additional two-year terms, unless terminated by Goodness Growth or the Company.

A termination fee of at least $5,000,000 is payable to GR Unlimited in the event that Goodness Growth is acquired, sells all or substantially all of its assets, or is merged into another entity and is not the surviving entity of such merger. In addition, a termination fee of at least $2,500,000 is payable to GR Unlimited in the event that the Consulting Agreement terminates for certain other conditions.

As part of this strategic agreement, Goodness Growth is obligated to issue 10,000,000 warrants to purchase 10,000,000 subordinate voting shares of Goodness Growth to the Company, with a strike price equal to CAD$0.317 (US$0.233), being a 25.0 percent premium to the 10-day volume weighted average price (“VWAP”) of Goodness Growth’s subordinate voting shares prior to the effective date of the Consulting Agreement. Similarly, the Company will issue 8,500,000 warrants to purchase 8,500,000 common shares of the Company to Goodness Growth, with a strike price equal to CAD$0.225 (US$0.166), being a 25.0 percent premium to the 10-day VWAP of the Company’s common shares prior to the effective date of the Consulting Agreement. These warrants were issued on October 5, 2023.

The Consulting Agreement and amendments to the Consulting Agreement provide for service revenue earned by the Company to be calculated beginning January 2023, and we reported service revenue of $96,050 (October 31, 2023 - $929,016) and cost of service revenue of $89,210 (October 31, 2023 - $308,461) for the two months ended December 31, 2023.

PRODUCT

Grown Rogue produces a range of cultivars for consumers to enjoy, which are traditionally classified as indicas, sativas, and hybrids. Grown Rogue has a mix of “core” and “limited” strains to provide consumers with consistent and unique purchasing options at their local dispensary. Grown Rogue flower has won multiple awards in Oregon, which is one of the most competitive cannabis production environments in the world, including the prestigious Growers Cup competition on two occasions. Grown Rogue won 1^st^place for highest THC content, 1^st^ place for highest terpene content, and 3^rd^ place in the grower’s choice category. In addition, we believe we achieved an outdoor production potency record, at the time, in the state of Oregon, when its Monkey Train cultivar tested at a THC potency of 35.13%. In 2023, Grown Rogue won 3^rd^ place in the Oregon Grower’s Cup Outdoor category for its Sour Grape strain. Consumers can enjoy bulk flower in both Oregon and Michigan. In the Michigan market we also offer our innovative nitrogen sealed 3.5 gram flower jars, our patented nitrogen sealed pre-rolls, 3.5 gram flower bags, and regularly packaged pre-rolls.

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We recently launched a new line of strain-specific prepackaged flower, coupled with proprietary genetics, in Michigan, and launched a new branded pre-roll pack product in Oregon in 2023. In addition, Grown Rogue launched a new brand of pre-rolls, a rapidly growing category, called Yeti in 2023. According to LeafLink’s MarketScape data, Grown Rogue was the #1 flower producer in Oregon and a top 5 indoor flower wholesaler in Michigan in 2022 and in 2023.

GENETICS

We are committed to developing unique, proprietary genetics as long-term genetic diversity will be a major factor in establishing brand differentiation with consumers. We have allocated research and development space to develop new strains, while also phenotype hunting to identify new and exciting strain options that will delight consumers. Grown Rogue has developed a compelling mix of proprietary strains, along with a library of “fan favorites” to ensure that consumer and dispensary demand will remain strong for our flower and flower-derived products. All Grown Rogue genetics are rigorously tested to establish the genetic makeup of each strain in our portfolio. We continue to focus on bringing new unique genetics to ensure a steady flow of innovative flower and flower products to market. Currently we carry more than 50 unique cultivars in our genetic library, and we continue to develop our portfolio as we trial new genetics.

DISTRIBUTION AND SALES

Grown Rogue uses a multi-channel distribution strategy that includes direct-to-retail delivery and third-party delivery (Michigan regulations mandate independent third-party delivery); wholesalers, who have their own distribution channels; and processors, who utilize Grown Rogue products (e.g., trim) to create retail-ready products.

Regarding the direct-to-retail channel, Grown Rogue’s sales team works closely with dispensary owners and intake managers to provide consistent product, competitive prices, and personalized service using sales techniques from other industries such as pharmaceutical and liquor. Grown Rogue’s goal is to establish and maintain the client relationship as we continue to expand our footprint in the states in which we operate.

Grown Rogue has developed end user product marketing collateral and other educational information regarding Grown Rogue products as part of all sales with dispensaries that include strain type, testing results, information on the product and other necessary information to clearly articulate the product being provided. Each product is uniquely packaged while maintaining brand consistency across the product suite.

Grown Rogue works with dispensary owners to develop promotional opportunities for retail customers and bud tenders. Grown Rogue provides detailed tutorials to the staff and owners of the dispensaries around the product and how it is grown, processed, cured and packaged so that they are intimately familiar with the Grown Rogue process. Grown Rogue also invites dispensary owners and operators to Grown Rogue’s operating facilities so they can see first-hand the methods and processes used to create the product.

Based upon information from MarketScape, which is part of the sales analytics tool utilized by LeafLink, which handles all of our sales and invoicing, we are the largest producer in Oregon and a top five indoor flower producer in Michigan.

BRANDING

Developing compelling branding that engages, inspires, and creates transparency and trust with consumers is one of the most important aspects of building a successful cannabis company. Cannabis product branding has been evolving from promising high-quality flower, to providing descriptions of the effect a consumer should expect from a particular product.

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While other brands have shifted into the “one word” product description, Grown Rogue has leveraged consumer insights and product feedback to evolve the messaging to provide significantly more detail so consumers can make a more informed choice about which Grown Rogue products will optimally enhance their experience.

In order to grow the Grown Rogue community and spread knowledge of its products, Grown Rogue leverages social media and other digital platforms. Grown Rogue aspires to eliminate the “dark mystery” historically associated with cannabis by empowering consumers to learn about the plant and then “enhance experiences” as they desire. The transition from prohibition to legal cannabis has provided the cannabis community with an opportunity to welcome a large group of new members and it is vital that product education is completed in an authentic and informative manner to ensure that everyone’s first cannabis experience is not only positive but also as expected.

MARKETING AND ADVERTISING

Grown Rogue’s marketing channels include a comprehensive, fully responsive, interactive website (including mobile). The website has been search-engine optimized and includes calls to action that encourage consumers to become part of the Grown Rogue community by following the Company on social media.

Grown Rogue is focused on providing education to new and existing consumers through our website but even more hands on through our retail partners. We provide vendor days and budtender education days where we spend one on one time with the budtenders educating them about everything Grown Rogue.

We strategically leverage the narrative at retail through digital and physical retail assets to further educate consumers about Grown Rogue.

Grown Rogue has established a social media presence that includes Facebook, Twitter, Instagram, LinkedIn, TikTok and YouTube. Grown Rogue’s social identity is defined by delivering fresh content and keeping interaction with followers/fans prompt and positive. Grown Rogue attracts existing cannabis industry participants as well as people not familiar with the industry by creating a positive, inclusive environment where dialogue is encouraged. The goal is to change existing stereotypes and overcome the stigmas associated with the cannabis industry.

TRADEMARKS AND PATENTS

Grown Rogue actively seeks to protect its brand and intellectual property. Grown Rogue currently has three registered U.S. trademarks:

1.	Grown Rogue was filed on September 22, 2017, and registered on August 7, 2018 under Registration No. 5537240.
2.	The Right Experience Every Time was filed on September 29, 2017 and registered on August 7, 2018 under Registration No. 5537260.
---	---
3.	Sizzleberry was filed on September 29, 2017, and registered on August 7, 2018, under Registration No. 5537259.
---	---

Grown Rogue filed a patent for its nitrogen sealed glass containers on February 15, 2018, with the United States Patent and Trademark Office (“USPTO”). The nitrogen sealed glass containers preserve the freshness of the flower and essential terpenes to improve the “entourage effect.” The USPTO issued Grown Rogue United States Patent Number 10,358,282 on July 23, 2019. Several third parties have contacted us to request licensing information on this technology. We have introduced nitrogen sealed jars and pre-rolls in Michigan and plan on launching them as we enter additional new markets and may license the technology to third parties operating in markets in which Grown Rogue is not currently licensed.

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SOCIAL AND ENVIRONMENTAL POLICIES

Grown Rogue employs sustainable business models in our operations. We maintain the highest standards of environmental stewardship in cultivation. This includes sustainable water sources with optimization of reclamation and recapture from runoff and recycling of water input. We use only natural and sustainable products in all applications, including nutrients and integrated pest management. We maintain the highest level of sustainable cannabis practices through our focus on sustainable and natural cultivation methods. Grown Rogue hires and pays a living wage to its team members and is very involved in each of the communities where we operate.

PLANS FOR EXPANSION AND ECONOMIC OUTLOOK

Grown Rogue continues to focus on taking its learnings and experience from Oregon and Michigan into new markets across the United States. During the last two years, Grown Rogue has established a platform that excels at licensing, compliance, high-quality and low-cost production, understanding consumer purchasing preferences, and product innovation. This platform places Grown Rogue in a superior position to capitalize on new markets compared to our competitors. Oregon is arguably the most competitive cannabis market in the world, and we have excelled by implementing standard business practices that make the Company well suited for entering and building successful brand presence in newly-legalized cannabis markets.

The expansion into Airport (see “Description of the Business – Oregon”) and acquisition of a 60% interest in Golden Harvests (see “Description of the Business – Michigan”) represent execution of management’s strategy of growth through high quality, low-cost flower production. In addition, we have added a profitable services segment (see “Description of the Business – Services),” which leverages our cultivation expertise to generate margin and increase our presence to two new states at low financial risk. As other growth opportunities arise under favorable financial terms, management can activate known and repeatable systems into new assets.

We believe that the future of the cannabis industry is in branded products and that the leading brands are being developed on the west coast, which is well known for high quality cannabis. Unlike many current multi-state operators who prefer to obtain just a few licenses in a large volume of states, Grown Rogue is focused on establishing a larger number of licenses in fewer states to capitalize on the economies of scale we view as optimal to maximize profits. Over the next twelve months, we are focused on furthering our footprints and flower market shares in Oregon and Michigan markets, strengthening our presence in Minnesota and Maryland (by way of the Consulting Agreement), continuing to add new products to our portfolio, and exploring and executing on strategic opportunities in new states.

With the recent shift in political landscape, we have also begun analyzing the potential for federal de-regulation and the subsequent ability to export cannabis products across state lines. We believe Oregon will be a large export state. Being located in the Emerald Triangle provides a unique product differentiator due to the ability to produce high quality and low cost sungrown flower due to the environmental conditions that occur naturally in Southern Oregon. Our strategy to take advantage of what is projected to be a multi-billion dollar export business is developing, and we are excited to begin implementation of this business plan over the coming years, including the expansion into New Jersey.

On October 3, 2023, GR Unlimited executed a promissory note (the “New Jersey Retail Promissory Note”) and advanced $250,000 to an individual representing the principal amount of the note. Pursuant to the New Jersey Retail Promissory Note, interest on the outstanding principal borrowed accrues at a rate of 12% per annum provided that, if the extended maturity date of the note is triggered, interest shall accrue on the outstanding balance commencing on the maturity date and ending on the extended maturity date of the New Jersey Retail Promissory Note. The Company signed a related definitive agreement on January 16, 2024 to invest in the development of an adult-use dispensary in West New York, New Jersey. Also see Subsequent Events.

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On October 4, 2023, the Company announced that it signed a definitive agreement with an option to acquire 70% of ABCO Garden State, LLC (“ABCO”), pending regulatory approval from the New Jersey Cannabis Regulatory Commission (the “CRC”). ABCO was granted a conditional cultivation and manufacturing license by the CRC and will receive its annual cultivation license soon. GR Unlimited executed a secured draw down promissory note (the “Iron Flag Promissory Note”) with Iron Flag, LLC (“Iron Flag”), to fund tenant improvements and for general working capital at the 50,000 square foot facility leased by ABCO for use in ABCO’s cannabis cultivation operations under construction and estimated to be completed in the second quarter of 2024. Pursuant to the Iron Flag Promissory Note, GR Unlimited shall make the maximum amount available to Iron Flag in one or more advances in an aggregate amount not to exceed $4,000,000. Interest on the outstanding principal borrowed accrues at a rate of 12.5% per annum commencing with respect to each advance and accruing until the date the standing advances and all accrued interest is paid in full.

LEGAL MATTERS

On September 22, 2022, the United States Securities and Exchange Commission (the “Commission”) issued an Order Instituting Proceedings (“OIP”) pursuant to Section 12(j) of the Securities Exchange Act of 1934 (the “1934 Act”), against the Company alleging violations of the 1934 Act, as amended, and the rules promulgated thereunder, by failing to timely file periodic reports. Section 12(j) authorizes the Commission as it deems necessary or appropriate for the protection of investors to suspend for a period not exceeding 12 months, or to revoke, the registration of a security if the Commission finds, on the record after notice and opportunity for hearing, that the issuer of such security has failed to comply with any provision of the 1934 Act, as amended, or the rules promulgated thereunder. The Company has filed an answer to the OIP and is seeking a hearing in the matter. The Company is currently fully compliant with all of their filings, is vigorously defending itself in the matter, and is preparing to re-register its security if necessary.

SELECTED FINANCIAL INFORMATION

The following selected financial data for each of the three reporting periods are derived from the audited consolidated financial statements of the Company.

	Two months ended	Year ended		Year ended
	December 31,	October 31,		October 31,
	2023 ()	2023 ()		2022 ()
Total revenue
Income from operations
Net income (loss)			)
Net loss per share, basic and diluted			)
Comprehensive income (loss)			)
Comprehensive income (loss) per share, basic & diluted			)
Total assets
Total non-current liabilities
Cash dividends

All values are in US Dollars.

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RESULTS OF OPERATIONS

SELECTED FINANCIAL RESULTS

Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

Selected financial results of operations for the two months ended December 31, 2023, and the year ended October 31, 2023, are summarized below:

	Two months ended		Year ended
	December 31,		October 31,
	2023 ()		2023 ()		Variance ()		Variance<br> %
Revenue						)		(84	%)
Cost of goods and services sold, excluding fair value adjustments		)		)				(87	%)
Gross profit before fair value adjustments						)		(82	%)
Net income (loss)				)				(202	%)
Cash flow from operations before NCWC						)		(88	%)

All values are in US Dollars.

Significant items contributing to the generation of net income for the two months ended December 31, 2023, and the year ended October 31, 2023 are summarized in the table below:

	Two months ended		Year ended
	December 31,		October 31,
	2023 ()		2023 ()		Variance		Variance<br> %
Total revenues						)		(84	%)
Cost of revenues, excluding fair value items		)		)				(87	%)
Realized fair value amounts in inventory sold						)		(82	%)
Unrealized fair value gain on growth of biological assets		)		)				(80	%)
Accretion expense						)		(79	%)
General and administrative expenses						)		(78	%)
Share-based compensation						)		(70	%)
Interest expense						)		(81	%)
Amortization of property and equipment						)		(68	%)
Unrealized (gain) loss on derivative liability		)				)		(107	%)
Unrealized gain on warrants asset		)		)		)		210	%
Loss on disposal of property and equipment						)		(52	%)

All values are in US Dollars.

More detailed analysis of the components of results of operations are described in the following sections.

REVENUES

Revenues – Two Months Ended December 31, 2023, and the Year Ended October 31, 2023

	Two months ended	Year ended
	December 31,	October 31,
	2023 ()	2023 ()	Variance ()		Variance<br> (%)
Revenue from Grown Rogue production				)		(84	%)
Revenue from services				)		(90	%)
Total revenue				)		(84	%)

All values are in US Dollars.

Pg **11** of **41**

Service revenues during the two months ended December 31, 2023 and the year ended October 31, 2023, were derived from the Consulting Agreement (see Description of Business – Services).

The following table summarizes revenues from Grown Rogue production for the two months ended December 31, 2023, and the year ended October 31, 2023:

	Two months ended	Year ended
	December 31,	October 31,
	2023 ()	2023 ()	Variance ()		Variance<br> (%)
Indoor				)		(84	%)
Outdoor				)		(98	%)
Pre-rolls				)		(77	%)
Trim & other				)		(65	%)
Revenue from Grown Rogue production				)		(84	%)

All values are in US Dollars.

Revenues during the two months ended December 31, 2023, were lower than the comparative year ended October 31, 2023, due primarily to the number of months in which the revenues are based on.

As detailed further below, we sold less pounds in the two months ended December 31, 2023, than the comparative year ended October 31, 2023, at higher ASP.

The following tables summarize pounds sold and average selling prices:

	Two months ended		Year ended
	December 31,<br> 2023		October 31,<br> 2023		Pounds			December 31, 2023	October 31, 2023	ASP
	Pounds sold		Pounds sold		variance			ASP ()	ASP ()	variance
Indoor flower		2,901		20,329		(17,428	)				105
Outdoor flower		158		7,114		(6,957	)				(77	)
Pre-rolls		178		651		(473	)				(176	)
Total		3,237		28,094		(24,858	)				201

All values are in US Dollars.

COSTS OF GOODS AND SERVICES SOLD

Two Months Ended December 31, 2023 and the Year Ended October 31, 2023

	Two months ended	Year ended
	December 31, 2023	October 31, 2023	Change		Change
	()	()	()		(%)
Costs of goods sold				)		(87	%)
Costs of service revenues				)		(71	%)
Costs of goods sold, excl. fair value items				)		(87	%)

All values are in US Dollars.

Cost of finished cannabis inventory sold during the two months ended December 31, 2023, decreased by 87% over the comparative year ended October 31, 2023, while revenues for the same periods decreased 84%.

Pg **12** of **41**

NET INCOME AND LOSS

Share-based Compensation

During the two months ended December 31, 2023, we granted, or committed to grant, common shares and stock options as compensation to employees and service providers.

The common shares issuances and stock options (measured at fair value using the Black-Scholes pricing model) resulted in total expense recognition of $104,359 during the two months ended December 31, 2023 (for year ended October 31, 2023 - $346,113).

General and Administrative Expenses

The general and administrative expenses for the two months ended December 31, 2023, and the year ended October 31, 2023 are as follows:

	Two months ended	Year ended
	December 31, 2023	October 31, 2023	Change		Change
	()	()	()		(%)
Office, banking, travel, and overheads				)		(76	%)
Professional services				)		(90	%)
Salaries and benefits				)		(77	%)
General and administrative expenses				)		(78	%)

All values are in US Dollars.

General and administrative costs for the two months ended December 31, 2023, were approximately 22% of the costs for the year ended October 31, 2023.

Interest and Interest Accretion Expense

The interest and interest accretion expense for the two months ended December 31, 2023, and the year October 31, 2023 are as follows:

	Two months ended	Year ended
	December 31, 2023	October 31, 2023	Change		Change
****	()	()	()	****	(%)		****
Interest and accretion expense				)		(80%	)

All values are in US Dollars.

Interest and accretion expenses reflect the increase in accretion due to the new convertible debentures issued during the year ended October 31, 2023, including the convertible debentures issued on December 5, 2022, (the “December Convertible Debentures”); on July 13, 2023 (the “July Convertible Debentures”); and on August 17, 2023 (the “August Convertible Debentures”).

Pg **13** of **41**

SEGMENT REPORTING

We operate in the states of Oregon and Michigan in the United States, and we recently began providing consulting services. The following tables summarize performance by segment for the two months ended December 31, 2023, and the year ended October 31, 2023.

Segments	Oregon	Michigan	Other	Services	Total
****
Non-current assets other than financial instruments:
As at December 31, 2023
As at October 31, 2023
Two months ended December 31, 2023:
Net revenue
Gross profit
Gross profit before fair value adjustments
Year ended October 31, 2023:
Net revenue
Gross profit
Gross profit before fair value adjustments

All values are in US Dollars.

Pg **14** of **41**

SUMMARY OF QUARTERLY RESULTS

The following table sets out selected quarterly results of the Company for the seven quarters and two months ended on or before December 31, 2023. The quarterly information contained herein is drawn from the interim financial statements of the Company for each of the aforementioned seven quarters. The information contained herein for the two months ended December 31, 2023 is derived from the audited financial statements of the Company. Revenues in any period are subject to market sales pricing, which historically has fluctuated significantly. Management has observed that pricing and sales volumes tend to be lower seasonally during winter months, in the Company’s first fiscal quarter, although we do not have high confidence that this will persist. Net income and loss include the impact of significant non-cash expenses, such as losses on the fair valuation of derivative liabilities, marketable securities, share-based payments, and interest accretion. Expenses contributing to net loss do not have significant seasonal trends, except for costs of sales, which follow trends in revenues.

		Fiscal Year			Fiscal Year		Fiscal Year
		2023			2023		2023
		Quarter End<br> Oct 31			Quarter End<br> Jul 31		Quarter End<br> Apr 30
Revenue ()	3,638,087		6,522,291			6,295,717		6,004,637
Net income (loss) ()	672,427		(2,012,324	)		345,488		411,979
Net income (loss)/share, basic & diluted	0.00		(0.00	)		0.00		0.00

All values are in US Dollars.

		Fiscal Year			Fiscal Year		Fiscal Year
		2022			2022		2022
		Quarter End			Quarter End		Quarter End
		Oct 31			Jul 31		Apr 30
Revenue ()	4,530,540		5,072,635			4,251,808		4,700,127
Net income (loss) ()	592,537		(451,630	)		571,406		144,734
Net income (loss)/share, basic & diluted	0.01		(0.00	)		0.00		0.01

All values are in US Dollars.

LIQUIDITY

Our ability to generate cash in the short term is based upon sales from production and financing proceeds, and in the long term is based upon sales from production, including production from investments in production increases, or from growth by business acquisitions, or a combination thereof. Investments to increase production or acquire business may require further financing. The Company generates operating cash flows from sales of cannabis products which generate margin that contribute to coverage of other operating costs. We have generated net income for five of the seven most recent quarters (exception Q4 fiscal year 2023 and Q4 fiscal year 2022) and expect to continue generating net income consistently. We have raised financing historically through debt and equity, which has been and will be invested in the business in order to improve production yields and increase total productive capacity, as well as cover operating costs, and to strategically expand the business. We raised no proceeds during the two months ended December 31, 2023, (October 31, 2023 - $8,000,000).

We are typically able to sell finished goods shortly after inventory reaches its final state, and sales are primarily made on cash-on-delivery terms, or with short net terms. Our ability to fund operations, to plan capital expenditures, and to plan acquisitions, depends on future operating performance and cash flows and the availability of capital by way of debt or equity investment in the Company, which are subject to prevailing economic conditions and financial, business, and other factors, some of which are beyond the Company’s control.

Pg **15** of **41**

CASH FLOWS

The following table summarizes certain cash flow items for the two months ended December 31, 2023, and the year ended October 31, 2023:

	Two months ended		Year ended
	December 31, 2023		October 31, 2023
	()		()
Net income (loss)				)
Net cash provided by operating activities
Net cash used in investing activities		)		)
Net cash provided by / (used in) financing activities		)
Net increase (decrease) in cash and cash equivalents		)
Effect of currency translation				)
Cash and cash equivalents, beginning
Cash and cash equivalents, ending

All values are in US Dollars.

Operating Activities

During the two months ended December 31, 2023, cash provided by operating activities was $231,109 (October 31, 2023 - $5,729,351). This number was derived by adding back non-cash items to net income, including the following significant adjustments:

●	$186,415 (October 31, 2023 - $578,641) in amortization of property and equipment;
●	$209,985 (October 31, 2023 - $1,757,672) from depreciation expensed in costs of finished inventory sold;
---	---
●	Deduction of $686,867 (October 31, 2023 - deduction of $3,355,797) from the unrealized change in fair value of biological assets;
---	---
●	$460,467 (October 31, 2023 - $2,573,151) for changes in fair value in inventory sold;
---	---
●	$224,064 (October 31, 2023 - deduction of $470,358) from deferred income taxes;
---	---
●	$104,359 (October 31, 2023 - $344,593) in share-based compensation and stock option vesting expense, including expense for option grants under our stock option plan implemented during 2020, as well as shares issued directly as compensation for employees, directors, and service providers;
---	---
●	$216,493 (October 31, 2023 - $1,026,732) in accretion of interest expense on debt and convertible debentures outstanding;
---	---
●	$87,699 (October 31, 2023 - $182,025) from loss on disposal of property and equipment;
---	---
●	Deduction of $336,981 (October 31, 2023 - $4,563,498) from the loss on fair value of derivative liability;
---	---
●	Deduction of $400,016 (October 31, 2023 - deduction of $129,113) from the unrealized loss on warrants asset.
---	---

Pg **16** of **41**

Changes in non-cash working capital are summarized in the following table.

	Two months ended		Year ended
	December 31, 2023		October 31, 2023
	()		()
Accounts receivable				)
Inventory and biological assets		)		)
Prepaid expenses and other assets		)		)
Accounts payable and accrued liabilities		)
Income tax payable
Unearned revenue				)
Total		)		)

All values are in US Dollars.

Changes in accounts receivable are due to the timing and collection of sales. Changes in inventory and biological assets reflect increases due to increased productive capacity, as well as the timing of harvests, the timing of the completion growth cycles, and the timing of sales of finished inventory. Changes in liabilities, including accounts payable and accrued liabilities reflect the use of credit terms and cash flow management based upon ongoing liquidity management.

Investing Activities

During the two months ended December 31, 2023, we added $770,010 (October 31, 2023 - $4,008,866) to property and equipment, including non-cash right-of-use asset additions. We expended cash flows of $126,690 (October 31, 2023 - $1,456,782) for property and equipment additions.

We also expended $1,018,596 (October 31, 2023 - $1,420,526) as cash advances and loans to other parties during the two months ended December 31, 2023.

Financing Activities

Net cash flows used by financing activities during the two months ended December 31, 2023 were $1,139,491 (for year ended October 31, 2023 – net cash provided of $4,433,820).

Significant financing activities for the two months ended December 31, 2023 included the following:

●	Repayments of $126,978 of convertible debentures;
●	Repayments of $444,347 of lease principal; and
---	---
●	Repayments of $568,166 of long-term debt.
---	---

Financing activities during the comparable year ended October 31, 2023, included the following:

●	Proceeds of $8,000,000 from issuance of convertible debentures;
●	Repayments of $261,006 of convertible debentures;
---	---
●	Repayments of $1,673,344 of lease principal; and
---	---
●	Repayments of $1,631,830 of long-term debt.
---	---

Pg **17** of **41**

TRENDS AND EXPECTED FLUCTUATIONS IN LIQUIDITY


Current assets			)	(10	%)
Current liabilities	)	)		(9	%)
Working capital			)	(13	%)

All values are in US Dollars.

Working capital varied from October 31, 2023, to December 31, 2023, due primarily to net cash used by financing activities, which was $1,139,491 during the two months ended December 31, 2023, versus cash provided by financing activities of $4,433,820 during the year ended October 31, 2023.

We expect significant ongoing fluctuations in working capital over time, as we are in the early stages of growth. We have historically raised debt with principal due on maturity, and accordingly, we expect significant one-time payments as debt matures, as opposed to smooth cash outflows over time. We have historically been able to meet commitments, modify debt maturities, and raise new financing as required to respond to changes in our liquidity position, although there is no guarantee we will be able to do so in the future. We are exposed to market pricing for cannabis products, which materially impacts our liquidity and is out of our control. The market for cannabis products, including flower, which is our primary product, is relatively immature, having recently become legal to buy and sell in certain markets.

We have observed some indications of seasonality, and in addition, we have observed that market conditions can change rapidly without apparent explanations or analyzable causes. We cannot control whether we will be able to raise financing when required or sell cannabis products at profitable prices in the future; however, part of our strategy is to produce flower at sustainable gross margins over a growing productive base, which, holding other factors constant, is expected to result in improved net loss or net income, as well as net cash flows.

Commitments and Obligations

Set out below are undiscounted minimum future lease payments after December 31, 2023.

	Total future minimum lease payments ()
Less than one year
Between one and five years
Total minimum lease payments
Less amount representing interest		)
Present value of minimum lease payments

All values are in US Dollars.

The Company has four lease contracts with extension options remaining after December 31, 2023, which were negotiated by management to provide flexibility in managing business needs. Set out below are the undiscounted potential rental payments related to periods following the date of exercise options that are not included in the lease term:

	Within<br> five years		More than<br> five years
Extension options available to be exercised	$	3,611,037	$	6,351,725

Pg **18** of **41**

The contractual maturities of the Company’s accounts payable and accrued liabilities, debt, leases, and unearned revenue occur over the next five years are as follows:

****	Year 1	Over 1 Year - 3 Years	Over 3 Years - 5 Years
****
Accounts payable and accrued liabilities
Lease liabilities
Convertible debentures
Debt
Business acquisition consideration payable
Total

All values are in US Dollars.

CAPITAL RESOURCES

DEBT FINANCING

On December 5, 2022, the Company announced the closing of a non-brokered private placement of the December Convertible Debentures with an aggregate principal amount of $2,000,000. The December Convertible Debentures bear an interest of 9% per year, paid quarterly, and mature 36 months from the date of issue. The Convertible Debentures are convertible into common shares of the Company at a conversion price of CAD$0.20 per common share. Additionally, on closing, the Company issued to the purchasers of the December Convertible Debentures an aggregate of 6,716,499 warrants (the “December Warrants”), that represent 50% coverage of each purchaser’s December Convertible Debenture investment. The December Warrants are exercisable for a period of three years from issuance into common shares at an exercise price of $0.25 CAD per common share. The Company has the right to accelerate the warrants if the closing share price of the Common Shares on the Canadian Securities Exchange is CAD$0.40 or higher for a period of 10 consecutive trading days. On March 1, 2024, the Company announced it has accelerated the expiry date of the December Warrants. The Company issued the notice of acceleration required by the warrant certificates governing these warrants on March 1, 2024, thereby accelerating the expiry date to 90 days from the date of notice.

During the year ended October 31, 2023, two holders of the December Convertible Debentures converted an aggregate total of convertible debenture principal of $1,040,662 and $133,977 at CAD$0.20 per share into 10,151,250 and 1,022,025 common shares respectively.

On July 13, 2023, the Company announced the closing of the first tranche of a non-brokered private placement of the July Convertible Debentures with an aggregate principal amount of $5,000,000. The July Convertible Debentures accrue interest at 9% per year, paid quarterly, and mature 48 months from the date of issue. The July Convertible Debentures are convertible into common shares of the Company at a conversion price of CAD$0.24 per common share, at any time on or prior to the maturity date. Additionally, on closing, the Company issued to the Subscribers of the July Convertible Debentures an aggregate of 13,737,500 warrants (the “July Warrants”), that represents one-half of one warrant for each CAD$0.24 of principal amount subscribed. The July Warrants are exercisable for a period of three years from issuance into common shares at an exercise price of CAD$0.28 per common share. The Company has the right to accelerate the warrants if the closing share price of the common shares on the Canadian Securities Exchange is CAD$0.40 or higher for a period of 10 consecutive trading days. The July Warrants’ expiry date will be accelerated to 90 days following notice of the acceleration.

Pg **19** of **41**

On August 17, 2023, the Company announced that it had closed the second and final tranche of a non-brokered private placement of the August Convertible Debentures for gross proceeds of US$1,000,000, for a total aggregate principal amount under both tranches totaling $6,000,000 for both the July Convertible Debentures and August Convertible Debentures. On closing, the Company issued to subscribers of the August Convertible Debentures an aggregate of 2,816,250 common share purchase warrants (the “August Warrants”). The terms of the August Convertible Debentures and August Warrants issued as part of this second tranche are the same as those issued in the July Convertible Debentures and July Warrants. On March 1, 2024, the Company announced it has accelerated the expiry date of the July Warrants and August Warrants. The Company issued the notice of acceleration required by the warrant certificates governing these warrants on March 1, 2024, thereby accelerating the expiry date to 90 days from the date of notice.

TRENDS AND EXPECTED FLUCTUATIONS IN CAPITAL RESOURCES

We realized net cash flows used by financing activities of approximately $1.1 million during the two months ended December 31, 2023, (October 31, 2023 – net cash provided of $4.4 million outflow), resulting from proceeds from debt financing of $nil (October 31, 2023 - $8.0 million from debt), less debt, debenture, and lease principal repayments of $1.1 million (October 31, 2023 - $3.6 million).

Financing activities have been critical to our ability to continue operating, and significant portions of our financing have historically been raised from key management personnel. These individuals have not provided assurance that they will provide additional financing if the Company requires it but are able to raise such financing from third parties; this highlights the importance of management’s strategy of scaling operations. Our business strategy contemplates growing cash flows from operations, which may contribute to reinvestment and growth; however, further financing may be required or utilized based upon our future capital position and future business opportunities.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH KEY MANAGEMENT AND DIRECTORS

During the two months ended December 31, 2023, the Company completed the following related party transactions:

Through its wholly owned subsidiary, GRU Properties, the Company leased a property located in Trail, Oregon (“Trail”) owned by the Company’s President and CEO (“CEO”). The lease was extended during the year ended October 31, 2021, with a term through December 31, 2025. Lease charges of $24,000 were incurred for the two months ended December 31, 2023 (year ended October 31, 2023 –72,000). The lease liability balance for Trail at October 31, 2023, was $129,401 (October 31, 2023 - $139,014).

During the year ended October 31, 2021, the Company leased a property which is beneficially owned by the CEO and is located in Medford, Oregon (“Lars”) with a term through June 30, 2026. Lease charges for Lars of $31,827 (year ended October 31, 2023 - $190,035) were incurred for the two months ended December 31, 2023. The lease liability for Lars at December 31, 2023, was $445,708 (October 31, 2023 - $470,134).

During the year ended October 31, 2021, the CEO leased equipment to the Company, which had a balance due of $Nil at December 31, 2023 (October 31, 2023 - $nil). Lease payments of $nil were made against the equipment leases during the two months ended October 31, 2023 (year ended October 31, 2023 - $9,971).

Pg **20** of **41**

Leases liabilities payable to the CEO were $575,109 in aggregate at December 31, 2023 (October 31, 2023 - $609,148).

During the two months ended December 31, 2023, the Company incurred expenses of $24,039 (year ended October 31, 2023 - $98,846) for salary paid to the spouse of the CEO, who is employed as our Community Relations manager. At December 31, 2023, accounts and accrued liabilities payable to this individual were $3,846 (October 31, 2023 - $2,692). The spouse of the CEO was granted 500,000 options during the year ended October 31, 2023.

Key management personnel consists of the President and CEO; the Senior Vice President (“SVP”); the former Chief Operating Officer (“COO”); General Manager (“GM”); and the Chief Financial Officer (“CFO”) of the Company. The compensation to key management is presented in the following table:

	Two months ended	Year ended
	December 31, 2023	October 31, 2023

Salaries and consulting fees
Stock option expense
Total

All values are in US Dollars.

During the year ended October 31, 2023, 1,250,000 stock options were granted to three board of directors.

During the year ended October 31, 2023, the Company issued 200,000 shares to the GM, which represented a portion of consideration for the acquisition of Golden Harvests.

Compensation to board of directors during the two months ended December 31, 2023, was $3,000, (year ended October 31, 2023 – $18,000).

Through its subsidiary, Golden Harvests, the Company leased Morton, owned by the Company’s GM, that is located in Michigan, with a lease term through January 2026. Lease charges of $32,000 (year ended October 31, 2023 - $180,000) were incurred during the two months ended December 31, 2023. The lease liability of Morton at December 31, 2023 was $350,668 (October 31, 2023 - $377,043).

Pg **21** of **41**

Through its subsidiary, Golden Harvests, the Company also leased Morton Annex located in Michigan, which is owned by the Company’s GM. The lease term was extended during the two months ended December 31, 2023, through November 2024. Lease charges of $330,000 (year ended October 31, 2023 - $740,000) were incurred during the two months ended December 31, 2023. The lease liability of Morton Annex at December 31, 2023, was $239,871 (October 31, 2023 - $29,774).

Accounts payable, accrued liabilities, and lease liabilities due to key management at December 31, 2023, totaled $1,230,808 (October 31, 2023 $1,118,763).

DEBT BALANCES AND MOVEMENTS WITH KEY MANAGEMENT AND DIRECTORS

The following table sets out the movements and balances of debt with related parties during the two months ended December 31, 2023 and the year ended October 31, 2023. Borrowings from related parties were executed at times because we could identify very limited other sources of financing. The borrowing from the COO was transacted to accelerate expansion of an indoor growing facility at a competitive rate of interest. The borrowings from other than the COO in the table below were transacted to accelerate construction and production in Michigan. The names of the related parties, by designation, are as follows: CEO – Obie Strickler; SVP – Adam August; Directors – Abhilash Patel; former COO – Thomas Fortner; and GM – David Pleitner.


****	****	****	****	****	****
Balance – October 31, 2022	****	****	****	****	****
Interest
Payments	)	)	)	)	)
Balance – October 31, 2023
Interest
Payments	)	)	)	)	)
Balance – December 31, 2023

All values are in US Dollars.

Pursuant to the loan and related agreements transacted during the year ended October 31, 2020, the CEO, SVP, and a director obtained 5.5%; 1%; and 2.5% of GR Michigan, respectively; third parties obtained 4% as part of the agreements, such that GR Michigan has a 13% non-controlling interest. These parties, except the CEO, obtained the same interests in Canopy; the CEO obtained 92.5% of Canopy Management, of which 87% was acquired by the Company during the year ended October 31, 2023; all payments necessary for the Company to exercise its option to acquire 87% of Canopy were equal to payments made by Canopy to purchase a controlling 60% interest of Golden Harvests. Interest payments of $10,800 were made on the business acquisition consideration payable of $360,000 for the two months ended December 31, 2023 ($59,400 for the year ended October 31, 2023).

Pg **22** of **41**

OTHER SELECTED FINANCIAL INFORMATION

EBITDA AND ADJUSTED EBITDA (NON-IFRS MEASURES)

The Company’s “Adjusted EBITDA,” or “aEBITDA,” is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and that may not be comparable to similar measures presented by other companies. Adjusted EBITDA is intended to provide a proxy for our operating cash flow before changes in non-cash working capital (“CNCWC”), which was $986,864 for the two months ended December 31, 2023 (for year ended October 31, 2023 - $7,633,872). The Company defines “EBITDA” as the Company’s net income or loss for a period, as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove transaction costs, stock-based compensation expense, accretion expense, gain (loss) on derecognition of derivative liabilities, the effects of fair-value accounting for biological assets and inventory, as well as other non-cash items and items not representative of operational performance as reported in net income (loss). Adjusted EBITDA is defined as EBITDA adjusted for the impact of various significant or unusual transactions. The Company believes that this is a useful metric to evaluate its operating performance, as it allows analysts to compare us to our competitors and derive expectations of our future performance. Adjusted EBITDA increases comparability between comparative companies by adjusting for variability resulting from differences in capital structures, resource allocations and investments, the impact of fair value adjustments on biological assets and inventory and financial statements, which may be volatile and fluctuate significantly from period to period.

	Two months ended		Year ended
	December 31		October 31
Adjusted EBITDA Reconciliation	2023 ()		2023 ()
Net income (loss), as reported				)
Add back realized fair value amounts included in inventory sold
Deduct unrealized fair value gain on growth of biological assets		)		)
Add back amortization of property and equipment included in cost of sales

Add back interest and interest accretion expense, as reported
Add back amortization of property and equipment, as reported
Add back share-based compensation
Deduct unrealized gain/add back unrealized loss on derivative liability, as reported		)
Add back loss on disposal of property plant and equipment
Deduct unrealized gain on warrants asset, as reported		)		)
Add back income tax expense, as reported
EBITDA
Performance incentive bonus payment^1^
Severance and inactive employee compensation^2^
Business development incentive bonus^3^
Compliance costs^4^
Costs associated with acquisition of Golden Harvests^5^
Deduct gain on debt settlement with marketable securities^6^
New production location startup costs^7^
Adjusted EBITDA

All values are in US Dollars.

^1^	Payment to the minority owner and General Manager of Golden Harvests in recognition of outstanding business performance that was in excess of expected ongoing employment performance bonuses.

Pg **23** of **41**

^2^	Payments to the COO as part of his transition when no longer a paid member of the Company’s executive team, effectively a severance package.
^3^	Payments to the owners of Golden Harvests and Company’s CEO to incentivize business growth during the startup phase of Golden Harvests. These costs are non-recurring in nature and not reflective of operational efficiency during the quarter. Of the $153,825 payment, $100,000 was beneficially made to the CEO, a related party.
---	---
^4^	Costs for professional services pertaining to prior periods as a result of efforts to bring the Company’s disclosures current with the Commission. The Company’s required disclosures were brought current, and over-the-counter trading resumed in the United States.
---	---
^5^	Costs associated with the Company’s acquisition of the Michigan assets.
---	---
^6^	On June 20, 2022, the Company announced the settlement of the PBIC Note, which had a principal balance owing of $700,000. The Company agreed to transfer its ownership in PBIC, comprised of 2,362,204 common shares in PBIC, to the creditor, to which PBIC sold and assigned the PBIC Note. In exchange, the creditor provided forgiveness and settlement of all amounts owing in connection with the PBIC Note, in which the Company reported a gain on debt settlement of $449,684 as a result of the settlement.
---	---
^7^	During the year ended October 31, 2022, we incurred $697,120 in non-recurring costs associated with the first year of operations at our Foothill outdoor facility, including product quality and sales prices not reflective of mature operations.
---	---

Below we reconcile aEBITDA to cash flows from operations before changes in non-cash working capital, in order to present the efficiency with which aEBITDA is converted into cash flows.

	Two months ended		Year ended
	December 31		October 31
Reconciliation of aEBITDA to cash from operations before CNCWC	2023 ()		2023 ()
aEBITDA
Less: Interest expense		)		)
Less: Income tax expense		)		)
Less: non-cash gain on debt settlement
Add back: non-cash loss on asset disposal
Impact of foreign exchange and other				)
Impact of deferred income taxes				)
Less: adjustments to EBITDA to arrive at aEBITDA:
Performance incentive bonus payment
Severance and inactive employee compensation
Business development incentive bonus
Gain on debt settlement for marketable securities
Compliance costs				)
Costs associated with acquisition of Golden Harvests		)		)
New production location startup costs
Cash flows from operations before CNCWC, as reported
Cash flows from operations before CNCWC as % of aEBITDA		%		%

All values are in US Dollars.

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OUTSTANDING SHARE DATA

As of the date of this MD&A, the Company had 208,250,743 common shares outstanding.

As of the date of this MD&A, the Company has the following warrants outstanding, exercisable into common shares:

Exercise price (CAD$)	Warrants outstanding	Life (years)	Expiry date
0.33	8,500,000	4.44	October 05, 2028

As of the date of this MD&A, the Company has the following stock options outstanding and exercisable into common shares:

					Remaining
	Options		Number		Contractual Life
Exercise price (CAD)	outstanding		exercisable		(years)		Expiry period
		1,075,000		1,012,500		0.3	July 2024
		200,000		200,000		0.7	November 2024
		1,000,000		850,000		1.1	April 2025
		1,150,000		1,150,000		1.2	May 2025
		85,000		85,000		1.7	November 2025
		300,000		150,000		2.1	April 2026
		5,475,000		5,475,000		2.8	January 2027
		400,000		-		3.6	September 2027
		600,000		125,000		3.7	November 2027
		10,285,000		9,047,500		2.4

All values are in US Dollars.

As of the date of this MD&A, the Company has December Convertible Debentures outstanding with an aggregate principal balance of $300,000 and accrued interest of approximately $717. The debentures mature on December 2, 2025. Interest accrues at 9% per annum and is payable on the last business days of March, June, September, and December.

Shares issuable upon conversion of the December Convertible Debentures as of the date of this MD&A are presented in the table below.

Debenture principal		Accrued interest		/CAD exchange rate *	Exercise price (CAD)	Shares issuable<br> if converted
$	300,000	$	717				2,014,950

All values are in US Dollars.

*	Most recent exchange rate as published by the Bank of Canada.

As of the date of this MD&A, the Company also has July Convertible Debentures outstanding with an aggregate principal balance of $4,800,000 and accrued interest of approximately $34,418. The debentures mature on July 13, 2026. Interest accrues at 9% per annum and is payable on the last business days of March, June, September, and December.

Shares issuable upon conversion of the July Convertible Debentures as of the date of this MD&A are presented in the table below:

Debenture principal		Accrued interest		/CAD exchange rate *	Exercise price (CAD)	Shares issuable<br> if converted
$	4,800,000	$	34,418				26,376,000

All values are in US Dollars.

*	Most recent exchange rate as published by the Bank of Canada.

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Additionally, as of the date of this MD&A, the Company has August Convertible Debentures outstanding with an aggregate principal balance of $1,000,000 and accrued interest of approximately $7,170. The debentures mature on August 17, 2027. Interest accrues at 9% per annum and is payable on the last business days of March, June, September, and December.

Shares issuable upon conversion of the August Convertible Debentures as of the date of this MD&A are presented in the table below:

Debenture principal		Accrued interest		/CAD exchange rate *	Exercise price (CAD)	Shares issuable<br> if converted
$	1,000,000	$	7,170				5,632,500

All values are in US Dollars.

*	Most recent exchange rate as published by the Bank of Canada.

CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATION UNCERTAINTIES

The preparation of the consolidated financial statements in conformity with IFRS requires that the Company’s management make critical judgments, estimates and assumptions about future events that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. The most significant judgments include those related to the ability of the Company to continue as a going concern, the determination of when property and equipment are available for use, and impairment of its financial and non-financial assets. The most significant estimates and assumptions include those related to the valuation of biological assets, the collectability of accounts receivable, the useful lives of property and equipment, inputs used in accounting the determination of the discount rate used to estimate the fair value of the liability component of convertible debt instruments, the discount rates used to calculate present values of lease liabilities, the inputs used in the estimate of the fair value of equity based compensation, and the inputs used in the estimate of the fair value of equity instruments.

NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Amendments to IAS 41: Agriculture

As part of its 2018-2020 annual improvements to the standards process of IFRS, the IASB issued amendments to IAS 41 Agriculture. The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flow when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13 Fair Value Measurement. The amendment is effective for annual reporting periods beginning on or after January 1, 2022. The Company adopted the Amendments to IAS 41 effective November 1, 2022, which did not have material impact to the Company’s Financial Statements.

Amendments to IFRS 9: Financial Instruments

As part of its 2018-2020 annual improvements to IFRS standards process, the IASB issued amendments to IFRS 9 Financial Instruments. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged

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on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption permitted. The Company adopted the Amendments to IFRS 9 effective November 1, 2022, which did not have material impact to the Company’s Financial Statements.

Amendments to IAS 37: Onerous Contracts — Cost of Fulfilling a Contract

The amendment specifies that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. The amendment is effective for annual periods beginning on or after January 1, 2022 with early application permitted. The Company adopted the amendments to IAS 37 effective November 1, 2022, which did not have material impact to the Company’s Financial Statements.

FINANCIAL INSTRUMENTS AND OTHER RISK FACTORS

MARKET RISK

Interest Rate Risk

At December 31, and October 31, 2023, the Company’s exposure to interest rate risk relates to long term debt, convertible promissory notes, and finance lease obligations, but its interest rate risk is limited as the aforementioned financial instruments are fixed interest rate instruments.

Currency Risk

Other Price Risk

CREDIT RISK

Credit risk is the risk that one party to a financial instrument will cause a loss for the other party by failing to pay for its obligation.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.

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At December 31, 2023 and October 31, 2023, the Company had $6,054,579 and $8,108,247 in excess of the FDIC insured limit, respectively.

The carrying amount of cash and trade accounts receivable represents the Company’s maximum exposure to credit risk; the balances of these accounts are summarized in the following table:

	December 31, 2023	October 31, 2023

Cash
Accounts Receivable
Notes Receivable
Total

All values are in US Dollars.

The allowance for doubtful accounts at December 31, 2023 was $373,393 (October 31, 2023 - $165,347).

LIQUIDITY RISK

Liquidity risk represents the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when they become due. At December 31, and October 31, 2023, the Company’s working capital accounts were as follows:



Cash
Current assets excluding cash
Total current assets
Current liabilities	)	)
Working capital

All values are in US Dollars.

The Company Faces Risks Inherent in an Agricultural Business.

Cannabis is an agricultural product. There are risks inherent in the agricultural business, such as insects, plant diseases, forest fire and similar agricultural risks. Although some of the Company’s cannabis flower is grown indoors under climate-controlled conditions, with conditions monitored, there can be no assurance that natural elements will not have a material adverse effect on the production of the Company’s products.

FAIR VALUES

A number of the Company’s accounting policies and disclosures require the measurement of fair valued for both financial and nonfinancial assets and liabilities. The Company has an established framework, which includes team members who have overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values. When measuring the fair value of an asset or liability, the Company uses observable market data as far as possible.

The Company regularly assesses significant unobservable inputs and valuation adjustments. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: unadjusted quoted prices in active markets for identical assets or liabilities;

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Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; or

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The carrying values of the financial instruments at December 31, 2023 are summarized in the following table:

	Level in<br> fair value	Amortized
	hierarchy	Cost	FVTPL

Financial Assets
Cash	Level 1
Accounts receivable	Level 2
Warrants asset	Level 2
Financial Liabilities
Accounts payable and accrued liabilities	Level 2
Debt	Level 2
Convertible debentures	Level 2
Business acquisition consideration payable	Level 2
Derivative liability	Level 2

All values are in US Dollars.

During the two months ended December 31, 2023, there were no transfers of amounts between levels.

The carrying values of the financial instruments at October 31, 2023, are summarized in the following table:

	Level in <br> fair value	Amortized
	hierarchy	Cost	FVTPL

Financial Assets
Cash	Level 1
Accounts receivable	Level 2
Warrants asset	Level 2
Financial Liabilities
Accounts payable and accrued liabilities	Level 2
Debt	Level 2
Convertible debentures	Level 2
Business acquisition consideration payable	Level 2
Derivative liabilities	Level 2

All values are in US Dollars.

During the year ended October 31, 2023, there were no transfers of amounts between levels.

See additional risk factors relating to the Company as described in section 17 of the Company’s Listing Statement dated November 15, 2018 which can be found under the Company’s profile on www.sedarplus.ca.

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SUBSEQUENT EVENTS

PURCHASE OF ROSS LANE, OREGON FARM PROPERTY

On January 12, 2024, the Company executed the option to purchase the Ross Lane property located in Central Point, Oregon for total consideration of $1,525,000.

NEW JERSEY RETAIL INVESTMENT

WARRANTS ACCELERATION

ILLINOIS EXPANSION

CANOPY BUYOUT

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REGULATORY DISCLOSURE

Grown Rogue derives a substantial portion of its revenues from the state-legal cannabis industry in the United States. Grown Rogue is indirectly involved (through subsidiaries) in the state-legal cannabis industry in the United States where respective state laws permit “adult-use”/“reactional” and/or medical cannabis cultivation, manufacture, distribution, sales, and possession. Currently, Grown Rogue’s subsidiaries directly participate in the cultivation, manufacture, possession, distribution, or sale of cannabis in Oregon’s adult-use market and in Michigan’s medical and adult-use market. Pending regulatory approval, Grown Rogue, through its subsidiaries, expects to participate in Illinois’s and New Jersey’s adult-use markets over the coming year.

Cannabis is classified as a Schedule I narcotic under the United States Controlled Substances Act (the “CSA” or “Federal CSA”), making it federally illegal in the United States. A Schedule I narcotic under the CSA is deemed to have a high potential for abuse, no accepted medical use, and a lack of accepted safety for the use of the drug under medical supervision. The United States Food and Drug Administration has not approved marijuana as a safe and effective drug for any indication.

Despite federal illegality, over the past decade 38 states have legalized cannabis for medical use within their borders, 24 states, two territories, and the District of Columbia have enacted measures to regulate cannabis for recreational use, and nine states have approved measures to allow for “low THC” medical use programs. As such, cannabis is largely regulated at the state level in the United States. Notwithstanding the permissive regulatory environment of cannabis at the state level, pursuant to the Supremacy Clause of the United States Constitution, United States federal laws are paramount and in case of conflict between federal and state law in the United States, the federal law shall apply. As a result of the conflict between state and federal law regarding cannabis, investments in cannabis businesses in the United States are subject to inconsistent legislation and regulation.

On the federal legislative side, a number of bills (some bi-partisan) have been introduced in Congress over the years in an attempt to address and perhaps reconcile the tension between state-legal cannabis programs and federal illegality, including the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, the Marijuana Opportunity Reinvestment and Expungement Act (MORE) Act, the Cannabis Administration and Opportunity (CAOA) Act, the Secure and Fair Enforcement (SAFE) Banking Act, the Preparing Regulators Effectively for a Post-Prohibition Adult-Use Regulated Environment (PREPARE) Act, and the Small Business Tax Equity (SBTE) Act. Congress has not passed any material marijuana reform legislation in decades.

There has, however, been activity with respect to cannabis from the administrative branch. In 2013, then United States Department of Justice Deputy Attorney General James M. Cole issued a memorandum (the “Cole Memorandum”) for all United States Attorneys providing updated guidance to federal prosecutors concerning marijuana enforcement under the CSA. The Cole Memorandum applied to all Department of Justice federal enforcement activity, including civil enforcement, criminal investigations, and prosecutions concerning marijuana in all states. However, the Cole Memorandum was rescinded by Attorney General Jeff Sessions on January 4, 2018. Notably, the Biden administration has tacitly reverted to the guidance provided in the Cole Memorandum. Although current Attorney General Merrick Garland has not officially reinstated the Cole Memorandum, he advised in written testimony in early 2021 that he did not “think it the best use of the Department’s limited resources to pursue prosecutions of those who are complying with the laws in states that have legalized and are effectively regulating marijuana.” The Department of the Treasury adopted recommendations based on the standards set forth in the Cole Memorandum in its guidance (the “FinCen Guidance”) provided in 2014. Despite the repeal of the Cole Memorandum, the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has confirmed that the FinCEN Guidance remains in effect and the Department of Treasury indicated it will remain in place.

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On October 6, 2022, President Biden, among other things, asked the Secretary of Health and Human Services and the Attorney General to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law. On or about August 29, 2023, Deputy Secretary of Health and Human Services (HHS) Rachel Levine transmitted a letter to the head of the Drug Enforcement Agency (DEA), Anne Milgram, recommending that cannabis and its derivatives be removed from Schedule I of the CSA. HHS’s recommendation is to reschedule cannabis to Schedule III. Schedule III substances are deemed to have medicinal value and have potential for abuse but less than substances in Schedules I or II, and abuse that may lead to moderate or low physical dependence or high psychological dependence. HHS’s recommendation remains pending and the Department of Justice (DOJ), specifically the DEA, is in the process of assessing it. If DOJ accepts the recommendation, it will then promulgate rules to effectuate the reschedule.

There is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned. Unless and until the United States amends the CSA with respect to marijuana, there is a risk that federal authorities may enforce current federal law. If the federal government begins to enforce federal law, or if existing applicable state laws are repealed or curtailed, Grown Rogue’s business, results of operations, financial condition, and prospects would be materially adversely affected. There thus remains a risk that federal authorities may enforce current federal law against companies such as Grown Rogue for violation of federal law or they may seek to bring an action or actions against Grown Rogue and/or its investors for violation of federal law or otherwise, including, but not limited to, a claim against investors for aiding and abetting another’s criminal activities.

In light of the uncertainty surrounding the treatment of United States cannabis-related activities, including the rescission of the Cole Memorandum, the Canadian Securities Administrators published a Staff Notice 51-352 (Revised) – Issuers with U.S. Marijuana-Related Activities (“Staff Notice 51-352”) on February 8, 2018 setting out certain disclosure expectations for issuers with United States cannabis-related activities. Staff Notice 51-352 includes additional disclosure expectations that apply to all issuers with United States cannabis-related activities, including those with direct and indirect involvement in the cultivation and distribution of cannabis, as well as issuers that provide goods and services to third parties involved in the United States cannabis industry.

In accordance with the Staff Notice 51-352*,* below is a table of concordance that is intended to assist readers in identifying the disclosure expectations outlined in Staff Notice 51-352.

In accordance with Staff Notice 51-352, this section provides a discussion of the federal and state-level U.S. regulatory regimes in the jurisdictions where Grown Rogue is currently directly involved through its subsidiaries or is planning to be directly involved in the future. Certain Grown Rogue subsidiaries are directly engaged in the cultivation, manufacture, possession, sale, or distribution of cannabis in the recreational cannabis marketplace in the State of Oregon and in the medical and recreational marketplaces in the State of Michigan. Pending regulatory approval, certain Grown Rogue subsidiaries expect to be directly engaged in the cultivation, manufacture, possession, sale, or distribution of cannabis in the recreational cannabis marketplace in New Jersey and Illinois. In accordance with Staff Notice 51-352, Grown Rogue 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 marijuana regulation. Any non-compliance, citations or notices of violation which may have an impact on Grown Rogue’s licenses, business activities, or operations will be promptly disclosed by Grown Rogue.

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All Issuers with US Marijuana-Related Activities	Response
Describe the nature of the issuer’s involvement in the U.S. marijuana industry and include the disclosures indicates for at least one of the direct, indirect and ancillary industry involvement types.	See above under “Description of Business”.<br><br> <br>See below under “U.S. Regulatory Matters”
Prominently state that marijuana is illegal under US federal law and that enforcement of relevant laws is a significant risk	See above
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. marijuana-related activities.	See below under “U.S. Regulatory Matters”<br><br> <br>See the following risk factors included in the Company’s Listing Statement available on www.sedarplus.ca:<br><br> <br>Section 17 – Risk Factors – Grown Rogue’s Business is Illegal under U.S. Federal Law<br><br> <br><br><br> <br>Section 17 – Risk Factors – Because marijuana is illegal under federal law, investing in cannabis business could be found to violate the Federal CSA
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.	See the following risk factors included in the Company’s Listing Statement available on www.sedarplus.ca:<br><br> <br>Section 17 – Risk Factors – Grown Rogue’s Business is Illegal under U.S. Federal Law<br><br> <br><br><br> <br>Section 17 – Risk Factors – Because marijuana is illegal under federal law, investing in cannabis business could be found to violate the Federal CSA<br><br> <br><br><br> <br>Section 17 – Risk Factors – Risks Relating to Other Laws and Regulations<br><br> <br><br><br> <br>Section 17 – Risk Factors – Current and Future Consumer Protection Regulatory Requirements<br><br> <br><br><br> <br>Section 17 – Risk Factors – Operational Risks<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue will not be able to deduct many normal business expenses<br><br> <br><br><br> <br>Section 17 – Risk Factors – External Factors<br><br> <br><br><br> <br>Section 17 – Risk Factors – Failure to Protect Intellectual Property<br><br> <br><br><br> <br>Section 17 – Risk Factors – Agricultural Operations<br><br> <br><br><br> <br>Section 17 – Risk Factors – Liability, Enforcement Complaints etc.<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue’s business is highly regulated and it may not be issued necessary licenses, permits, and cards<br><br> <br><br><br> <br>Section 17 – Risk Factors – Licenses<br><br> <br><br><br> <br>Section 17 – Risk Factors – Local Laws and Ordinances

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All Issuers with US Marijuana-Related Activities	Response
	Section 17 – Risk Factors – Third party service providers to Grown Rogue may withdraw or suspend their service<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue may not be able to obtain or maintain a bank account<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue’s contracts may be unenforceable and property may be subject to seizure<br><br> <br><br><br> <br>Section 17 – Risk Factors – The protections of US bankruptcy law may be unavailable<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue may have a difficult time obtaining insurance which may expose Grown Rogue to additional risk and financial liabilities<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue’s websites are accessible in jurisdictions where medicinal or recreational use of marijuana is not permitted and, as a result Grown Rogue may be found to be violating the laws of those jurisdictions<br><br> <br><br><br> <br>Section 17 – Risk Factors – The marijuana industry faces significant opposition in the United States
Given the illegality of marijuana under US 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.	See above under “Description of Business”.<br><br> <br><br><br> <br>See the following risk factor included in the Company’s Listing Statement available on www.sedarplus.ca:<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue may not be able to obtain or maintain a bank account
Quantify the issuer’s balance sheet and operating statement exposure to U.S. marijuana-related activities.	100% of Grown Rogue’s balance sheet and operating statements are exposed to U.S. marijuana-related activities.
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.	Grown Rogue has received legal advice from multiple attorneys regarding (a) compliance with applicable state regulatory frameworks and (b) potential exposure and implications arising from U.S. federal law.
Federal CSA Requirement – US Marijuana Issuers with direct involvement in cultivation or distribution	Response
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.	See below under “U.S. Regulatory Matters”

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Federal CSA Requirement – US Marijuana Issuers with direct involvement in cultivation or distribution	Response
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.	See below under “U.S. Regulatory Matters”<br><br> <br><br><br> <br>See the following risk factors included in the Company’s Listing Statement available on www.sedarplus.ca:<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue’s Business is Illegal under U.S. Federal Law<br><br> <br><br><br> <br>Section 17 – Risk Factors – Risks Relating to Other Laws and Regulations<br><br> <br><br><br> <br>Section 17 – Risk Factors – Grown Rogue’s business is highly regulated and it may not be issued necessary licenses, permits, and cards<br><br> <br><br><br> <br>Section 17 – Risk Factors – Licenses<br><br> <br><br><br> <br>Section 17 – Risk Factors – Liability, Enforcement Complaints etc.
U.S. Marijuana Issuers with indirect involvement in cultivation or distribution	Response
Outline the regulations for U.S. states in which the issuer’s investee(s) operate.	N/A
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. Promptly disclose any non-compliance, citations or notices of violation, of which the issuer is aware, that may have an impact on the investee’s licence, business activities or operations.	N/A
U.S. Marijuana Issuers with material ancillary involvement	Response
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.	N/A

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U.S. REGULATORY MATTERS

Grown Rogue (through its subsidiaries) has direct involvement in the cultivation, manufacture, possession, sale, and distribution of marijuana in the United States. Grown Rogue and its subsidiaries are primarily involved in the U.S. marijuana industry as a seed to retail company with operations currently in Oregon and Michigan (both of which have legalized medical and recreational marijuana). Grown Rogue, through its subsidiaries, produces recreational marijuana and distributes it to dispensaries throughout Oregon and Michigan.

Grown Rogue incorporates its discussion above in the “Regulatory Disclosure” section regarding the status of cannabis in the United States and the interplay between federal and state laws. As discussed therein, active enforcement of the current federal law on cannabis may directly and adversely affect revenues and profits of Grown Rogue. The risk of strict enforcement of the Federal CSA remains uncertain.

U.S. FEDERAL LAWS APPLICABLE TO BANKING

Because producing, manufacturing, processing, possessing, distributing, selling, and using marijuana is a crime under the CSA, most U.S. banks and other financial institutions are unwilling to provide banking services to marijuana-related businesses due to concerns about criminal liability under the CSA as well as concerns related to federal money laundering rules under the U.S. Bank Secrecy Act. Canadian banks are also hesitant to work with cannabis companies, due to the uncertain legal and regulatory framework of the industry. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to cannabis businesses.

Under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering or conspiracy. In both Canada and the United States transactions by cannabis businesses involving banks and other financial institutions are both difficult and unpredictable under the current legal and regulatory landscape. Though guidelines issued in past years allow financial institutions to provide bank accounts to certain cannabis businesses, relatively few U.S. banks have taken advantage of those guidelines and many U. S. cannabis businesses still operate on an all-cash basis.

OREGON STATE REGULATION

The Oregon Medical Marijuana Program (“OMMP”) is a state registry program within the Public Health Division, Oregon Health Authority (“OHA”). The role of the OHA is to administer the Oregon Medical Marijuana Act. The OMMP allows individuals with a medical history of one or more qualifying illnesses and a doctor’s written statement to apply for registration with the OMMP. Qualified applicants are issued a registry identification card that entitles them to legally possess and cultivate cannabis, subject to certain limitations.

On November 4, 2014, Oregon voters passed Measure 91, known as the Control, Regulation, and Taxation of Marijuana and Industrial Hemp Act (the “Act”), effectively ending the state’s prohibition of recreational marijuana and legalizing the possession, use, and cultivation of marijuana within legal limits by adults 21 years and older. The Act did not amend or affect the Oregon Medical Marijuana Act and the OMMP. The Act empowered the Oregon Liquor Control Commission (“OLCC”) with regulating sales of recreational marijuana in Oregon. It is possible that the voters could potentially repeal the law that permits both the medical and recreational marijuana industry to operate under state law.

Under current Oregon law, possession, and home cultivation by adults at least 21 years old is allowed within legal limits. Public sales of marijuana and marijuana products may be done only through OLCC-licensed retailers. Medical marijuana patients and adults at least 21 years of age may purchase marijuana and marijuana products at OLCC-licensed retailers. Medical marijuana patients are not charged sales tax for their purchases when they present their registry identification card. OLCC-licensed retailers (and their associated applicants and licensees) are required to obtain a certificate of tax compliance to show compliance with Oregon tax laws at the time of license issuance and at each annual license renewal. The OLCC has the authority to require all OLCC license types to demonstrate compliance with Oregon tax laws, but it has not yet done so.

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The OLCC issues five basic types of recreational marijuana licenses: (a) producer, (b) processor, (c) wholesaler, (d) retailer, and (e) testing laboratory. Each license type must be renewed annually and in a timely manner (i.e., on or before the license expiration date). Oregon currently has a moratorium on the issuance of new OLCC licenses (with the exception of testing laboratories). This moratorium sunsets on December 31, 2024 and will be replaced with a per capita limit on the issuance of new OLCC licenses. Under the new license limit, the OLCC may not accept new applications for: (a) producer or retail licenses unless there is not more than one active license per 7,500 residents in the state who are 21 years of age or older; and (b) processor and wholesale licenses unless there is not more than one active license per 12,500 residents in the state who are 21 years of age or older. Applications for renewals, changes of location, changes of ownership, or changes in the size of a mature canopy are exempt from both the moratorium and the license limit. The OLCC may disqualify applicants for a number of reasons, including for lacking a good moral character, for lacking sufficient financial resources or responsibility, for relevant past convictions, and for using marijuana, alcohol, or drugs “to excess.”

Grown Rogue has a comprehensive compliance program, which tracks all aspects of operations through the METRC program (an online software tool mandated by the State of Oregon that tracks seed to retail purchases), as well as compliance with all state and federal employment and other safety regulations.

Grown Rogue is periodically advised by various outside attorneys about the requirements for compliance with Oregon law.

Grown Rogue is in compliance with Oregon state law and its related licensing framework.

MICHIGAN STATE REGULATION

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 (the “MMFLA”) and the Marihuana Tracking Act (the “MTA”). On November 6, 2018, Michigan voters approved the Michigan Regulation and Taxation of Marihuana Act, which makes marijuana legal under state and local law for adults 21 years of age or older and controls the commercial production and distribution of marijuana under a system that licenses, regulates, and taxes the businesses involved.

The Michigan Department of Licensing and Regulatory Affairs (“LARA”) is the main regulatory authority for the licensing of marijuana businesses, and it currently administrates five types of “state operating licenses” for marijuana businesses: (a) a “grower” license, (b) a “processor” license, (c) a “secure transporter” license, (d) a “provisioning center” license and (e) a “safety compliance facility” license. There are no stated limits on the number of licenses that can be made available on a state level; however, LARA has discretion over the approval of applications and municipalities can pass additional restrictions including zoning and licensing requirements.

Grown Rogue has a comprehensive compliance program, which tracks all aspects of operations through the METRC program (an online software tool mandated through the State of Michigan that tracks seed to retail purchases), as well as compliance with all state and federal employment and other safety regulations.

Grown Rogue is periodically advised by various outside attorneys about the requirements for compliance with Michigan law. Grown Rogue is in compliance with Michigan state law and its related licensing framework.

MICHIGAN LICENSE CLASSES AND MUNICIPAL AUTHORITY

State operating licenses for marijuana businesses have a 1 year term and are annually renewable if certain conditions are met: (a) the renewal application is submitted prior to the date the license expires, or within sixty (60) days of expiration if all other conditions are met and a late fee is paid, (b) the licensee pays the regulatory assessment fee set by LARA and (c) the licensee continues to meet the requirements to be a licensee under the Michigan Cannabis Regulations.

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Each renewal application is reviewed by LARA, and provided that the requisite renewal fees are paid, the renewal application is timely submitted prior to the expiration date, and there are no material violations noted against the applicable licenses, a licensee would expect to receive the applicable renewed license in the ordinary course of business.

There are no stated limits on the number of licenses that can be made available on a state level; however, regulatory authorities have discretion over the approval of applications and municipalities can pass additional restrictions.

Licensees are heavily regulated with on-going requirements related to operations, security, storage, transportation, inventorying, personnel, and more. As in other states where cannabis is legal, Michigan regulators can deny or revoke licenses and renewals for multiple reasons. Additionally, license holders must ensure that no cannabis is sold, delivered, or distributed by a producer from or to a location outside of Michigan.

Pursuant to the requirements of the MTA, LARA utilizes METRC as the state’s third-party solution for marijuana and marijuana product tracking. METRC is Michigan’s statewide seed-to-sale marijuana tracking system that uses serialized tags attached to every plant — and labels attached to wholesale packages — to track marijuana inventory. METRC allows us to track our inventory, permissible sales and seed-to-sale information. METRC also gives regulators access to our product supply chain from seed-to-sale.

NEW JERSEY STATE REGULATION

New Jersey enacted the Compassionate Use Medical Marijuana Act (“CUMMA”) on January 18, 2010. CUMMA allows patients with qualifying medical conditions to access cannabis through a program regulated by the New Jersey Department of Health (“NJDOH”), which authorized six alternative treatment centers (“ATCs”) to operate as vertically integrated cultivators and dispensaries. In 2019, the NJDOH held a “Request for Application” process for 24 additional ATCs, with some ATCs limited to cultivation, some limited to retail dispensaries, and some vertically integrated.

Following voter approval of an adult-use cannabis ballot measure amending the New Jersey Constitution to permit the use of cannabis for adults 21 years of age and older, on February 22, 2021, New Jersey enacted the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”), which legalized the adult use of marijuana and established the New Jersey Cannabis Regulatory Commission (“CRC”) as the regulatory body for both the medical and recreational cannabis within the state.

Under CREAMMA, ATCs can apply to serve the recreational cannabis market as “Expanded ATCs.” In addition, New Jersey established six (6) new classes of licenses for recreational use: Class 1 Cannabis Cultivator, authorized to grow recreational cannabis; Class 2 Cannabis Manufacturer, permitted to manufacture cannabis products; Class 3 Cannabis Wholesaler, licensed to store, sell, and transfer cannabis items among cultivators, wholesalers, and retailers; Class 4 Cannabis Distributor, authorized to transport cannabis items in bulk within the state; Class 5 Cannabis Retailer, allowed to purchase cannabis from licensed sources and sell to consumers in retail settings; and Class 6 Cannabis Delivery, tasked with transporting purchases from retailers to consumers. Additionally, New Jersey offers microbusiness licenses targeting smaller, local enterprises. These licenses are restricted to operations with no more than 10 employees, with at least 51% of them required to reside in the local or neighboring municipalities. Notably, there are no statutory caps on the number of licenses the CRC may issue. However, the CRC has discretion over the approval of applications and municipalities can pass additional restrictions including zoning and licensing requirements.

Recreational cannabis businesses in New Jersey are permitted to integrate vertically by holding licenses across several classes—cultivator, manufacturer, retailer, and delivery service, or as both a wholesaler and a distributor. However, businesses are restricted to holding only one license per class.

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As part of the adult use licensing process, applicants are permitted to apply for “conditional” or “annual” licenses. Conditional licenses serve as an entry point for industry newcomers, providing them up to 120 days (with a potential 45-day extension) to site their proposed operations. To qualify for a conditional license, applicants must meet specific residency and financial requirements. Successful conditional license holders may transition to annual licenses, which transition is required for the business to be approved by the CRC to begin operations. Additionally, the CRC implemented a program that prioritizes review of applications from Diversely Owned, Social Equity, and Impact Zone qualifying applicants. Microbusinesses are also prioritized, with opportunities for expansion.

Recently, the CRC approved new regulations for cannabis consumption lounges, which are set to be implemented following approvals from the New Jersey Office of Administrative Law and local municipalities. These lounges, required to be attached to existing dispensaries and prohibited from selling food or alcohol, aim to offer a secure, regulated environment for medical and recreational cannabis users to consume their own products.

To safeguard fair business practices and maintain competitive market conditions, New Jersey imposes specific prohibitions on Financial Source Agreements (FSA) and Management Services Agreements (MSA).

The CRCA utilizes METRC as the state’s third-party solution for marijuana and marijuana product tracking from seed to sale.

ILLINOIS STATE REGULATIONS

In August 2013, Illinois became the 20^th^state to authorize a program for the cultivation and dispensing of cannabis for medical purposes for qualified medical patients—the Compassionate Use of Medical Cannabis Program. In June 2019, Illinois passed the Cannabis Regulation and Tax Act (“CRTA”), which legalized cannabis for recreational use and created one of the largest adult use markets in the country. The law went into effect on June 25, 2019, and adult use sales of cannabis began in the state on January 1, 2020. Under the CRTA, existing medical cannabis license holders were allowed to apply for Early Approval Adult Use Dispensing Organization (“EAAUDO”) licenses to be able to sell adult use product at existing medical cannabis dispensaries. Existing medical operators also received the privilege of opening a secondary adult use only retail dispensary for every medical cannabis dispensary location already existing in the operator’s portfolio. All EAAUDO license holders were also required to commit to Illinois’s groundbreaking Social Equity program either through a financial contribution, grant agreement, donation, incubation program, or sponsorship program.

The CRTA also authorized the issuance of an additional 75 Adult Use Dispensing Organization (“AUDO”) licenses, 40 craft grower licenses as well as infuser and transporter licenses in 2020. Generally speaking, these licenses were to be awarded via a competitive application process. The CRTA provided a significant advantage to applicants that qualified as a “Social Equity Applicant” under the CRTA. In addition, the CRTA authorized issuance up to 110 additional AUDO licenses and 60 craft grower licenses by December 21, 2021. However, due the COVID-19 pandemic, litigation relating to the application process, and the passage of H.B. 1443, which amended the CRTA, the issuance of new cannabis licenses in Illinois was delayed until July 2021. By June 2022, the Illinois Department of Agriculture (“IDOA”) has issued approximately 87 craft grower licenses in several tranches, along with infuser and transporter licenses. Note that those applicants who did not win a craft grow license have since sued IDOA alleging a host of issues and arguments relating to the application and scoring process. All such cases were consolidated for administrative purposes and are still pending (In re Cannabis Craft Grow Litigation, Case No.: 22 CH 06071).

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On September 3, 2021, the Illinois Department of Financial and Professional Regulation (“IDFPR”) announced that 185 Conditional AUDO licenses have been awarded through three license lotteries that took place on July 29, 2021, August 5, 2021, and August 19, 2021 respectively. These Conditional AUDO licenses were ultimately issued to the respective winners in July 2022. The CRTA was subsequently amended in the Spring of 2023 and Conditional AUDO license holders are now required to site and operationalize their dispensaries within 720 days of license receipt.

The state of Illinois currently uses BioTrackTHC as its computerized track-and-trace system for seed-to-sale reporting. However, Illinois announced that it will be switching to Metrc as the state’s track-and-trace system and that switch is expected to be implemented in or around the beginning of 2024. Individual licensees, whether directly or through third-party integration systems, are required to push data to the state to meet all reporting requirements.

Illinois allows for five types of cannabis businesses within the state: (1) cultivation centers; (2) craft growers; (3) infusers; and (4) transporters, which are regulated by the IDOA. Fifth are dispensaries, which are regulated by the IDFPR. Vertical integration is permissible through the acquisition of the various license types, but there are restrictions on certain license ownership. Pursuant to the CRTA, an individual may not be a “Principal Officer” in: (1) more than 10 adult use dispensaries, (2) more than three craft growers, and (3) a craft grower and cultivation center simultaneously. Principal Officer includes a cannabis business establishment applicant or licensed cannabis business establishment’s board member, owner with more than 1% interest of the total cannabis business establishment or more than 5% interest of the total cannabis business establishment of a publicly traded company, president, vice president, secretary, treasurer, partner, officer, member, manager member, or person with a profit sharing, financial interest, or revenue sharing arrangement.

All cultivation, infusing, and transporter establishments must register with the IDOA. All dispensaries must register with the IDFPR. If applications contain all required information, establishments are issued a marijuana establishment registration certificate. Registration certificates are valid for a period of one year and are subject to annual renewals after required fees are paid and the business remains in good standing. Pursuant to Illinois law, registration renewal applications must be received 45 days prior to expiration and may be denied if the license has a history of non-compliance and penalties.

The cultivation and craft grower licenses permit a licensee to acquire, possess, cultivate, manufacture and process cannabis into edible products and cannabis-infused products. Cultivators and craft growers can transfer, have tested, supply or sell cannabis and cannabis products and related supplies to licensed dispensaries, craft growers, and infusers. Craft growers can cultivate a flowering stage canopy of up to 14,000 sq. ft. Infusing licenses permit a licensee to acquire and possess distillate from a licensed cultivator or craft grower and to manufacture edible and cannabis-infused products. Infusers can transfer, have tested, supply or sell cannabis and cannabis products to dispensaries. The transporter license permits a licensee to transport cannabis and cannabis products to and from licensed entities.

The retail dispensary license permits us to purchase cannabis and manufactured cannabis products from licensed cultivation centers, craft growers, and infusing organizations and to sell such products to adult consumers (21 years old or older).

There are significant risks associated with the business of the Company, as described above and in Section 17 – Risk Factors of the Company’s Listing Statement as filed on www.sedarplus.ca. Readers are strongly encouraged to carefully read all of the risk factors contained in Section 17 – Risk Factors of the Company’s Listing Statement.

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INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS

Management, including the President and CEO and the CFO, is responsible for designing, establishing, and maintaining a system of ICFR to provide reasonable assurance that all information prepared by the Company for external purposes is reliable and timely. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with IFRS.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately reflect the transactions of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. Due to its inherent limitations, internal control over financial reporting and disclosure may not prevent or detect all misstatements.

The CEO and CFO have evaluated whether there were changes to the ICFR during the two months ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, the ICFR. As a result, no such significant changes were identified through their evaluation.

There have been no material changes in the Company’s internal control over financial reporting during the two months ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

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Exhibit 5

FORM 52-109FV1

CERTIFICATION OF ANNUAL FILINGS

VENTURE ISSUER BASIC CERTIFICATE

I, J. Obie Strickler, President and Chief Executive Officer of Grown Rogue International Inc., certify the following:

1.	Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Grown Rogue International Inc. (the “issuer”) for the financial year ended December 31, 2023.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
---	---
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.
---	---

Date: April 29, 2024.

(signed) “Obie Strickler”
Name:	J. Obie Strickler
Title:	President and Chief Executive Officer
Note to Reader
---	---	---
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
	i)	controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
	ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Exhibit 6

FORM 52-109FV1

CERTIFICATION OF ANNUAL FILINGS

VENTURE ISSUER BASIC CERTIFICATE

I, Ryan Kee, Chief Financial Officer and Corporate Secretary of Grown Rogue International Inc., certify the following:

1.	Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Grown Rogue International Inc. (the “issuer”) for the financial year ended December 31, 2023.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
---	---
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.
---	---

Date: April 29, 2024.

(signed) “Ryan Kee”
Name:	Ryan Kee
Title:	Chief Financial Officer and Corporate Secretary
Note to Reader
---	---	---
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
	i)	controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
	ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Exhibit 7

Grown Rogue Completes Fiscal Year End Change, Reports Audited

Financial Results for the Two Months Ending December 31, 2023

●	Grown Rogue has completed its transition from an October 31 financial year end to a calendar year end, and is reporting a two-month stub period for the two months ending December 31, 2023
●	Revenue of $3.6M and Operating Cash Flow (OCF), before changes in working capital (WC), of $0.7M
---	---
●	Subsequent to period-end, the Company augmented New Jersey presence with a retail investment, announced entry into Illinois via a craft growers license, and announced the exercise and conversion of warrants, options, and debentures
---	---

Medford, Oregon, April 30, 2024 – Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a craft cannabis company born from the amazing terroir of Oregon’s Rogue Valley, is pleased to report its audited financial results for the two months ending December 31, 2023. The Company is reporting this two-month period as part of its earlier announced transition to a financial year end of December 31, so the Company’s financial quarters align with peers on calendar quarters going forward and the Company’s annual harvest cycle. All financial information is provided in U.S. dollars unless otherwise indicated.

Management Commentary

“We are excited to complete the transition of our fiscal year to now align with the calendar year. It was great to see that during November and December, typically the two slowest months for the Company, we saw 30% year-over-year revenue growth in our core markets of Oregon and Michigan,” said Obie Strickler, CEO of Grown Rogue.

“We are also pleased with the construction and business planning progress in New Jersey and are excited to soon be bringing our high-quality, craft cannabis to the great people of New Jersey. We set aggressive timelines for the cultivation facility and would like to thank our team for their effort and commitment to achieving these timelines,” continued Mr. Strickler.

“The recent warrant exercises, which resulted in the Company adding an additional US$4.7M in cash, have positioned us well to finance our current growth initiatives with cash on the balance sheet while leaving us with enough liquidity to move quickly if an attractive opportunity presents itself.

I want to personally thank the entire Grown Rogue team, our shareholders, and our customers for the continued support to help Grown Rogue achieve our goal of becoming the first nationally recognized craft cannabis company in the U.S.”

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FinancialStatements and aEBITDA reconciliation

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

ASSETS
Current assets
Cash and cash equivalents
Accounts receivable (Note 18)
Biological assets (Note 3)
Inventory (Note 4)
Prepaid expenses and other assets
Total current assets
Property and equipment (Note 8)
Notes receivable (Notes 6.2.1 and 6.2.2)
Warrants asset (Note 13.2)
Intangible assets and goodwill (Note 9)
Deferred tax asset (Note 20)
TOTAL ASSETS
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
Current portion of lease liabilities (Note 7)
Current portion of long-term debt (Note 10)
Business acquisition consideration payable (Note 5)
Derivative liability (Notes 11.1.1, 11.2 and 11.2.1)
Income tax payable
Total current liabilities
Lease liabilities (Note 7)
Long-term debt (Note 10)
Convertible debentures (Notes 11.1, 11.2 and 11.2.1)
TOTAL LIABILITIES
EQUITY
Share capital (Note 12)
Contributed surplus (Notes 13 and 14)
Accumulated other comprehensive loss	)	)
Accumulated deficit	)	)
Equity attributable to shareholders
Non-controlling interests (Note 23)
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY

All values are in US Dollars.

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CONSOLIDATED STATEMENTS OF INCOME & LOSS AND COMPREHENSIVE INCOME & LOSS	****

Revenue
Product sales (Note 2.5)
Service revenue (Note 2.5.1)
Total revenue
Cost of goods sold
Cost of finished cannabis inventory sold	)	)
Costs of service revenue	)	)
Gross profit, excluding fair value items
Realized fair value amounts in inventory sold	)	)
Unrealized fair value gain on growth of biological assets
Gross profit
Expenses
Accretion expense
Amortization of property and equipment (Note 8)
General and administrative (Note 19)
Share-based compensation
Total expenses
Income from operations
Other income and (expense)
Interest expense	)	)
Other income (expense)
Unrealized gain on derivative liability		)
Unrealized gain on warrants asset
Loss on disposal of property and equipment	)	)
Total other income (expense), net		)
Gain (loss) from operations before taxes		)
Income tax (Note 20)	)	)
Net income (loss)		)
Other comprehensive income (items that may be subsequently reclassified to profit & loss)
Currency translation loss		)
Total comprehensive income (loss)		)
Gain (loss) per share attributable to owners of the parent – basic		)
Weighted average shares outstanding – basic
Gain (loss) per share attributable to owners of the parent – diluted
Weighted average shares outstanding – diluted
Net income (loss) for the period attributable to:
Non-controlling interest		)
Shareholders		)
Net income (loss)		)
Comprehensive income (loss) for the period attributable to:
Non-controlling interest		)
Shareholders		)
Total comprehensive income (loss)		)

All values are in US Dollars.

3
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CONSOLIDATED STATEMENTS OF CASH FLOWS

Operating activities
Net income (loss)		)
Adjustments for non-cash items in net income (loss):
Amortization of property and equipment
Amortization of property and equipment included in costs of inventory sold
Unrealized gain on changes in fair value of biological assets	)	)
Changes in fair value of inventory sold
Deferred income taxes		)
Stock option expense
Accretion expense
Loss on disposal of property and equipment
(Gain) loss on fair value of derivative liability	)
(Gain) on warrants asset	)	)
Effects of foreign exchange		)

Changes in non-cash working capital (Note 15)	)	)
Net cash provided by operating activities
Investing activities
Purchase of property and equipment and intangibles	)	)
Cash advances and loans made to other parties	)	)
Payments of acquisition payable
Net cash used in investing activities	)	)
Financing activities
Proceeds from convertible debentures
Repayment of long-term debt	)	)
Repayment of convertible debentures	)	)
Payments of lease principal	)	)
Net cash provided by (used in) financing activities	)
Change in cash and cash equivalents	)
Cash and cash equivalents, beginning
Cash and cash equivalents, ending

All values are in US Dollars.

4
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Adjusted EBITDA Reconciliation	Two months<br>ended December 31, 2023		Year ended<br>2023
	()		()
Net income (loss), as reported				)
Add back realized fair value amounts included in inventory sold
Deduct unrealized fair value gain on growth of biological assets		)		)
Add back amortization of property and equipment included in cost of sales

Add back interest and interest accretion expense, as reported
Add back amortization of property and equipment, as reported
Add back share-based compensation
Deduct unrealized gain/add back unrealized loss on derivative liability, as reported		)
Add back loss on disposal of property plant and equipment
Deduct unrealized gain on warrants asset, as reported		)		)
Add back income tax expense, as reported
EBITDA
Compliance costs
Costs associated with acquisition of Golden Harvests
Adjusted EBITDA

All values are in US Dollars.

NOTES:

The Company’s “Free cash flow” metric is defined by cash flow from operations minus capital expenditures and expansion related advances

The Company’s “aEBITDA,” or “Adjusted EBITDA,” is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and that may not be comparable to similar measures presented by other companies. The Company defines “EBITDA” as the Company’s net income or loss for a period, as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove transaction costs, stock-based compensation expense, accretion expense, gain (loss) on derecognition of derivative liabilities, the effects of fair-value accounting for biological assets and inventory, as well as other non-cash items and items not representative of operational performance as reported in net income (loss). Adjusted EBITDA is defined as EBITDA adjusted for the impact of various significant or unusual transactions. The Company believes that this is a useful metric to evaluate its operating performance.

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NON-IFRS FINANCIAL MEASURES

EBITDA and aEBITDA are non-IFRS measures and do not have standardized definitions under IFRS. The Company has also provided unaudited pro-forma financial information, which assumes that closed and pending mergers and acquisitions in 2021 are included in the Company’s financial results as of the beginning of the quarterly and annual periods in 2021. The Company has provided the non-IFRS financial measures, which are not calculated or presented in accordance with IFRS, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. These supplemental non-IFRS financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS 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 IFRS financial measures presented herein. Accordingly, the following information provides reconciliations of the supplemental non-IFRS financial measures, presented herein to the most directly comparable financial measures calculated and presented in accordance with IFRS.

About Grown Rogue

Grown Rogue International Inc. (CSE: GRIN | OTC: GRUSF) is a craft cannabis company operating in Oregon, Michigan, Minnesota, Maryland, and New Jersey, focused on delighting customers with premium flower and flower-derived products at fair prices. The Company’s roots are in Southern Oregon, where it has proven its capabilities in the highly competitive and discerning Oregon market. The Company’s passion for quality product and value, combined with a disciplined approach to growth, prioritizes profitability and return on capital without sacrificing quality. The Company’s strategy is to pursue capital eﬃcient methods to expand into new markets, bringing craft-quality product at fair prices to more consumers. The Company also continues to make modest investments to improve outdoor craft cultivation capabilities in preparation for eventual interstate commerce. For more information, visit www.grownrogue.com.

FORWARD-LOOKING STATEMENTS

This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward- looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse eﬀects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to diﬀer materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on Sedar.

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Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to diﬀer materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company’s business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR+ at www.sedarplus.ca. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

For further information on Grown Rogue, please visit www.grownrogue.com or contact:

Obie Strickler

Chief Executive Oﬃcer

[email protected]

Jakob Iote

Vice President of Investor

Relations

[email protected]

(458) 226-2662

GRUSF 6-K